Renewal number

Renewal number is the count of prior terms a contract has completed. First renewals run ten to twenty points below third renewals on most desks, because the customer is still deciding. A base with many new contracts has a lower blended renewal rate for that reason alone, so the rate is computed and compared within each renewal number.

How it is used

Each contract carries the count of prior terms it has completed. Renewal rates are computed and compared within each count, because first renewals behave differently.

Example

First renewals run at 85 percent and third renewals at 97. A base with many new contracts has a lower blended rate for that reason alone.

Where it goes wrong

A fast-growing base judged against a mature one on a blended rate.