The unpredictability of an economic downturn, such as the continuing COVID-19 pandemic, can introduce uncertainty into the relationship between you and your customer. Sudden and unexpected external forces beyond the control of either of you can also lead to unanticipated customer behavior.
During difficult times, it is especially important to understand what is going on inside your customer’s mind, as well as what is going on inside their business. By carefully tracking customer data and proactively engaging with your customer through direct communication, you can understand exactly how your customer is being impacted and build a successful digital relationship with them.
Empathy is a core tenant of relationship-building in the business world—people do business with people, not companies. During these unprecedented times, it might be necessary to adjust your business offerings accordingly. These adjustments might include promotions around free services to enhance implementation, offering more personalized training sessions, or providing more licenses for the same price.
Equipped with the knowledge provided by customer data, you can help your customer survive tough times by offering practical solutions that add value and ultimately contribute to customer retention during economic downturns—even ones caused by a pandemic.
Providing Value Is Key to Retaining Customers During an Economic Downturn
Customer retention is the lifeblood of recurring revenue enterprises, regardless of the external economic circumstances. Every act of providing value is therefore an act of customer retention.
The key to retaining your customers during market uncertainty is converting the breadth of the customer journey into actionable, measurable goals and KPIs. By considering each stage of the journey as a unique customer experience that comes with its own goals for achieving success, you can generate customer momentum and reduce the time to value—and the sooner customers experience ROI, the sooner they begin to rely on your product.
Maintaining strong customer relationships is the key to the long term success of both your customers and your organization. These relationships become even more critical when overcoming an economic downturn. Therefore, it is important to proactively deliver value with customer success best practices that work in both good and bad economic times, such as:
- Clear, Empathetic Communication
- Establishing Customer Status and Goals
- Target Audiences with Accuracy
- Maximizing Your Resources
- Turning Data into Action
To effectively employ these best practices toward customer retention during an economic downturn, you first have to understand why retaining your customers is so important. Customer retention increases customer lifetime value (CLV), which provides added benefits of fostering brand loyalty and predicting churn while saving time and money.
Customer Retention Is Your Future
During an economic downturn, many companies respond by cutting spending and preserving core assets. We are seeing this now, as the pandemic recession pushes companies to reduce their spending on non-essentials, such as subtle product variations, and instead, portray themselves as dependable and steady by focusing resources on the bottom-line.
A business model dependent on new customer acquisition will struggle when companies inevitably try to slim spending down during a downturn. The company may continue to stay in business, but it will struggle to thrive, as the cost of acquisition eats away at profits.
It is an example worth following in the B2B recurring revenue sector. Here, your core assets are your existing customers, and your challenge is to remain an essential part of their present as they look to preserve only their “must-have” services. That begins with the crucial task of proactively maintaining regular communication.
1. Clear, Empathetic Communication
The timing of your communication efforts is as important as their substance. Do not wait for the customer to come looking for you, instead, reach out regularly—but when you do so, ensure you are adding value. Personalized, empathetic messaging lets your customer know that you understand their specific challenges and can provide a clear plan of action to offer solutions.
- Establish and scale your digital communication
- Personalize communications
- Offer the right value at the right time
It has been estimated that 91 percent of customer success teams are currently working remotely, so you are not alone in having to reach your customers through digital means. Direct communication gives you a greater understanding of the changing circumstances your customers face and leaves you in a position to deliver relevant value. In other words, once you know what your customer is going through, you have to step up and provide value that moves them on to the next level of success.
2. Establishing Customer Status and Goals
You should already have established how each of your customers is being affected by the current economic challenges. Now you will also need to collaborate with your customers to adjust their agreed-upon goals for future success. You and your customer should agree on new definitions of success and new milestones to measure progress. You may need to change the metrics used to determine things like customer health scores to reflect these new realities. While conditions may have changed greatly, there may still be an opportunity for growth.
3. Target Audiences with Accuracy
To maximize the efficiency of your customer engagements, segment your customers based on shared characteristics. The more specific the variables you use to segment customers, the greater the likelihood that you will be able to offer personalized engagements that provide customers with value. Create relevant campaigns, communications, and other materials ready to send to these segments. When you evaluate customers with greater clarity and sensitivity, you will be able to notice change quickly and be ready to immediately initiate action.
Assessing and segmenting your accounts in this way also helps you prioritize customers as you move to protect your core assets. You can monitor customers with approaching renewal dates, prioritize by value, and organize your portfolio around those at risk of churning and those ready for expansion.
4. Maximizing Your Resources
Just as your customer is likely to reduce spending in order to protect their core assets, so too do you need to get the most out of your current investments. While most companies only use some of the functionality in their tech stack, it’s important to look for innovative ways to use more. If you are a Totango customer, consider Dynamic Assignment, which can match less dedicated resources—like experts from different parts of the organization—with customers according to variables like availability, experience, and time zone. This enables employees to provide personalized customer engagements in a resource-efficient way that makes the most of your resources. That personalization is valuable to enterprises and can be the difference between retaining and losing a customer.
5. Turning Data into Action
The unexpected is inevitable when it comes to customer retention during economic downturns, so it is imperative your customer success software can capture data from a range of sources and enable it to be shared across your enterprise with anyone at any time, whether they are part of a customer-facing team or a team working on product development. This data can also guide how you set up your SuccessPlays—a set of tasks that are automatically triggered to improve team workflow—so your CSM can focus on what is important: customer relationships and retention. The observed data should ultimately trigger established campaigns that will capitalize on an opportunity or prevent churn.
Of course, that customer data is useless unless it can be turned into action. An early warning system will ensure you are kept up to date and able to make informed decisions on how to proactively deliver value—typically through results-driven, goal-based engagements.
Your Software Solution Should Improve Customer Retention
Your customer success software is your best chance at keeping pace with how the changing economic conditions are impacting your customer and acting accordingly. Established business metrics such as usage rates, feature access, and license utilization can be coupled with goal-oriented analytics to keep you informed of exactly how your customer is using your solution. Disparate metrics can be reduced to a highly visible, customer health score that you can use as a trigger for rapid engagements that deliver value and ward off churn. If you’re intimately aware of what is going on inside your customer’s business, you can better predict what is going on inside their minds.
Customer retention during economic downturns can be difficult. Proactively creating value turns a changed landscape into an opportunity to solidify your ongoing relationship.
In these challenging times, you can’t afford to buy before you try. Get started for free today. Totango’s customer success platform gives you the visibility and digital capabilities you need to retain customers in any economic climate.