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Contract Renewal Rate

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What is Contract Renewal Rate?

Contract Renewal Rate (CRR) is a metric that measures the percentage of contracts that are renewed by clients at the end of their term.

In the context of Professional Service Automation (PSA), it provides insights into client satisfaction, the quality of services delivered, and the overall health of the business-client relationship.

Importance of Contract Renewal Rate

A high CRR indicates that clients are satisfied with the services provided and choose to continue their partnership. This not only ensures consistent revenue but also reduces the costs associated with acquiring new clients.

On the other hand, a low CRR can signal potential issues in service delivery, client management, or pricing strategies.

Contract Renewal Rate

Why Contract Renewal Rate is so important?

How to Calculate Contract Renewal Rate?


Contract Renewal Rate (CRR) = (Number of Contracts Renewed / Total Number of Contracts Expiring) × 100


If a PSA firm had 80 contracts expiring in a month and 65 of those were renewed, the CRR would be:


Difference Between Contract Renewal Rate and Other Metrics

CRR is often confused with metrics like Customer Retention Rate (CRR) or Customer Churn Rate. While all these metrics provide insights into client relationships, they serve different purposes:

  • Customer Retention Rate: Measures the percentage of customers retained over a specific period.
  • Customer Churn Rate: Indicates the percentage of customers lost during a specific period.
  • Contract Renewal Rate: Focuses solely on the renewal of contracts, making it more specific to businesses operating on contract-based models, like those in PSA.
Metric Definition Importance in PSA
Contract Renewal Rate Percentage of contracts that are renewed after their initial term ends. Indicates customer satisfaction and the effectiveness of service delivery.
Utilization Rate Percentage of billable hours out of total working hours. Measures the efficiency of resource allocation and how well employees are utilized.
Project Margin Difference between project revenue and project cost, often expressed as %. Reflects the profitability of projects and the effectiveness of cost management.
Client Satisfaction Score A measure of how satisfied clients are with the services provided. Directly impacts client retention and can influence the likelihood of contract renewals.

How Contract Renewal Rate is Used in PSA?

In PSA, the CRR is crucial for:

1. Forecasting Revenue: A high CRR indicates consistent revenue streams.

2. Resource Allocation: Knowing the number of renewed contracts helps in allocating resources effectively. For instance, using tools like Gantt charts can aid in project planning.

3. Client Relationship Management: A low CRR can be a prompt to re-evaluate client relationships, perhaps by leveraging insights from Employee 360 or refining proposals using tools like the Proposal Builder.

4. Operational Efficiency: Streamlining processes, such as order-to-cash, can directly impact CRR by enhancing service delivery.

Ready to Optimize Contract Renewal Rate?

KEBS, as a leading PSA software, offers tools and insights to optimize CRR:

By integrating financial management software, businesses can ensure competitive pricing and accurate billing. Tools like timesheets ensure that projects are completed on time, leading to higher client satisfaction.

With KEBS deal management software, firms can craft compelling proposals, increasing the chances of contract renewals. KEBS ebook on PSA provides valuable insights into best practices, which can be implemented to improve CRR.

KEBS Project Management

By leveraging tools and insights from KEBS, businesses can optimize their CRR, ensuring sustained growth and profitability. Ready to take your CRR to the next level? Contact us or request a demo today!

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