Inflation is up and the markets are down. These signals are familiar and suggest that we are close to a recession. New sales leads will start to slow, deals will take longer to close, and customers will start to leave. We have been through this before, and there is a way to weather these conditions.
Churn Zero helps companies manage their customers. I was able to see how companies that focused on existing customers were able to ride through the uncertainty.
There are three practices that worked for me.
If you want to mitigate short-term or panic, you need to understand the nature of the downturn. Customer success teams are required to understand why customers Churn, Renew, and grow. Give this team the mandate, people, and purpose-built technology to group your customers into groups based on the industries most affected by the crisis.
Untappd spotted a pattern of distress affecting their smallest customers. Micro-businesses in the restaurant and bar industry were trying to cut costs as a result of the lock downs. It was important to know which customers were feeling the most pain.
We took a similar approach with our own customers. We used a matrix of data points, including each customer's industry, company size, sentiment, account tenure, and product usage, to create a new cohort of customers.
The first thing we did was engage with our customers in the most at risk groups. They were asked if they were struggling. We decided to be as flexible as we could with other customers in their industry, after talking about how they were dealing with challenges. We gave them the benefit of the doubt if they asked for different things. The answer was yes if they asked for a break.
You have to find ways to help the customers who are most at risk of leaving. Individualized solutions can make a difference, but there are similarities between what people need and what they don't. It's possible to find and implement repeatable solutions in this case.
Untappd gave their most at-risk customers the option to pause their subscriptions until their venue reopens. After the lockdowns were lifted, customers were able to restart their subscription and take advantage of new features, like touchless menus.
Even if you have a strong group of customers, there may still be surprises and a customer who you didn't expect to be hurting. It's as important to reach these customers as it is to reach your most at-risk ones.
Monitoring your product usage data and reaching out to customers whose usage goes down are two ways to do this. The Customer Success team should ask how they are being impacted by the downturn.
You don't want to lose sight of your long-term goal if you focus on the short-term aspects of retaining at-risk customers. Ensuring all clients receive the maximum benefit of your product is a core part of navigating a downturn.
CEOs should ask themselves if their Customer Service teams have the resources they need to fight for and retain customers. Research shows that most do not.
Money and people with data skills are needed to operationalize a customer success team. In a booming market, these resources are plentiful; in a downturn, they are finite and fiercely fought. There is evidence that strengthens retention. Retention is less vulnerable than acquisition to the short-term swings of a bad economy and the rule of thumb that it costs five times more to win a new customer is even more extreme in a downturn. New leads are hard to come by as the multiple expands.
It is necessary to shift resources to focus on retention. It is frightening to shift resources away from new business. The expectation to deliver higher retention with their increased resources should be accepted by your Customer Success team. Hold them accountable and watch your return on investment.
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