What would you do if the customers you have now were your

WHAT IF THE CUSTOMERS YOU HAVE NOW WERE YOUR ONLY CUSTOMERS? ?

Let's say for the remainder of 2020, you weren't able to acquire new customers.

What would you do differently?

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Comments

Anita Toth

I totally get that. Many companies are in the same position. When covid hit, we all thought the pricing changes/plan adjustments were going to be very temporary. With the uncertainty is still around but we have a better idea of how it's impacted people, many businesses are revisiting their earlier changes. I'm sure there's a lot of speculation happening right now as to what Q1 and Q2 of 2021 will look like and how to prep for it.

Brian Hartley

Nothing official yet but I am going to recommend we re-evaluate at the conclusion of this year. We want to remain sensitive to customer needs but we also need to protect our business interests.

Anita Toth

@Mike Gospe I wouldn't have expected any less than the amazing response you just gave. Wow!

I agree that it's time to focus outward instead of the tendency to focus inward when things are tough. Sales are important but not as important as looking after those customers you already have. We're innately wired to help each other. When we do, amazing things happen. And, yes, as things change companies that have chosen to be supportive of their customers will be in a better position coming out of this.

Thank you so much for this response Mike! ?

Mike Gospe

Hi Anita,

Indeed, this is a very relevant and critical question. I've been poising this question to my clients and community groups for a while now. It's a hard question that is very uncomfortable.

Here's my take: Unless your are FAANG (Facebook, Apple, Amazon, Netflix, Google) and a few other lucky companies, you will not make your quarterly or annual numbers. Even those lucky enough to be in the cloud space who saw an uptick in Q1 and Q2 as their customers accelerated their digital transformation programs have told me (via my Customer Advisory and Partner Advisory Board programs -- which are all being run virtually now) that they are deeply concerned about Q3 and Q4 and 2021.

So, for the rest of 2020 here's the choice. Do you:

a) Embrace aggressive marketing and sales tactics to push for revenue in the final weeks of the quarter/year?

or b) Transition your organization to help your clients survive the crisis?

I'm seeing a lot of companies push for (a) and it's not pretty. I'm seeing stressed executives fighting each other; blame being pushed on sales teams; and non-marketing departments browbeating their CMO thinking they can do his/her job better. (They can't.) The worse the numbers get, the worse the internal behavior becomes. The problem here is that this approach will not, and cannot work in today's COVID environment. Company leaders that think their business model is independent of our global situation are doing themselves and their companies and customers a grave disservice. The hard truth is you will not make your numbers. To survive you must get comfortable with this discomfort. Stop pushing. Find a different path. Given that humans have limited number of time and energy, I advocate that there is a better way to weather the storm.

Choice (b) offers a better path. I've been a professional CAB facilitator for 20 years. I started my practice after 9/11 (a crummy time to start a new business, for sure), and I paid attention to the mortgage meltdown crisis in 2008. While COVID is completely different from these other eras, human behavior is a constant. After 9/11 and 2008, many companies cut marketing and customer advocacy programs. They pushed sales. And when the results didn't come in, they laid off lots of sales, marketing, and customer support folks. Human behavior makes it comfortable to push the status quo even if we instinctively know it will not work.

But, not all companies did that. Some made the hard choice to keep their Customer and Partner Advisory Board going (even if in a reduced capacity). This allowed them to keep the customer dialog going. Executive leaders across the company exhibited signs of empathy. They asked their clients how they could help.

It was understood (and uncomfortably agreed upon) that revenue targets would be missed. They adjusted their plans and compensation models. Some issued temporary wage cuts so they didn't have to lay off staff. They pivoted from driving sales to helping their customers. And this is happening in places today, too. I've seen companies offering "health check" services and other professional services for free. "What can we do to help you?" They are not asking for money. "Let's figure out how to help you today. Don't worry about money. We'll figure that out later." Some companies have bolstered their customer success programs and created cross-functional pods that focus on a few selected customers to offer leadership, advice, and service. For example, they put together new Zoom training modules, offered partner incentives with less-restrictive payment terms, and they are sponsoring peer group happy hours with their customers so they (the customers) can share stories and best practices with each other. I've been told at least 3 times by 3 different companies how well the happy hour sharing model is working. It's a powerful form of therapy and camaraderie. This type of interaction is driving a new level of advocacy.

None of choice (b) adds immediate revenue today. However, I guarantee you that it will accelerate revenue tomorrow. I know this because it happened after 9/11 and 2008. Customers are hurting (hey, we all are). They are hoping their key vendors will forego the push for money, if only for a short while, to offer assistance and thought leadership today. Those companies that do will strengthen their relationship with these customers. It's easy to be of service to customers when times are good. It is much harder when times are tough. But these are the times that truly define a company, their brand, and their culture. I've heard customers respond to their vendors, "You now have a customer for life! Thank you!"

So, what will you do if your current customers are your only customers for the rest of 2020?

Anita Toth

These are great points to add @Andy Barton. As someone who does customer feedback research, I'm 100% in on your first suggestion -- focus in on that customer feedback. If time (or resources allow), it sometimes is helpful to dig into the recent past and have a look through a new lens at feedback collected 9 months ago, pre-covid. There might be some golden nuggets.

And your #2 point around segmentation is spot on--looking at ARR and short-term growth. There might be a certain group of accounts that is more at risk right now but that is usually quite fine. I think those types of accounts bubbled to the surface early on in the pandemic but now that things have settled, other risk factors might be in play. Certainly worth keeping an open eye to these.

Thanks for sharing these @Andy Barton.

Anita Toth

@Mike Gospe Care to weigh in on this question? ?

Anita Toth

I think for most companies the ability to change payment terms (or offering new plans etc), is what is most helpful right now. But it certainly is a balancing act between good for the customers and good for business.

If you don't mind me answering @Brian Hartley, has your exec team put time limits this flexibility around payments?

Brian Hartley

Flexibility on payment terms, ability to discount (last resort), payment deferrals, etc. Trying to make it as painless as possible while also trying to protect our business interests .

Anita Toth

Thanks for sharing this @Shari Srebnick. It's always a good thing to focus on those high value activities. Just when things get busy (or a bit turned upside down), it's hard to remember that those are the activities that will really move the needle forward. Just like with exercise or letting your diet slip, the faster you can get back on track, the better it is for everyone. ?

I've really enjoyed reading what you've shared.

Anita Toth

Great to hear you have executive support @Brian Hartley. Makes such a difference. Are you finding there's a certain place that flexibility comes in handy? Like a specific use case that really stands out?

Andy Barton

@Anita Toth ... interesting Q and can be a scary scenario. I hope the customer base is big enough so you can draw confident conclusions on reasons for historical churn, and potentially even growth. @Brian Hartley @Shari Srebnick mention a few key things that I would also do.

Customer Experience (for all customers) - Laser focus on all feedback from all channels. Remove all admin and operational friction (contracts, how customer collaborates with vendor etc)
Customer Segmentation - I would consider resegmenting the customer base by ARR and Short Term growth potential. I would keep focus on growth potential and avoid a mindset of renewal at all cost.
Renewal process - Start the renewal process earlier. Many advantages to gauge real health and sentiment. This will in turn allow for many different actions, including price,
Success Plans - Insure they have Business Outcomes defined. However I wouldn't spend too much time trying to define them on accounts that are low ARR with low growth potential as they are likely not to have the appetite/time/skills to understand ROI/Outcomes enough to get vendor the value.

lots more thoughts.. hopefully others will chime in.
Andy

Shari Srebnick

Thanks guys!

@Anita Toth - The opportunities we found, in many cases, came from the way we have changed our pricing and packaging. Prior to the change, our Professional Services were separate contracts from the technology, and that is mostly because of the way we recognize the revenue. Also, contract lengths were different. With the new model, everything is rolled up into one contract. So for those clients who we had annual ProServ contracts with, we moved them over to the new system - this resulted in what on the books is an upgrade, though their contract value didn't change.

As far as the high value activities, it never hurts to reset your focus on the things that matter: Account Planning, Joint Success Planning, Business Reviews, etc.. Being able to speak to goals achieved and ROI, especially with Execs, goes a long way.

Brian Hartley

Great question! Great call-outs by @Shari Srebnick . We, too, are spending time listening and triaging customer feedback more diligently than ever. For us it is using Gong and Salesforce Inbox to get out in front of potential churn (i.e. frustrated customer, feature ideas, contract concerns, etc). Our leadership team has given us the tools to be as flexible as possible when it comes to retention and renewals.

Anita Toth

@Shari Srebnick You make some excellent points. You're so right. For some businesses, this is their reality. Many businesses found like you did that changes in pricing helped retain customers given the volatility of the first few months of covid and subsequent contraction of risk tolerance.

I really like the laser focus you mention. What was one of the biggest areas of opportunity that this laser focus found? Did you know about it pre-covid or was it novel?

(I'm so sorry -- Friday afternoon-- had to sneak in a pun ?)

Shari Srebnick

Hi Anita,

This is a great question. Unfortunately due to COVID, I fear many of us are likely living this scenario right now ... or something close to it.

Since new business has definitely been slower for us since March/early Q2, our Services team has been carrying the majority of the weight. To our credit, we've exceeded our NRR Target in Q2 and we're about to do the same in Q3. What did we do differently? Nothing out of the ordinary, but it has forced us to become more laser focused on the activities we know that are high value, finding opportunities and capitalizing on them, and having leadership that gives us autonomy and flexibility.

I'll also add that we changed our pricing and packaging model earlier this year and it really provided us with great leverage for renewals and upgrades/upsells.

All that said, I'd want to understand what has been working and where there can be improvement. Why do your customers churn? If pricing has been a barrier, this could be a time to be more flexible, especially given these hard times we're currently in. In my opinion, "doing things differently" may not always be about the CS team, but could come from changes in other departments.