The Great Resignation and Technology Layoffs
What is the impact of staff churn on Renewal Rates for Technology Support, Service and Subscription Agreements?
In recent years, there has been a massive shift in the way businesses operate, with many companies experiencing what has been dubbed “the Great Resignation.” The reference to the growing trend experienced since COIVD 19 of employees leaving their traditional office jobs to work remotely or pursue other career and life goals. While in the last few months nearly 1,000 tech companies around the world have laid off more than 150,000 tech workers. (layoffs.fyi, a site that tracks publicly reported job cuts in the industry)
The rate of job cut announcements at US employers in November was more than five times greater than a year ago. (Challenger, Gray & Christmas.) Technology company’s now face significant issues related to contact ability when it comes to renewing subscriptions, service, maintenance and license agreements with their customers. When an employee leaves a company, they all too often take knowledge and expertise of the specific subscriptions, service, maintenance and license agreements, leaving behind gaps in the organization’s knowledge and understanding of the various tech platforms they are using. This is now manifesting itself as lower IQRR (In Quarter Renewal Rate) and OTR (On Time Renewal) and creating difficulties for vendors to find the correct employee to manage renewals and subscriptions.
This problem is further exacerbated across high volume, low value technology agreements where the sales rep/customer success rep/renewals rep coverage is in excess of >1/150 and where notification strategies utilised by vendors start at either 60 or 90 days from expiry and may rely on an Auto-Renew process.
According to the TSIA, in order to address these challenges, technology companies need to be segmenting the expansion and renewal process into high-touch, medium-touch, and low-touch modalities when strategizing frictionless approaches and when renewal automation is deployed. Research indicates a 11.5-point improvement in renewal performance when this segmentation approach was implemented.
In our experience here at Renewtrak across more that 20 million renewals per year, companies that utilize a digital renewal, best practice segmentation, notification campaigns, strategies, workflows, contact management automation and scaled automation with detailed analytics are significantly outperforming companies utilizing rep only or manual processes. It is clear that companies who are digitalizing and automating manual systems will be the ones that meet and exceed current financial markets expectation to grow revenue with smaller operational budgets.
It is important to not only give customers a digital self-serve experience; language, context and tax are key elements for consideration. Though approximately 1.5 billion people speak English natively or as a second language, more than 80% of the world’s population doesn’t speak the so-called “international business language.” As companies, we must consider our customers in core local markets and international markets and ensure that we are communicating with them in their preferred language, currency and apply the appropriate local and regional tax to enhance customer engagement.
We live in a world that is ever changing and the Great Resignation and technology redundancies have had a significant impact on contact ability for renewals of technology agreements and subscriptions. Companies need to take a proactive approach to managing their technology agreements and subscriptions to address these challenges and ensure continuity of optimal customer experience and this should be front of mind as you assess your renewals software for all digital renewals.
Since writing this article, layoffs have continued into January 2023, which will be creating even more stress on organizations ability to manage renewals: