How can you measure the ROI of renewing and upselling existing contracts?

1 Define your goals and costs

Before you can calculate the ROI of renewing and upselling existing contracts, you need to define your goals and costs. What are the objectives and outcomes that you want to achieve with your existing customers? How much revenue do you expect to generate from renewing and upselling them? How much does it cost you to service, support, and communicate with them? How much time and money do you spend on training, incentives, and tools to enable your sales team to renew and upsell effectively? These are some of the questions that you need to answer to establish a baseline for your ROI calculation.

2 Choose your metrics and formulas

To measure the ROI of renewing and upselling existing contracts, you need to choose the appropriate metrics and formulas. Depending on your industry, product, and customer lifecycle, there are many options to choose from. Common metrics include the customer retention rate, customer lifetime value (CLV), customer acquisition cost (CAC), and customer churn rate. The customer retention rate indicates how loyal and satisfied your customers are with your product and service; a high CLV shows that you have a profitable and loyal customer base; a low CAC reflects an efficient and effective sales process; and a high customer churn rate indicates dissatisfaction and unengagement with your product and service. The formula for calculating ROI is: Revenue from renewals and upsells - Costs of renewals and upsells / Costs of renewals and upsells. You can also use this formula to compare the ROI of renewing and upselling existing contracts with the ROI of acquiring new customers by substituting the revenue and costs accordingly.

3 Track and analyze your data

Finally, you need to track and analyze your data to measure the ROI of renewing and upselling existing contracts. You can use various tools and methods to collect and organize your data, such as CRM software, spreadsheets, dashboards, and reports. You can also segment your data by customer type, product type, contract term, sales rep, and other criteria to identify patterns and trends. You should monitor your data regularly and compare it with your goals and benchmarks to evaluate your performance and progress. You should also use your data to identify opportunities and challenges, and to adjust your strategy and tactics accordingly.

Renewing and upselling existing contracts is a valuable and rewarding activity for outside sales professionals. By measuring the ROI of your efforts, you can demonstrate your value and impact, and optimize your sales process and results.

4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?