Dear Growth Molecules: What can I do as a Customer Success leader to drive results through current economic challenges?
As a Customer Success leader, looking at the key learnings from the past can be a helpful guide to navigate the future. This is especially true when it comes to economic uncertainty. In fact, we don’t have to look too far in the past to derive insights that are helpful to overcome what economists are calling the “soft landing” in Q1 of 2023.
It was just 15 years ago that the financial crisis of 2007-2009 stung businesses and individuals alike. The period often referred to as the “Great Recession” is widely regarded as one of the worst financial disasters in history. It had far-reaching consequences, causing a global recession that lasted for years, with significant impacts on US gross domestic product (GDP fell 4.3% – the largest post-war era drop), employment rates (rose to 10%), poverty levels (increased to 15%), and general financial well being for millions of people (Median real household cash income fell from $57,357 in 2007 to $52,690). I lost my job, my husband lost his job, and we had just bought our first home. We had a new mortgage to pay and no idea how we were going to make ends meet.
We all learned important lessons from this crisis that have shaped how we manage finances today. Similarly, lessons learned can also help customer success leaders in the B2B SaaS industry such that our teams and our companies can thrive in 2023 and beyond. Below are four key pieces of advice to help you be a good customer success leader in a bad economy:
Focus On Customer Retention
This one seems like a given, especially in our line of work where our number one charter is literally to keep customers. When economic times are good, companies may acquire new customers with velocity and that can allow forgiveness of customer / revenue churn (A reason that just net renewal rate, or NRR, alone can be a misleading metric). However, now is the time to align more efforts on customer retention. It is literally the best scenario for leveraging TSIA’s LAER model (Land Adopt, Expand & Renew), focusing of course on the AER part of the framework.
Looking to history to guide us now, we can recall that one of the primary causes of the financial crisis was the widespread use of subprime mortgages and the aggressive marketing of these loans to customers who could not afford them. Similarly, in the B2B SaaS industry, companies may be tempted to prioritize new customer acquisition over customer retention. However, studies show that retaining an existing customer is much cheaper than acquiring a new one. Customer success leaders should focus on building strong relationships with their existing customers, providing excellent customer service and support, and enabling their teams to be effective at these strategies. By prioritizing customer retention, companies can ensure stable revenue streams and be poised to be in a market leader position.
Emphasize Transparency and Accountability
One of the key issues in the financial crisis was the lack of transparency and accountability in the financial industry. Complex financial instruments were created and sold without adequate oversight, leading to widespread risk-taking and fraud. In the B2B SaaS industry, companies must prioritize transparency and accountability. Customers should have a clear understanding of the products and services they are purchasing, as well as any associated costs and fees. Additionally, companies should be open about their data and privacy policies, as well as any potential risks or vulnerabilities associated with their products. By emphasizing transparency and accountability, companies can build trust with their customers and establish themselves as ethical and responsible businesses.
Similarly, leaders have a responsibility to guide their team even when it feels uncomfortable. The concept of being human first and transparent was a prominent theme in leadership during the COVID-19 pandemic of 2020-2021. As leaders, we’ve done it before, and we can do it again. Be the stabilizing force that your team craves from you.
Prepare For Unexpected Events
The financial crisis was a catastrophic event that caught many businesses off guard. However, companies that were better prepared for unexpected events were able to weather the storm more effectively. Similarly, in the B2B SaaS industry, companies must be prepared for unexpected events such as market disruptions, changes in customer needs or preferences, and cybersecurity threats. Customer success leaders should work closely with their teams to identify potential risks and develop contingency plans to address them. Customer success teams should also strive to understand how their customers are being impacted and if there are ways to partner to help them. By being proactive and prepared, companies can minimize the impact of unexpected events and emerge stronger in the long run.
Maintain A Long-Term Perspective
Finally, it’s essential to maintain a long-term, calculated, perspective, rather than jumping at immediate knee-jerk responses. In the financial crisis, many businesses focused on short-term gains and took excessive risks in pursuit of immediate profits. Similarly, in the B2B SaaS industry, companies may be tempted to prioritize short-term revenue growth over long-term customer satisfaction and retention. However, companies that take a long-term approach, focusing on taking care of their teams, being true partners to their customers, and continuing to provide high-quality products and services, are more likely to succeed in the long run. By prioritizing long-term goals over short-term gains, companies can build a sustainable business model and establish themselves as leaders in their industry.
In conclusion, the financial crisis of 2007-2009 was a devastating event that had far-reaching consequences for businesses and individuals around the world. However, by learning from the mistakes of the past, customer success leaders in the B2B SaaS industry can apply key learnings to thrive in 2023 and beyond. By focusing on customer retention, emphasizing transparency and accountability, preparing for unexpected events, and maintaining a long-term perspective, companies can establish themselves as ethical and responsible businesses and build a loyal customer base.
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