Throughout my career in technology, I’ve focused on helping customers achieve their goals. My experiences span the entire customer journey – from enterprise sales and account management, through implementation, support and customer success. While the COVID-19 pandemic is unlike anything I’ve experienced before, I realized that in my 20+ year career I have experienced three other economically challenging times; the 2008 recession, the dot-com bubble and Y2K. Through these experiences I learned that while times of uncertainty are stressful, they can also be times of great opportunity.
The role of Customer Success teams is to help customers achieve the goals and solve the problems that prompted them to take action and buy your solution in the first place. Many companies will have experienced a slow-down in new customer sales. This means retaining your existing customers is more important than ever.
Many of your customers will also have experienced a slow-down or maybe even a cessation of their own revenue. They may be experiencing cash flow challenges and will certainly be scrutinizing every financial expense. There is no “one size fits all” for operating in times of crisis, but there are steps you can take to help you turn a crisis into opportunity.
Do Your Research
First, invest the time to really understand your customer base. Consider the industry, geography, size, and user roles you serve and how these make up your overall customer base. What are your customers going through right now? Are some regions harder hit? Are some industries prospering? What are possible business scenarios for these geographies, industries and user roles? Will they do well? What are the near-term prospects? Are they likely to make it through, and if so, how might they be changed?
Next, take a hard look at your solution offering and the problem it solves / value it provides for your customers today. Is your solution still relevant across all those industries, geographies and user roles? Why should customers continue paying for it? What do your customers need most to be successful now? Are you able to provide some of this? Is there a different problem you can solve for now? If you haven’t done this already – ask some of your customers what would help them now, and really listen to what they say.
Finally, with your customer business scenarios in mind, group or segment your customers to understand who’s at risk of churn, and the type of churn this represents: user, logo or revenue churn. Each of these churn types is different and will have a different impact on the overall business.
- User Churn is the number of users that stopped using your product during a specified period of time. This is relevant if your solution is priced on a per user basis.
- Logo or Customer Churn is the percentage of customer organizations that stopped using your solution during a specified period of time. Let’s say you have 100 customers and you lose two, this represents 2% Logo Churn.
- Revenue Churn is the percentage of revenue lost due to cancellations and downgrades during a specified timeframe, usually measured monthly or annually. Let’s say you have 100 customers again. Eighty of them pay $2,500 annually and the other 20 pay $40,000. If you lose two that pay $2,500 this represents only 0.25% revenue churn. However, if you lose two that pay $40,000 each, this is a much larger impact at 4% Revenue Churn.
Evaluate Your Options
Armed with the data from your research the next step is to determine how to turn that data into options that could be a win-win for your customers and you.
Connect with your Product Team and collaborate on the Product Roadmap. Are there new capabilities you could add or accelerate to provide more value for customers now? Could you introduce a mobile app, more features in the existing mobile app, or integration to another business platform to provide more value for your customers remote workforce? Is there an existing (maybe little known capability) customers can leverage to help them strengthen engagement with their own customers.
With your customers’ potential business scenarios in mind, review your existing Plan tiers. Is there a very defined or entry-level capability you can offer under a “Freemium” plan or 90-Day trial? Would this help Sales attract net-new users or logo customers who will [hopefully] convert to a paying Plan in the future? Could temporarily switching to a Freemium plan enable you to reduce financial burden for some existing customers? Could you offer customers an upgrade to a higher tier plan, with additional value-added features, at no additional fee for a limited period of time? Are you able to temporarily reduce or defer monthly fees outright to a segment of customers who are struggling near-term but are likely to come through the pandemic? Does it make sense to offer this fee reduction as part of converting customers from a monthly plan to an annual plan?
It’s important to know that in the end you may have some customers whose businesses have changed so dramatically that your solution no longer provides value, or whose businesses are simply unable to survive the financial impact, and these customers will ultimately churn.
Equipped with insights from your research, your Customer Success team is now able to identify the steps you can take to best respond – both proactively and reactively – to what your customers need. Identify which options will likely be most helpful to which groups of customers. Decide which customers you want to contact, with what message, and how that message is likely to be received. Is it best for you to reach out proactively, or to give them space and be prepared when they reach out?
Your old retention strategies likely don’t apply so you will need to provide your Customer Success team with new retention playbooks. This is not the time to wing it. Your team needs to feel well prepared to manage their responsibilities and understand the options available to them to help customers throughout this time.
The more you can help your Customer Success team to anticipate and understand what real value looks like for your customers and what customers need now to be successful, the more likely the team will be able to provide impactful solutions that will create a positive experience, build customer loyalty and preserve revenue that will sustain and ultimately grow your business