In just the first four months of 2023, high-profile technology brands laid off nearly 170,000 employees. Now, the next cohort in line for the shock of the downturn is the B2B technology vendors whose products and services keep those high-profile tech brands running. Contracts are up for renewal, and renewal decisions will be heavily scrutinized. It’s going to be a bumpy ride, especially for mid-market companies whose pockets aren’t as deep as their enterprise counterparts.
When times are good, many B2B products are considered mission-critical. This year, as many businesses’ ambitions and forecasts recede, and their goals pivot, that term rings hollow. Value is now measured carefully against changing business goals.
As a SaaS vendor, you might be considering aggressive discounting, or cutting your own costs to the bone. In the long-term, however, these approaches can lock a mid-market business, whose brand is less established, into a race to the bottom. In my experience as CEO of ChurnZero, which helps subscription businesses grow by keeping their customers, the right approach for mid-market vendors is to become “stickier” by working with customers to realize the value they need and solve the new challenges they face.
In the best of times, it takes a lot to save accounts that are at risk of churning. When the risk is widespread, and customers’ emotions are running high both personally and organizationally, it takes far more.
These three strategies will help you save your accounts. When executed with a spirit of partnership and empathy, plenty of hard work, and a little improvisation, you can keep more of the customers on whom your future growth depends.
Become Your Customers’ Coach When Their Goals Change
I spent the (awful) weekend of the Silicon Valley Bank (SVB) bank run thinking about a mitigation plan for our customers who used SVB. We would need to assume they had no money, and that their organizational goals had changed to simply surviving. How would we work with them to help them stay afloat?
Unlike a bank run, the shock of a recession occurs over months, but it’s equally likely to change the goals that your customers had when they signed with you. It’s essential to understand those changes and partner with your customers as they adapt to them. That starts with your customer-facing people asking one question: How is the economy affecting your goals, and have any of your goals changed? Outside of a downturn, when everyone has resources, it’s not a question that people ask. Today, it’s the key to saving many accounts.
For example: say you have a client whose initial goal was to expand their own customer accounts. When asking the above question, however, you discover that their new goal is to save money and be more efficient. That’s your cue to help them adapt. Can you provide them with value from a different part of your product? Do you have automation or AI capabilities that can save them time and money? If your automation and AI can save 20% of their time, you can take one-fifth of their busywork away.
As a mid-market vendor facing the same headwinds as your customers, you’ll frequently find that their new challenges and priorities mirror your own. Leverage this vantage point. You’re already looking for “better, faster, cheaper” in your own operations, so apply the same perspective to your customers’ needs. Lead with product features that offer speed, efficiency, and scale, and prepare to accelerate your customers’ adoption of them through digital education or one-to-one coaching to make the customer self-sufficient in their use of your products as quickly as you can.
Address Underutilization Before Your Customers Do
According to G2, 30% of business software subscriptions are idle or underutilized. Outside of a downturn, that’s embarrassing but largely harmless. Now, though, these mistakes feel bigger and tougher to your customers, and right now, they are hunting down every non-essential software application.
For your disengaged customers, you need to get to them before they act, with your own plan of action. These customers might be unhappy, but everyone appreciates a vendor who shows up to offer a solution.
On every customer call, ensure that your customer-facing team brings empathy. Approach these meetings as second discovery conversations. Look to understand your end-users’ worries and their organizations’ concerns. Listen carefully, read between the lines, and ask follow-up questions before you suggest the solution.
The right solution will be different for each customer, but you can predict what they might need in advance by paying attention to your product usage data. A good-fit customer who’s six weeks behind on product adoption can be brought back on track with extra onboarding or digital education, for example. An account that’s fallen behind for six months, however, might need extra services or a discount to save the relationship. In a downturn, holes like these are bigger and harder to crawl out of.
Partner With Your End-Users to Influence Renewal Decisions
Even when your product is well-adopted and delivering value, renewals become more uncertain in a downturn because every purchase is scrutinized more heavily. This year, your customers’ controllers, CFOs, and even CEOs might need to approve contracts — which means that your end-users need to get better at conveying your value to the decision-makers. You can help them in two ways.
The first is through relationships and reporting. Your customer-facing people should map out the tree of decision-makers at your customer’s company, and work with your end user to engage and influence them. Get hands-on setting up and customizing your customers’ reporting to communicate its full value. Coach your end-users on the tough questions that their leaders will ask — and offer to join those meetings.
Second, revisit your product roadmap through the end of this year. If you can speed up any enhancements that add value for leaders and decision-makers, now is the time. If your product is tied to revenue, for example, can you create a custom dashboard for CFOs? If your product is for customer success teams but surfaces new business opportunities incidentally, can you build a CRM integration that keeps you top-of-mind with your customer’s head of sales?
Build these enhancements to work with the platforms that decision-makers use on a daily basis. The average business uses 88 apps and I, for one, want to log into as few of them as possible.
Where Should You Start? Focus on Your Best-Fit Customers.
The customer engagements I’ve outlined above require significant time and resources, especially for mid-market vendors who are already running lean. If your product usage data indicates distress across your entire customer base, focus on your best-fitting customers first and foremost.
Cross-reference your historical and real-time data. Which industries, or sizes of companies, tend to achieve the most with your product? Which cohorts are hardest hit by the current environment? Update your customer health scores accordingly and go where the data points you. While it’s tempting to spread your resources evenly, it’s more effective to focus on the customers most likely to succeed.
Once you’ve identified them, don’t wait to put your plan into action. The longer you delay, the harder your accounts become to save. Conversely, the earlier you act, the better. In getting to these situations before your customers do — especially if you’ve noticed the problem before they have — you transcend the vendor relationship to become a partner, one that your customers may just go the extra mile to save.