A Framework for Winning Renewal Messaging? Research Says Yes.

By Tim Riesterer, Chief Strategy Officer

February 10, 2017

 

Provocative messaging works wonders…except when it doesn’t.

Among the exceptional scenarios, it turns out, are renewals—a selling situation where marketers and sales pros need to have a compelling answer to the question that’s top of mind for your customers: “why stay?”

When you’re the outsider trying to move buyers off their current situation, a disruptive message is gold—our own research proves it. But a recent Corporate Visions study revealed that provocative messaging isn’t universally applicable. In fact, when you’re the incumbent and trying to secure a renewal contract, this messaging approach could actually backfire.

Corporate Visions teamed up once again with Dr. Zakary Tormala, a social psychologist with expertise in messaging and social influence, to build on that study’s main finding, i.e. that reinforcing the causes of the “status quo bias”—preference stability, anticipated blame/regret, perceived cost of change and selection difficulty—gives you a statistically significant advantage across several areas critical to winning renewals.

Here’s the question we set out to answer in the follow-up study: Is there a specific messaging framework that’s best suited to reinforcing the status quo bias and encouraging customers to renew with you?

Turns out, there is.

Taken together, the studies confirm that you need to reinforce the four causes of the status quo bias, below, to tell the most compelling renewal story:

  • Preference stability – When our preferences are stable, the decisions informed by those preferences are likely to remain stable too. To reinforce this cause of the status quo bias, you need to remind customers of the long, hard process they went through to make their original buying decision. This reinforces their natural inclination to keep preferences—and by extension, our decisions—stable.
  • Anticipated regret and blame – Humans anticipate regret and blame before it actually happens, and this can be a significant impediment to change. You can message to this natural anxiety by reminding customers of the time and resources it’s taken to ramp up the solution they purchased, onboard their people, manage the changes, and get the implementation running smoothly. Making another change exposes them to all these potential failure points, which they could get blamed for.
  • Perceived cost of change – To the human mind, change is riskier and more costly than staying the course, and you need to reinforce that in your renewal message. To do so, you need to walk customers through the startup costs that have been returned through improved performance and are now functionally part of the ongoing operating budget. People tend to believe change costs more than staying the same. You need to confirm that.
  • Selection difficulty – Selection difficulty refers to the idea that making the choice to change is significantly harder to do when the decider sees little difference between the current situation and an alternative change scenario. To take advantage of this cause of the status quo bias in your message, you should willingly admit that most other solutions on the market provide a similar set of capabilities, that the offerings haven’t significantly changed since their original purchase, and that you’ve kept customers apprised of changes in the market throughout the span of your partnership. People are far less likely to consider change if they don’t see contrast between alternatives.

The overall pattern of findings reveals that documenting results at the outset of your message (before trying to affirm that you, and continue to be, the right choice) and providing more explicit detail about your progress (as opposed to less) will give you significant messaging advantages in the areas of:

  • Minimizing switching intentions;
  • Increasing willingness to pay;
  • Improving trust; and
  • Enhancing perceptions of quality

For an in-depth look at the study’s findings, check out the research brief.

Below is the basic message framework of the winning condition in the study, which tested four different renewal messages (varying in structure and level of detail) aimed at convincing business partners to remain with their current 401k provider. The parts of the framework correspond to the four causes of the status quo, mentioned above, which the renewal message sets out to reinforce.

Winning Condition

Document ResultsYou have made great progress on your goals over these last two years. You’ve seen 401k participation grow from 20 percent to 50 percent. Your employee satisfaction scores are up, and you’ve said some employees have even taken the time to thank you for the changes you’ve made. In addition, your employee retention rates have started to improve, which you said was the ultimate goal of making these changes.

Stabilize preferences – When you signed up two years ago, you really did your homework and looked at a lot of options before getting your entire team to come to a consensus and choose our company. It was a long process that involved a lot of people, but you ultimately arrived at a big decision to bring this program on board.

Anticipate Regret/Blame – As you look at making a renewal decision, it’s important to realize that you are at a critical point in this journey and that it’s important to maintain momentum to achieve your ultimate participation and retention goals. Any change to the program at this point could create an unnecessary risk of losing the positive gains you’ve made.

Mention Perceived Cost of Change – Not to mention that bringing in another vendor would require you to invest time in getting them up to speed and money on implementation costs and other changes that you won’t have to spend if you continue working with us.

Reinforce Selection Difficulty – We’ve also continued to update and tweak your program over the last two years to make sure you are keeping pace with anything else available in the market today. Specifically, you will get two new features designed to help improve your goals of employee participation and satisfaction:

The first is a monthly report that shows how many tax dollars your 401k participants saved versus those who aren’t in the 401k. You can share this with your employees monthly to provide a gentle nudge to get into the program for the tax benefits. Second, we’ve also added a new smartphone app with retirement planning calculators and budgeting tools to help your employees make more informed decisions, and feel like they’re making progress on their goals.

You’re making great progress. Stick with our program for another two years, and I know you’ll get to your 80% participation goal and further increase your employee retention rates.

 

 

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