Renew Your SaaS Contracts Early

We track lots of data as you have seen from the blog. One of those things we look at closely is the money we spend on sales and marketing software. Depending on the vendor, software costs are driven by consumption either based on user counts, database size, emails sent or other measures.  We work hard to keep our systems clean, our data clean and our usage of these systems efficient to avoid price increases.  For one particular vendor, our usage had increased dramatically over the past two years.  To reduce costs, we implemented a plan to clean up our database size and consumption of this vendor’s service so our renewal costs would return to levels last seen about 2 years ago.

The problem, which I was concerned was coming, is that once a SaaS vendor has your spending at a certain level, only the best ones will work with you to reduce it. We did not have a pleasant experience with this vendor last time we renewed, so to make sure we could switch off this vendor if needed, we initiated a renewal process a full quarter and a half prior to our contract expiration.

Hence the lesson for everyone – renew your SaaS contracts early to give you the opportunity to switch to another vendor should your SaaS vendors not support your usage ,levels in a reasonable way.

How did it play out with this one vendor?  Unfortunately, badly, as I expected.  You quickly learn which vendors are your true partners and which ones are not.  A true vendor partner works with you to control costs and sell you what you need.  This vendor was not that way. Besides being incredibly difficult to get a quote based on the lower size, they were just plain non-responsive.  Why?  I can only guess.  But each week that passed without this getting resolved was one less week we would have to move our systems to a new vendor.

We finally got a quote only to find automatic renewal clauses with hefty prices increases.  The net of it, only after pulling my team back from supporting this vendor with speaking, webinars, and even user group support did they provide pricing somewhat inline with our usage.  Had we started this process in the last month of the renewal, the outcome would most likely have been different.

Regardless, I learned a couple of things with this vendor.

First, their only interest is to maximize revenue from me.  They are no longer on my list of trusted vendors and I am now working to neutralize them further in the organization so a swap out is even easier.

Second, my team’s evangelization for this vendor ended up being the deciding leverage which avoided the vendor switch.  I had been given their “best and final” quote which was unacceptable. Based on this, I instructed the team to withdraw from all assistance to the vendor and had started the selection process to switch.  It was this withdrawal of support for the vendor as  a reference site etc.  that pushed the sales organization to make a reasonable proposal.  Had I not had this leverage, I would have been switching today.

The entire experience was pretty frustrating. We were big advocates.  Now the relationship is strained at best. Our request was pretty reasonable.

The net of it – renew your SaaS contracts early to give you plenty of time to switch to a new vendor.  This also will give you great insight into the type of vendor you are dealing with.

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