Reflecting on the unpredictable whirlwind of the past three and a half years, it's become evident that agility and adaptability are key.
Although we don't claim to have the mystical insight of a crystal ball or the knowledge of professional economists, we acknowledge the valid concerns raised by the rising cost-of-living crisis post-pandemic and with the Russo-Ukrainian war.
Indeed, it poses significant questions about the future stability of the global economy. But what does this mean for everyday professionals like CSMs?
Are customer success teams prepared for an economic downturn?
In light of the rise of inflation, we wondered whether companies are battening down the hatches and planning for a recession.
If so, what do these plans look like? Putting our curiosity hats back on, we asked our survey participants if their company has (that they know of) a plan for their customers in the event of an economic downturn. The results were mixed.
65.3% of people said their customer success team doesn’t have a strategy in place, with 34.7% of teams claiming to have a rainy-day plan.
While a single Customer Success Manager may not be privy to the plans strategized by their company’s senior leadership team, over two-thirds of CS professionals claimed their CS team does not have a strategy in place for a recession.
For those who answered "yes," we wanted to know what customer security in the event of an economic crisis looked like. Here are just some of the responses:
“We have a good understanding of customer success performance. We want to avoid reducing headcount as much as possible in our lean team, but we’re switching focus to our product-led growth initiatives to improve upsell for the existing customer base.”
“We can help our customers prioritize what actions to take with their customers in order to retain them as well as identify top internal performers, all through customer intelligence.”
“Keep doing what we’re doing and ensure customers are seeing value, hopefully sustaining customer loyalty. We’re also trying to protect our global depositary receipt (GDR) as much as possible.”
“We’ll carry on to continue asking the appropriate questions, identify and adjust their goals and work together to achieve the adjusted targets.”
“Price and terms softening.”
“Maintain existing pricing and out-price our competitors.”
“Focus on ensuring the product continues to provide value to customers.”
We don’t know for sure if the global economy is going to be hit hard, but it’s encouraging (and relieving!) to see the famous proactive minds of customer success teams doing what they do best: looking forward.
Preparation for a recession
We put this intriguing position to our resident CS experts, to understand what they think teams could be doing to minimize the damage of a recession:
Mark Higginson, Chief Customer Officer at Enhanced Ai:
"Planning for a recession is critical. Many organizations are adding extra responsibilities to their customer success team, which will decrease their time dedicated to serving customers. Skills traditionally associated with sales teams will be critical for customer success functions, as there needs to be a shift in messaging to demonstrate value and discover customer goals are being met."
Ryan Noakes, Customer Success Manager at SAI360:
"Customer success helps companies adopt more of the service or software that they’ve purchased. The more they use it, the more it helps them, and the harder the decision to leave for a competitor would be. When a business is facing a financial crisis, having a solid bank of customers that are guaranteed month-on-month/year-by-year can certainly help stabilize things and give security."
Michelle Wideman, Chief Customer Officer at Onna:
"There are three different ways companies can safeguard their customers:
1. Are customers receiving value? If your customers can easily communicate the value they are receiving from your product or service, you’re making the renewal a non-event, vs having to go in and resell why they should renew your software/service.
2. Understanding your customer's product needs and aligning a percentage of the roadmap to these needs can help minimize churn, but also help maximize incremental revenue. If you understand the future needs of your customers and what features they would pay for and get their buy-in, you’re opening up new revenue streams.
3. Analyzing if you are easy to do business with can be huge in financial downturns. For example, can you offer extended payment terms or flexible payment terms to customers that are having financial difficulty? Do you have strong customer champions that you can leverage for introductions to new customers to help generate revenue?"
If you enjoyed this article, be sure to check out our library of reports, including The State of Customer Success 2023 for more juicy CS insights like these. 👆