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Think ahead with these 5 tips to improve the profitability of your contracts

September 27, 2023 -  By Neal Glatt

As maintenance contracts come to a close, many salespeople will be happy with a renewal sometime before the spring. But, your business loses immense value by not focusing on my five critical outcomes to closing out a contract.

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Here’s what to focus on as contracts conclude:

1. Defend business

Prevent clients from exploring other alternatives by securing renewals before contracts fully conclude. The pricing pressure from competitors, alternative contract structures or simply hearing other sales pitches could all mean trouble when you don’t secure contracts early. Defend your existing business by locking customers into a contract today.

2. Expand wallet share

Almost every client has opportunities for additional spending that not currently allocated to their primary contractor. It could be additional properties, additional services or even new services not considered before, such as augmenting holiday décor with interior seasonal planters. Now is the time to explore with clients how to expand the scope — and profit — of their contracts.

3. Save future time

Contract renewals always kick off some renegotiation, which can turn into lengthy conversations. That is why you should always pursue multiyear agreements to save time by skipping future annual negotiations. While a three-year performance period can be standard, options for additional renewal terms can lead to perpetual agreements.

4. Secure price increases

With an unpredictable economic future and continued rising costs, every contract should have price escalations built in to eliminate the need to adjust pricing. An annual price increase of at least 3 percent, or even as much as 10 percent, can be contractually agreed upon to secure future profits no matter the length of the contract term.

5. Get referrals

The easiest sale is always a referral, so salespeople should ask for them all the time, including when renewing contracts. While weak salespeople are content with renewals, the best salespeople know the only thing better than a renewal is securing two contracts from the same conversation!