How to use the Canvas
If you are looking for some guidelines on creating your contract renewal plan with the Canvas, you are at the right place.

Please select the topic you want to know more about and find out.

Do we need to change our value proposition?

In this box you share your analysis on how relevant the current value proposition still is to you customer. In a multi-year service contract, your customers’ priorities might have changed. In other words: They might no longer care as much about your solution.

So, the first question you should ask yourself when aiming for renewal is: How valuable is our current solution to the customers’ future? Is the problem you help solving still important to your client? Does it still have the attention of senior leadership, or is it handled by others?

Indicators that your service is decreasing in relevance for you customer are things like:

  • The agreed upon performance is a hygiene factor and considered just a basic performance
  • The client is asking you to be innovative
  • The client expresses a wish for you to be a more proactive business partner
  • The client is asking for additional suggestions to improve
  • The client wants to review costs or expresses concerns about the price
  • The level of personal involvement of the decision makers in your service is in decline
  • Decision makers are no longer keen to learn about the progress that is being made
  • The decision makers are less inclined to meet with you
  • Meetings get cancelled or pushed forward
  • There is less talk about long term partnership
  • The client meets with your competitors

So how are you doing? Is your customer expressing a wish to continue the cooperation? Are there signs of high interest in what you are doing for them? Do they still consider your service to be of high value for their future?

If not, you better develop your value proposition in order to renew the contract.

This is the first question on the Contract Renewal Canvas. If you have not downloaded it yet, do it now. It’s free and it will guide the thinking of your teams!

The 3 to 5 key people in deciding on the next contract

To know WHAT value the customer will be looking for in a next contract, you’ll first need to know WHO will define value.

Don’t just assume the decision makers will be the same people as last time. They often aren’t.

There are multiple reasons why this might have changed.

  • People may have left
  • People may have accepted different roles
  • The specific task may have been taken over by a different department/business line, location, etc.
  • Because it is easier to renew a contract then to sign a new one, higher raking executives may have delegated this task to others. Maybe the procurement department plays a bigger role
  • Priorities in the company may have changed causing other stakeholders to come into play

Before you can progress to the next box on the canvas, it is important to know who will be making the actual decision to sign the next contract and who has an advisory role. This is an essential part of building your renewal plan.

Here are some considerations when listing the key decision makers:

  • Consider all relevant stakeholder groups. This will differ per industry, but examples are:
    • C-suite
    • Finance
    • Operations
    • HRM
    • Logistics
    • IT
    • Legal
    • External advisors
  • There are usually between 3 and 5 key stakeholders involved in decision making. Do you know who these people are at your customer? And who has what role? Consider the following buying roles:
    • Initiator: initiates new initiatives, solutions or partners
    • Decision maker: ultimately responsible for approving a deal/contract.
    • User: senior person conveying the voice of the users
    • Influencer: people with a persuasive role, but not users
    • Buyer: responsible for the formal supplier relationship
    • Gatekeeper: responsible for providing information to the decision-making unit

After defining who the key decision makers are, consider if the relationships with your company are developed well enough to really understand their expectations and interest. Developing or deepening the relationship may become an essential part of your renewal plan.

KPI’s and other expectations.

Now that you have reviewed who the decision makers are, you need to ask yourself; what value do they seek in working with us? What do they expect us to accomplish?

The contract usually states what you have agreed to do for them. But what they expect of you often goes beyond what is in the contract. The contract just states the minimum of value they expect you to deliver throughout the contract. It’s your basic service.

During the lifespan of the contract things will change and with that, your clients’ goals may change. In services a client expects you to adapt to their needs throughout the contract. These needs will be expressed through expectations. Unfulfilled expectations will become complaints.

Write down what you know to be expectations the decision makers have. Not sure? This is the best time to ask them.

  •             What do you expect us to accomplish going forward?
  •             How will you measure progress on these expectations?

Are we delivering the value the customer expects?

The current value perception of your clients is the basis for their future decisions. Either in your favor or not.

In box 3 ‘Value Expected’, you determined what is important to you customer at this point in time and in the near future (contract KPI’s and other expectations). Now you need to assess how you are doing in these areas.

Write down how well your customer thinks you are doing. That may differ from your internal performance assessment.

Ask yourself: ‘Are we delivering the value the customer expects?’. Please include why you think you do or don’t. What prove do you have?

Your analysis will be important for filling out the next box: ‘Value proposition to renew the contract’.

What solution/expertise will be most valued to realize what goal?

If you have filled in box 1 to 4, you have clear understanding of:

  • The relevance of your current proposition (what you are currently doing for your client)
  • The current value perception of your clients.
  • Who will decide on the next contract.
  • What expectations these decision makers have of the future

Now it is time to form a proposition that will convince them to renew the contract and maybe even extend or improve.

In this box you will want to include:

  • What business issue(s) will your customer focus on in the next period in relation to your services?
  • What expertise do they see as essential to address these issues?
  • What solution(s) can you offer that your customer will see as valuable?
  • Will this value proposition hold opportunities to extend or improve the contract?

Financial, length of contract, scope of services, other

In this section of the canvas you describe the renewal objectives you think you can realize (improve or retain) with the value proposition you determined earlier.

Value and price are two sides of the same medal. When your proposition holds real (additional) value for your client, a contract can be renewed against good or even better terms.

When you start the renewal process early, there is enough time to consider ways to improve on contract conditions. Too often contracts get renewed without even considering the possibilities.

What do you want in return for the value you offer? Don’t just think about a better price. Also consider:

  • (a longer) contract period
  • Share of wallet or additional business
  • Conditions that lower your costs
  • Conditions that lower the stress on your organization
  • Access to data
  • References
  • Investments by your client that will strengthen your position
  • Acceptance of barriers to exit
  • Legal clauses
  • Annual indexation of prices

Don’t make your objectives a mere wish list. After completing the canvas, look at your proposition as a whole. Does your objective hold up when overlooking your value proposition, the competing solutions and your competition strategy?

Objectives should be realistic. Not realizing all of your objectives should be felt as a missed opportunity. When improving the terms of the contract is very important, the canvas should clearly reflect how this can and will be achieved. Clients will agree to many terms, as long as the overall deal is positive in their view.

How do we optimize our competitive position?

When you start your renewal process timely, you may be able to develop different strategies for dealing with the competition. As the current partner, you have an advantage over your competitors. You have better access to people and access to information.

What the best strategy is may vary and depends on the situation. In this box you write the competition strategy you have chosen. Here are some example strategies to consider:

Full competition
One strategy is to just wait for the new RFP (request for proposal). This may be the best strategy when you are certain you will win. But in a lot of cases this will lead to price erosion.

Early renewal
An often-used strategy is early renewal: Proposing to renew the contract before the customer starts preparing for retendering. The most common proposition is to renew the contract with a reduced price, although that is not always necessary. There may be other ways to be of relevant value that will not cost you much.

Influence content of RFP
In cases where you cannot renew the contract privately, your best strategy may be to influence the content of the request for proposal that will go out to you and your competitors.

You may convince your client to include elements that will be in your favor. And you have a competitive advantage by knowing early what is in the RFP and how to interpret it.

Lock-in
When you start the renewal process early you can consider investing in a lock-in strategy. This is probably best for contracts with high margin or customers of strategic importance.

Common lock-ins will be financial in nature. For example, the ownership of equipment, tools or instruments that the customer needs to continue the (level of) service and only can obtain from you.

Reciprocity
A well-known strategy for a long-term partnership, though not always possible. Please do make sure the decision(makers) are sensitive to this. As that is not always the case.

Loyalty
The definition of loyalty is the quality of staying firm in your friendship or support for someone or something. Good personal relationships matter in a lot of industries. Although loyalty only get you so far, it is worth overthinking as (part of any) competition strategy.

Overrule
The overrule strategy is similar to creating loyalty. When there is someone at the clients’ side with enough power to overrule other decisionmakers and influencers, you might consider putting your cards on winning this person for your proposition. You can do this by contributing a lot to this person’s goals, making the cooperation of high personal value.

Alliance
When your position as a (single) supplier is weakened, you might consider forming an alliance with a competitor in a similar position. This is usually not the first strategy that comes to mind, but it might hold real value for your customer. And as such, be the best bet to retain (part of) your current business.

Decisive Renewal Milestone

As with any plan, you will need to review at some point whether your renewal plan is working. And you need it timely so you can adjust your plan if needed.

This is what the Decisive Renewal Milestone helps you do. In this box, you set one milestone that will decisively tell you if your renewal plan is working.

A milestone is a goal to be achieved before a certain date. So, in this box, write the goal in a way that is either true, or not true at a specific date.

The milestone should be a logical and necessary step in your renewal plan. For example, if your renewal plan is all about early and private renewal, your milestone could be:

“Before May 1st, the key decision agrees to a meeting where you can present your renewal proposal.”

The DRM is an essential instrument in overseeing your renewal efforts, especially if you are not working with a detailed project plan for renewal.

Proposition of competitors and/or substitute solutions your client might value and consider.

In this box you write down the alternatives you think your client will consider.

When the list is complete, take a look at your value proposition and see if it holds up against these alternatives. It might lead you to reconsider or adjust your proposition.

Most companies have clear understanding who the competition is. We challenge you to consider other forms of competition as well. Your client will look for a solution for their problem (the problem you defined in the box about your value proposition). That solution might also be as simple as creating something internally or combing different solutions to get to the same result.

Audi may look a BMW as their main competitor. But they should also consider Uber as a competitor, since Uber provides a solution for the same problem: getting from A to B in a flexible, fast and comfortable way.

What other solutions will your client consider? And how do these solutions compare to yours?

Most important actions to get in the best position to renew the contract

What to put in the box Action plan mostly speaks for itself.
But there are some things to consider.

This box is not about a detailed action plan like a project manager would create. It is about the most important actions that will put your strategy to work. About what you as an Account Manager should manage and/or do yourself.

It is a place where you think about what to do to set the wheels of your plan in motion.

Taking a look at the things you have put in the other boxes will give you the input for your action plan.

For example, if your renewal plan is about creating a lock-in for your client, you probably will need permission for an investment. Getting that approval should be in your action plan.

Or when your renewal plan relies heavily on what you know to be the main topic in a next RFP, verifying your assumptions with the key stakeholders should be an important action.

Or when your plan includes improving the value perception of your service (Box Clients Perception of Our Performance), you will need to put some serious actions regarding operations and/or communication in here.