The small and medium-sized business (SMB) cloud market continues to grow rapidly. Internal projections, informed by IDC market trends, estimate that the SMB cloud market will reach $777 billion1 in FY26. A significant share of customer renewals occur in Microsoft Q3, making now a critical moment for Cloud Solution Provider (CSP) partners to prepare and act with intention.
Renewals are integral to that growth because they protect recurring revenue, deepen account relationships, and create natural opportunities to expand service and solution offerings through upsell. When approached strategically, renewals can allow partners to address customers’ evolving business needs while introducing modern security and AI capabilities that drive additional value across the account.
Microsoft internal data shows that on-time renewals drive 20% more revenue than late renewals. When a subscription lapses, partners risk revenue contraction and missed opportunities to introduce new capabilities. Renewals are no longer routine; they are strategic, and strong outcomes can result from starting conversations early and engaging customers well before a contract approaches its expiration date.
The Partner Guidance Deck provides a clear framework for driving CSP renewals, including sales guidance for hero scenarios and key investments and levers available to maximize the moment. When you connect renewal cycles with the right mix of secure AI productivity solutions, you can create long-term account value and build momentum across your AI Business Solutions practice.
Why timely renewals matter
A proactive renewal motion offers several advantages.
Protecting revenue begins with outreach 90 days or more before the expiration date. Partners who engage early can see higher retention and stronger upsell outcomes. Late renewals often lead to seat reductions or competitive pressure.
Renewal conversations also provide a natural moment to introduce advanced security or AI capabilities, such as Microsoft 365 Copilot. These solutions build on customers’ existing investments, making them cost-effective and easy to deploy, while addressing critical priorities such as continuity, compliance, and productivity.
A Forrester study found that partners evolving their security services with smarter, more flexible AI-driven solutions expect up to 20% revenue growth year over year.2 This highlights the opportunity to pair renewals with innovative solutions such as advanced security or AI capabilities so that customers can work securely and efficiently while realizing value from their AI investments.
For customers, renewing on time supports uninterrupted service, ongoing compliance, and a stronger foundation for modernization.
Treat renewals with the same urgency and structure as net-new sales. Starting three months ahead sets the foundation for growth.
Four steps to drive on-time renewals
Successful CSP partners take a disciplined approach to renewals. These steps form a clear motion.
- Leverage data to target efforts. Microsoft CloudAscent provides insights into where to focus outreach, highlighting customers with growth potential or high propensity signals. If it identifies rising demand for security, bring a security specialist into the renewal conversation and frame the quote around advanced protection.
Additionally, by the end of January, the AI Business Solutions and Security Insights report in Partner Center (ASPX) will introduce several exciting features for CSPs:
- Propensity, targeting, and usage data will be accessible for Secure Productivity workloads and B-SKUs, including SMB customer tenants.
- CSPs will be able to find the largest and earliest seat customer renewal dates.
- Distributors will have the capability to identify which reseller is associated with their customers.
These capabilities in ASPX will be critical for supporting partners’ continuous engagement with customers, including driving CSP renewals.
- Bundle value in every renewal. Treat renewals as an opportunity to solve a broader customer Introduce integrated secure AI productivity solutions that strengthen collaboration, protection, and productivity across the organization.
- Automate and streamline. Copilot prompts reduce administrative time. Partners can use Copilot to summarize renewal histories, highlight customer usage patterns, and draft personalized outreach messages.
- Track KPIs and refine. Renewals work well as a managed motion. Track renewal rates and upsell rates to understand where the process is effective, and leverage Net Paid Seat Adds reporting, which shows which accounts are expanding and guides where to adjust your approach.
New CSP offers that accelerate upsells
Renewals are an ideal moment to introduce offers designed for SMBs.
- Microsoft 365 Copilot Business brings AI-powered productivity capabilities to SMB customers. For guidance, refer to the Copilot Business SKUs announcement and launch kit.
- Multiyear terms give customers predictable pricing and long-term value. Microsoft 365 E3 and E5 now offer 36-month CSP subscriptions, including a 10% promotion for new customers on three-year terms.
- Pricing and packaging updates planned for FY27 provide an additional incentive to accelerate earlier renewals and upsells for new and existing customers. Starting April 1, 2026, the grace period for non-renewed subscriptions will end, and any subscription with auto-renew turned off will transition to an Extended Service Term (EST) at expiration, billed monthly at the current term price plus a small uplift. Renewing before April 1 helps avoid these added costs and provides uninterrupted service for customers.
- Current promotions include 15% off Copilot licenses through June 30, 2026, 20% off Microsoft 365 E3 targeted promotion, and 50% off E5 Compliance add-ons for customers adopting Copilot.
- Security remains a priority across the SMB space. A 15% discount for first-time E5 customers also runs through June 30, 2026. Partners can use the to structure offers and ensure customers receive the right level of value.
Cloud & AI Platforms renewal and upsell opportunities
Beyond Microsoft 365, partners can expand value through Azure and Microsoft Marketplace motions. Publishing Azure-based solutions in Marketplace creates opportunities for co-sell and multiparty engagements.
Azure VMware Solution licensing changes went into effect on October 16, 2025. Customers must now bring their own VMware Cloud Foundation subscriptions, making this an important moment to guide modernization discussions.
Azure Accelerate provides funding, technical resources, and expert guidance that can drive cloud adoption and AI transformation.
You can also expand Azure migrations with advanced security offerings using Microsoft Defender and Purview Suite. These solutions can strengthen protection and compliance across customer environments and position you for broader security conversations. for broader security conversations.
Moving renewal season forward
Renewal season is an opportunity to strengthen your business and deepen customer relationships. As our enterprise commerce strategies evolve, you are positioned to deliver the solutions and outcomes customers want, combining expertise with value-added services that drive long-term value.
Start by accessing the Accelerate CSP renewals campaign for direct and indirect providers, Microsoft CloudAscent and ASPX, and engage customers early so you can bring added value into renewal conversations.
Follow our CSP partners discussion board for both direct bill and indirect resellers to collaborate, troubleshoot, and stay informed on the latest developments in the CSP ecosystem.
1 Throughout this document, $ refers to US dollar (USD).
2 Total Economic Impact™ (TEI) study conducted by Forrester Consulting, commissioned by Microsoft, "The Partner Opportunity For Microsoft Security Partners," November 2025.