Phil Sorgen, Venture Partner
As macro headwinds impact many sectors of the economy, the best companies view this as an opportunity to create separation from their competitors and gain share in their respective markets. While great execution is always important, these challenging times reward those that do it best. To win today – and set up your organization for the future – here are some thoughts on delivering business outcomes that help your customers today, and retain them in the future.
Securing Your Existing Customer Base
There is an adage that says, “It’s difficult to grow, if your base is shrinking,” and nothing is more important than securing your customer base, especially now.
- Start by doing a health check with your existing customers with a focus on “How can I help?” Arm your team with key usage and benchmarking insights to help customers maximize the value of your solution. Ensure that your entire organization – from the sales team to your customer success group – understands what is included in a great health check.
- Enable your sellers with key messages about how to help with changing trends in the areas that your solution addresses. This may mean that your messaging shifts to focus on different features, based on the needs of today’s environment. Provide prescriptive product and industry examples.
- Leverage success in customer usage as a trigger for driving upsell/expansion sales discussions. Existing customers generally represent a lower cost of sale and current usage will often determine your success.
Pipeline health is the fuel to grow your business during this period, and to accelerate as the market improves. While this may seem like a no-brainer, a focus on increased diligence and key customer outcomes will better position you for both today and tomorrow. Business outcome alignment with your customers, and execution excellence, will separate the winners from everyone else, especially in today’s market.
- Deep dive on existing pipeline and reprioritize resources. Determine how to apply the right resources against the right opportunity – it is vital this happens immediately! Break down barriers like territories, compensation, segments, etc. to ensure you can be agile in resource allocation.
- Run and execute campaigns that emphasize speed-to-value. Customers will look for faster ROI so emphasizing a quicker return on investment, and rapid onboarding, is essential. These plays must reflect opportunities to help your customers navigate their unique challenges.
- Work as a team. Rally all organizations behind you. Ensure that Marketing, Customer Success, and Product groups have visibility to, and engagement with, the top opportunities in your pipeline.
- Create a “win room,” bringing together key company leaders across all groups to review the opportunity/close plan for key deals in the current quarter pipeline. The goal is to create a sense of urgency and keep your sellers aware that the company is prioritizing investments to advance business. This also allows better optimization of resources across opportunities or channels.
Pricing is a tool that many companies go to during times like this, sometimes to close immediate opportunities, and other times due to pressure from customers who have their own budget constraints. Remember that decisions you make now will transcend this period and will set potentially difficult benchmarks for the future when the market improves. Before you immediately jump to discounting:
- Invest in your customers. Focus on accelerating time-to-benefit and reducing start-up costs since your customers are likely facing short term expense challenges. It’s much better to incur one-time costs, like implementation or training, while maximizing Annual Recurring Revenue, ultimately putting you in a better position when market forces are more favorable.
- If you have a channel, ensure you are differentiating yourself in terms of visibility and business impact. Partners can bring their unique capabilities to help your customers realize value faster. Focus on SPIFFs and rebates over increased annuity rates.
- If you must discount, optimize for long term contracts, and increased booked revenue. Another discounting tactic is to ramp discount from higher today to lower in out years to keep exit rates low. This may be defined as a specific offer versus a discount, which can be helpful in providing guardrails for your team. This helps your customer today, and resets pricing to a more traditional level when the customer is up for renewal, while also building in YoY growth into the contract. If positioned properly this solution can be framed as a way of helping your customers during challenging times by showing up for them now, ultimately winning long-term loyalty.
Building for the Future
During a time like this it’s easy for the GTM team to put 110% of their energy into pipeline building and sales. This is also a critical time to build for the future. There are few important things I would encourage you to do:
- Strengthen your customer relationships. Invest in your best customers and standout now! These are the times that a gesture focused on their success – perhaps a training, a solution focused workshop or another value-add service – pays significant dividends in terms of long-term relationships.
- Don’t waste a crisis. Scrutinize your GTM budget, justify all expenditures, and rebalance for greatest return. Determine cost of sales and marketing, and shift where appropriate to lower cost models and tactics. Root out organizational inefficiency and ensure you are maximizing customer-facing resources.
- Be data driven. Update the scorecard that drives your leadership team’s actions and make sure everyone is aware of the metrics that matter long term. Be more propensity driven in targeting customers as you focus your outbound sales efforts.
Investing in Your People
Those that have followed me over the years know one of my foundational beliefs in business to be – People are our singular competitive advantage! The narrative in news circles is layoffs and reduced hiring, but the reality on the ground is that the remaining people will determine your success. A strong company culture and a deliberate focus on your people is the key to ensuring the kind of effort and commitment required for fewer people to execute on the critical work needed in order to win. Here are a few best practices:
- Re-recruit your top talent!
- Maintain consistent communication and engagement that reinforces the culture that represents your company. Generate energy by highlighting successes and incremental wins more frequently across the business. Provide clarity to your team by communicating your plan to help minimize all other potential distractions.
- Enhance the skills everyone needs going forward. Be clear what great looks like.
Market cycles are something that all businesses face, and in down-times, where the strongest companies continue to outperform. Executing on these ideas will put you in the best position to weather today’s circumstances while setting you up for hyper-growth when market conditions improve.