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6 Reasons Your Customers Don’t Renew Medical Device Service Contracts – and How to Win Them Back

6 Reasons Your Customers Don’t Renew Medical Device Service Contracts – and How to Win Them Back

Do you currently have a significant number of customers that are out of warranty for their mission-critical medical equipment? Do you wonder why they decided not to renew their maintenance/service plan?

Bottom line, if your customer did not renew a service contract, they did not realize the value that your team has promised. Below you will find the top six reasons your customers choose not to renew their service contracts and how to win them back.

1. Your Service and Support Contracts Fail to Demonstrate Value:

A failure to demonstrate your service contract’s value frequently happens when you have reliable equipment that does not require service or maintenance before the service contract expires.

How to Consistently Demonstrate Value: 

Have Service Contract Marketing Documentation 

You can mitigate this risk and show value ensures that your contract marketing documentation includes all services provided. Some examples of what to provide could include: 

  • Firmware and software updates 
  • Services available only to contract customers (or to non-customers at a premium cost). These services can include priority telephone response vs. enhanced response for a higher price. 
  • Priority parts availability  
  • Rapid on-site response times for unscheduled service/maintenance support. 

Develop a Roadmap for Your Marketing Documentation 

Developing a detailed roadmap will help your customers understand developments within your product suite and planned future investments. Because products have lifecycles, a roadmap will also enable customers to know when to come back and buy new from you when it’s required. 

2. Competition (third party) Offers Similar Contract at a Lower Cost:  

When customers’ expectations are met, they purchase based on price. When customers’ expectations are exceeded, they are buying based on value. If you are not regularly demonstrating the value your company brings, customer loyalty will eventually start to subside.  

How to Consistently Demonstrate Value: 

Build a customer success strategy 

We recommend focusing your energies on consistently engaging with your customers with a robust customer success strategy to avoid this dilemma. By engaging with and tracking the voice of your customers with regular health checks, you will be able to learn and quickly remedy dissatisfaction and churn risks.   

Keep Close Tabs on Your Competition – and Partners 

Are you paying close attention to what your local and global competitors are doing in the space? Staying on top of your competitors will help your business remain competitive and help you improve both your processes, sales campaigns, and product development. Additionally, depending on your unique asset space, one of the biggest competitors will be your partners. Keeping a close watch on deals set to expire and letting your partners know when they are at risk of losing entitlement over renewal deals will help keep them accountable and proactive.

3. You’re Not Easy to DBusiness With: 

Customers buy from you because they hope to relieve a pain point. They rely on your service and support departments to provide peace of mind and manage the resolution process if your equipment breaks down or they experience any issues. If your team is not taking full responsibility for quickly solving their problems or the resolution path is full of friction points, they will inevitably go to your competition for a better experience.  

How to Consistently Demonstrate Value: 

Assign a Rep for Follow-up Surveys  

Not knowing your processes’ pain points is another scenario where having a robust customer success program and tracking the voice of the customer will help to mitigate clunky processes and an unsatisfactory support experience quickly. Performing these consistent check-ins and post-service surveys with your customer will ensure that your support operation is seamless and that people provide an excellent customer experience.  

Regularly Assess Your Service and Support Processes  

How well do you know if your replacement part or support infrastructure is a value add or hindering your customer experience? Doing a regular assessment of your service escalation tree or support hotline will ensure nothing becomes outdated or causes friction for your customers.  

Have Clean, Relevant Data 

Customer and product usage data can quickly become outdated, inconsistent, and – frankly, wrong. The old saying goes, “you can’t improve what you don’t measure.” It should be “you can’t improve what you don’t measure correctly.” Have strict policies around data gathering and cleansing to ensure that you base your communications, processes, and product development decisions around the correct insights.   

4. Not Meeting Expectations Around Equipment Uptime:  

When your customers buy a piece of equipment from you, they expect it to run without issue for at least the foreseeable future. Plus, the person recommending your business is putting their job on the line. They protect themselves by signing up for a service and support contract. If you do not help meet their expectations, they will go to your competition. 

How to Consistently Demonstrate Value: 

Include an agreement on uptime expectations 

Your contracts should always include an agreement on uptime expectations. If your customers are putting the CAPEX up for a new or refurbished piece of equipment, and you are touting a 97% uptime, you should be able to meet it. Parts inevitably wear down and break. When this happens, take the responsibility to find the root cause to come to a solution as quickly as possible.  

Go Above and Beyond to Ensure Your Customer is Successful  

When you’re constructing your contracts, terms, conditions, and deliverables, keep in mind that exceeding these agreed-upon terms measures your customer’s success, and ultimately, your success. If you can’t get a field technician to your customer’s facility or equipment operating within the agreed-upon timeframe, have backup incentives for the customer to ease the pain of operational downtime, such as rebates or parts discounts. 

5. You Did Not Deliver on the Ultimate Value Prop – Peace of Mind:  

A loss of confidence is tough to overcome but can be done. A loss of confidence can come in various ways, like unexpected expenditures, excessive equipment downtime, or friction with customer support representatives. 

How to Consistently Demonstrate Value: 

Have Documented Escalation and Resolution Plans 

It’s paramount that customer risk is escalated and mitigated as quickly as possible. Unless you learn where, why, and how your team dropped the ball, you will not be able to ensure it doesn’t happen again. 

Utilize Customer Sentiment Analysis to Detect Risk Earlier 

Use a customer sentiment analysis to gauge customer health whenever you perform a service. By utilizing a green, yellow, and red methodology, your team can immediately assess if a customer is dissatisfied or frustrated. Have a dedicated escalation plan in place if a customer becomes at risk – or yellow, in this case. In the unlikely case that this at-risk customer relationship becomes critical – or red, we recommend interviewing your customer to determine the root cause of frustration and loss of confidence. This generally requires an “all hands on deck” scenario to do everything in our power to get the customer in the green. 

6. The Customer Just Forgot to Renew, or It Is Not a Priority for Their Team: 

We’ve all been there before: a manufacturer’s warranty on a product expires, and you don’t even think to renew the contract. Even if your team has reached out, it may not be top of mind for your customer.  

How to Consistently Demonstrate Value: 

Ensure They Know the Risks of a Non-Renewal 

Compliance is one thing your customers do not want to worry about, especially when it comes to non-compliant equipment. If your customer decides not to renew, ensure they know that they choose to incur all the risks financially and operationally if their equipment malfunctions or does not have the latest software updates. Also, make sure your customer knows the cost of replacing the hardware versus the renewal cost, especially if you factor in the price of labor and time.  

Implement Reinstatement and Penalty Fees  

Make reinstatement and penalty fees for non-renewals expensive. Your customer must know about these fees upfront. Otherwise, if your customer renews a week late and experiences those fees, they will likely not be a customer for life.  

Reach Out to Customers Well in Advance of a Renewal 

Ensure your team reaches out at least 90 days in advance (DIA) of a renewal. At 90 days, your customer will not only be made aware that their equipment is approaching out of warranty but will be able to put all the pieces in place, such as financing, to ensure a smooth and on-time renewal.  

Treat the Customer as You Would Like to Be Treated 

It’s your business’s responsibility to deliver on your promises. It’s like the old saying, “do to others as you would like done unto yourself.” If your team does not deliver on your promise, take responsibility, and do what you want someone to do for you.  

If you are experiencing stagnant growth of your service/maintenance contracts, you can either make it an internal priority to create a plan and execute it. Otherwise, outsourcing your renewals efforts (especially for the long-tail segment) is an excellent way to reach the outcomes you desire cost-effectively. Outsourcing ensures that you’re getting the top talent to handle your customer renewal relationships from the start. Talk with one of our renewals experts today 

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