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5 Things Keeping Your Customers From Renewing Their IT Services


Picture of Tim Jones, CEO + Founder
Written by Tim Jones, CEO + Founder
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Service companies and organizations have immense dependence on the subscription model for long-term revenue growth and success. IT companies are not an exception, and renewals have a huge role in pushing recurring revenue. However, there are several challenges facing companies and organizations in the subscription field that are unique to their offerings.

Customers rarely stick to one IT service provider and are quick to jump to a competitor they realize provides much better solutions and has advanced features. Therefore, it is increasingly becoming important for IT companies to dig deep and determine why customers are not renewing and take strategic action over the objection to renewal.

This post explains five obstacles that prevent subscription customers from renewing their IT services.



1. Mode of Revenue Recovery

Although subscription billing reduces the hindrances to making sales, it initiates the need to collect monthly, thus requiring revenue recovery. If your company bills monthly, it needs to collect monthly. Companies tend to lose subscribers depending on how they conduct revenue recovery, but there are ways to avoid that.  

First, ensure you are both proactive and reactive to your subscribers. By proactive, we mean try notifying the customer typically on different dates, for example, on 4th, 8th, 16th, etc. Proactive actions include sending notifications informing the subscriber that;

  • The next invoice will be issued on (give the date)
  • The payment has been processed

Reactive actions include sending notifications such as;

  • The payment failed (please click to update)
  • Payment is past due; you need to pay for the services to continue. Your service will terminate on (give the date) if we fail to receive payment.

However, note that shutting off a subscriber immediately due to nonpayment may worsen the situation. They might wonder whether the subscription was that necessary. 


2. Complex Customer Experience

Customer experience should not be complex; otherwise, your company will increasingly experience low renewal rates. Consumers want to manage their subscriptions; thus, you must provide them with appropriate tools. For example, you can provide a self-service portal where they can revise their payment methods or easily readable invoices. The tools should be accessible all the time without the customer having to contact the office.

You should also have online sign-up pages and credit card capture to help customers subscribe to your IT service quickly. However, ensure you are keen on PCI requirements and security when capturing credit card details.  

Consistency is key in providing a good customer experience, and you should ensure you do this throughout a subscriber lifecycle. The last thing you want is a  frustrated customer when it takes them ages to resolve issues with your support staff. This is enough for them to leave after their current subscription lapses.

Need help with your customer experience? Give us a call! We'd love to help.


3. Lack of Value

Unless your customers opt to pay for unnecessary cloud computing resources, there are two likely reasons why they fail to renew. Either they are unaware of how to use the product optimally or it falls short of their expectations.

Any of the two could be the reason for low renewal rates. As such, the IT service provider should find out the issue early enough and help them leverage the IT product or service optimally. 


4. Poor Outreach

Tracking renewal trends helps an IT service provider to predict possible renewals and lay strategies in advance to take advantage of imminent opportunities and propel revenue through contract renewals.

It can cause you a big headache if you unexpectedly get hundreds or thousands of contracts at the same time. With such an unanticipated high number, you might pay less attention to individual customer-specific needs. Additionally, you may also fail to identify the subscribers that you need to contact and the right time to approach prospects with promotion messages for renewals.

Therefore, you need to have predictive analytics and advanced statistical algorithms to get complete visibility of the potential renewal rates for improved revenue capture going ahead. That way, you can provide each customer a quality subscription lifecycle.


5. Gaps in Engagement

Engagement and customer contract extension go hand in hand. Customers may fail to extend the subscription but remain open for renewal if your company adds some functionalities, security parches, or features. However, they might not say their reason for not renewing unless you inquire. Therefore, it is your role to conduct surveys and find out what changes they want.

The surveys can give you crucial insights that could help win back clients or retain current and future subscribers. Additionally, it could help you identify the most popular product features so you can enhance them. Other ways to improve engagement include responding to reviews and giving gifts curated to fit customer's interests.


We Can Help

For an industry such as IT, where companies offer services on a subscription basis, you cannot overstate the significance of ensuring customers renew. Customer retention plays an immense role in business growth and development.

At Eternal Works, we can help build long-term and successful partnerships with your subscription customers. Reach out to us for assistance. 

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