By Phil Harwood
The renewal process takes many different shapes in our industry. The renewal process for residential work is often very different than that for commercial work and there are many variations within these general categories. All of this variation makes writing about the renewal process challenging. However, there are some common themes that apply to most situations. As we consider our renewal process, let’s look for one or two ways to improve and run with those ideas.
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First, consider why we are having to go through a renewal process in the first place. Could a one-year agreement have been a 3-year agreement? How about a 5-year or 7-year agreement? Why are we renewing contracts every year?
A common reason companies avoid long-term agreements is because of the unknown. They are fearful of getting locked into a price that will not be sufficient. This fear can be overcome by structuring contracts to allow for price changes without renegotiating the entire contract. In this way, the contract defines the relationship while the scope and pricing elements are basically viewed as a change order or addendum. This creates the win-win that everyone is looking for.
In some situations, an evergreen contract will be appropriate. This is a contract that automatically renews every year. Either party may exit according to the terms of the contract. But, as long as both parties are satisfied, what’s the point of going through a renewal process again? The scope and pricing elements are simply adjusted as needed to reflect the current needs of the customer and the related current prices. Why are we over-complicating this?
Second, consider the timing of renewals. For seasonal renewals, it’s best to get them into the hands of our customers as soon as possible after the season ends. We need time to perform a profit analysis and make an intelligent decision about price increases, but aside from that, seasonal renewals must not be held up for any reason.
Whatever our process is for renewals, we have to go through all of the steps, regardless of when it is. Once we wrap our heads around this, we will be able to justify changing our renewal timing to a more appropriate month. Let me give you an example.
There are companies in our industry that renew landscape contracts in the fall. By Christmas or early January, their renewal process is complete. Customers have either renewed or not. Regardless, they know where they stand. Other companies in our industry don’t even begin to think about landscape renewals until January, struggle to get them out, and sometimes don’t do so until March or April.
Finally, consider our step-by-step renewal process. We should have a documented process map that identifies every step, who is responsible, and benchmark calendar dates for major steps. In my experience, creating such a process map exposes inefficiencies or gaps that may be addressed. Can we take our convoluted 65-step process and get it down to 45 steps? Can we further streamline it down to 25 steps? How low can we go?
In summary, the best renewal is the one you don’t have to touch. The next best thing is to handle renewals at the right time. Finally, renewals are best handled through a streamlined, efficient process.
Now go forth.
Note: This blog post was first published by Landscape Management magazine. Subscribe here.
Tags: Contracts , Renewal Process , Long-term Agreements ,