Combining expansion booking with a renewal

Smart CRM & Sales Hub Dashboards & Reporting
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Hi all,

Edit - we’re Saas, annual term, one product company

I’m curious how you all are tracking expansion bookings when they’re aligned with a renewal. We’ve got two funnels (new bookings and renewals) and IMO it’s best for reporting to have two deals: one expansion deal in the new booking funnel and one renewal deal in the renewal funnel. This concept can be extended to other deal types (mid term upsells, price increases, etc.) or even to a third expansion funnel. Are there any alternatives that have one combined renewal + expansion deal? I’ve got an idea (different amount fields within the deal) but given HS’s reporting framework, it would require special reporting (custom fields or external reporting) to give me a simple total of new bookings (incl. expansion). What other options have you all considered? Different product types?

Thanks!

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Hi @sales,

Thank you for reaching out to the Community!

I wanted to tag in a couple of subject matter experts to see if they have any input on this matter:

hi @Josh, @warrendavey, @KTownsend, @StefaniUAT, do you have any advice for @sales? Thank you!

Cheers
Mia, Community Team

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@MiaSrebrnjak can you help to nudge some responses on this? I’m curious too!

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I’ll be glad to ask a couple of other subject matter experts for advice, thank you for the tag @emphills!

Hi @Phil_Vallender, @JonPayne, @HubDoPete, @jfreeman, @natejoens, what do you think is the best way to manage upsells in HubSpot (when they’re aligned with a renewal)? Thank you for your input!

Cheers
Mia, Community Team

5

Hi!

(Thanks for the tag @MiaSrebrnjak )
Can you confirm/clarify that when you say “expansion” you mean a renewal that includes additional or upgraded items?

If that’s the case I would probably continue using the 2 deal pipelines you already have and add this as a deal in the “Renewals” pipe.

Are you already utilizing “Products” in your deals? Or just adding a single deal “amount” to build your price?

This may be too convoluted, but if you’re using products, maybe consider getting creative with how you build and name them to give you options to choose the same line items, but with different names…for instance…

“Item 1” and,

“Item 1 as expansion”.

When you build your renewal+ deal you can choose the “Item 1 as expansion” line item which would allow you to use “line items” in the Custom Report Builder to potentially get a view of the data you’re looking to report on.

May not work for your needs. But, maybe that helps spark some other creative solutions.

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Hi,
Wondering if you would have an example of how this might work please?
I’m happy to build out our product area of this will help the upsell report accurately but I’m not quite getting my head round how this would work. Grateful for any examples you could share with me! Thanks.

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Thanks for the quick response @jfreeman
To clarify, by expansion i mean an add on deal.
for eg. imagine an initial deal is closed for $100k. THEN 6mths through an annual contract, the customer wants to increase their licenses purchased by 25k (50k annual spend, but it’s the mid point of the year, so pro-rated to 25k). The new renewal deal should now have a target value of $150k. The in year bookings are $100k (original deal) + $25k (mid-year add-on) = $125k.
Do all these deals need to be distinct: 1) original new deal 2) add on deal 3) renewal deal.
If yes, is there a way to associate the add on deal with the original deal OR the renewal deal so the new target renewal amount is easy to identify? We do not use the Product functionality to my knowledge…

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I’m going to answer my own question here as our VP Sales had a strong preference for a renewal deal that “shows everything in just one deal” and I needed to deploy a solution ASAP.

We have two funnels: sales and renewals

sales now has: new bookings and pro-rated upsells/expansions

renewals now has: renewal deals including any price changes

Renewal deals are configured with a “Client ARR” value that reflects their ARR prior to starting the renewal process (~90 days out). This value is maintained by the CSM. EG if an upsell/expansion is added after their initial contract, the ARR from this pro-rated deal is added to the the Client ARR value in the renewal.

Here’s the fun part: As the renewal negotiation is taking place, the deal amount is updated to reflect ANY change to ARR - 3 or 5% price increase, expansion seat, or downgrade. Two calculated fields (one for expansion and one for contraction) are used to calculate either upward or downward revisions from the Client ARR: 1) Deal amount - Client ARR = expansion OR 2) Client ARR - Deal amount = downgrade depending if Client ARR or Deal amount is larger. So now I have three “amount” values for each renewal: renewal amount (what i expect to see / actually close), Client ARR (going into the renewal), and the difference between them (up or down).

Now to report on a few KPIs:

New ARR = all new deals in the sales funnel

Expansion ARR = expansion deals from the sales funnel + expansion amount from renewal funnel

Contraction ARR = downgrade amount from renewal funnel

Quota achievement for AEs (aka their Bookings) = all their sales funnel deals + deal split from renewal funnel (certain upsell deals are credited to AEs)

Total Bookings = total from sales funnel + expansion amount from renewal funnel (tragically these are separate reports)

So that’s how it works for us. I’m not sure that I’d recommend it to everyone as it has pros and cons:

Pros:

- Easier to make sense of a client journey → fewer deals to interpret and all renewal related info is in each renewal deal

- should make it easier for accounting to invoice clients (we use saasoptics so deals are pushed automatically)

Cons:

- reporting is more difficult → standard reports can’t generate bookings by rep (have to use deal splits), total bookings and total expansion can’t be totalled inside HS, the deal board/kanban view doesn’t reflect total quota achievement for AEs (sum at bottom of closed won stage)

We’re only a few weeks in… time will tell whether the pros outweigh the cons! Hope this helps others consider their options.

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Thank you so much @sales for sharing the strategy you decided to go with. This is very valuable advice, I hope the pros will outweigh the cons in the end!

Cheers
Mia, Community Team

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Hi @sales thank you for the detailed notes. We have similar process - using SaaSopcitcs - but can’t figure out how you recreate deals?

Let’s say you close the deal which sits in sales pipeline - closed won. Then assuming new deal is recreated in renewal pipeline and once comes to renewal date customer upsells or expand the contract. How do you react on the current deal in renewal pipeline (recurring inactive reason is upgrade?) and where do you recreate a deal (sales pipeline - again to closed won stage with new amount)

Thanks!
Matic

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How is this working for you a couple quarters in?

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We’ve built a Recipe to handle Renewals. A Recipe is a small process that you can install in your HubSpot portal. This doesn’t require any third-party tool.
Here’s a video of how it works:

louischausse_0-1709664022069.gif

Watch the video!

Renewal deals are created automatically for each closed-won deals with a known contract end date. Then, a task is generated with a reminder date XX days before that contract end date to notify the deal owner (or another user of your choice) that the renewal is coming soon.

Other settings and configurations are also available to suit your use case.

If you are interested, we can have a chat to setup this recipe on your HubSpot portal.

Learn more here