Taking care of (existing) business

It’s hard to believe but it’s actually only been a few weeks since the rhythm of life and business has been well and truly disrupted.

As we all begin to get over the initial shock and start to adjust and adapt to new ways of working, taking care of existing customers is going to be critical in ensuring things recover well.

To that end, I decided to set some time aside in the calendar every day for Office Hours for anyone in the SaaS or Customer Success community looking for help, advice or wanting to brainstorm ideas.

It’s been a terrific experience to connect with so many new people all over the world, and thanks to everyone who has reached out so far.

Here’s a summary of some of the key themes, challenges and recommendations that have come out of these sessions and I’m looking forward to speaking with many more of you in the coming days and weeks.

Risk rate your existing customers

Most businesses have some kind of segmentation for existing customers (typically by spend or employee size), so now is a good time for CS teams in particular to revisit that segmentation and start applying a “risk rating” to each of your customers.

The idea is to get a better sense of how your customer’s business (and by extension their subscription with you) is likely to be affected so you can plan and forecast accordingly. It’s probably worth starting with rating customers that have a renewal event in the current quarter.

Some criteria to start “risk rating” (but my no means exhaustive) are -

• Industry — if your customer is in the travel, aviation, recruitment or in-person retail business for example their bottom line is likely to have been significantly impacted (or they may well be existentially threatened). If they are in logistics, healthcare, supply chain, e-commerce or any type of business that supports working from home for example, then the financial impact may be less profound than in other industries (although they are likely to be far busier than usual and less responsive unless your solution is adding a lot of value to them).
• Geography — is also worth considering, given that some countries and regions will be more severely impacted and for possibly longer periods than others and conversely some geographies like Asia are slowly heading back on the road to recovery. If you have a lot of customers in a specific geography then taking the macroeconomic conditions in that region into consideration for your risk rating is a sensible thing to do.
• Cash stability — the amount of cash your customer has to hand (or the ease by which they can gain access to additional cash) will determine how long and how well your customer can weather the current disruption. An early stage startup with a high “cash burn rate” is likely to have a tougher time staying in business (without drastic cutbacks) than say a profitable public company that can borrow money more easily or a large global multinational that already has large cash reserves. Annual company reports and media articles are just a few of the things that might help you determine a customer’s cash position.

Whatever criteria you decide to apply, once you have your rating, the next step is to apply it to the “stage” each of your customers is in.

Apply the risk rating to customer stage

This is where it makes sense to go back to your customer segmentation and additionally quantify which stage of the customer journey each of them is in.

The reason is that the longer some customers are in certain stages, the greater the risk of losing their business becomes. The stages of the journey a customer goes on with you will vary depending on your solution, but a useful way to get started is to think about customers who you are -

• Deploying — these are the customers that were about to start (or were in the midst of) deploying your solution and being on-boarded. It’s important to quantify them quickly because for many customers, continuing the deployment or finishing the on-boarding may have dropped way down their list of priorities — and the longer a deployment or on-boarding process goes on for, the greater the risk of a churn (especially if they have a break clause in their subscription).
• The goal: is to close as many “deployment gaps” as quickly as possible, which may involve you offering your CS or Professional Services team (if you have one) to step in and shoulder some of the deployment and on-boarding burden from your customer to help speed things along so they start seeing value quickly. The “risk rating” should help you to prioritise which customers to focus on here.
• Defending — these are the customers you were already concerned about prior to the Covid 19 pandemic. They may not have been seeing enough value from your product, adoption and usage may have been consistently low, there could have been a key stakeholder change, competitive pressure or maybe there has been technical or resourcing issues causing delays deploying and on-boarding them.
• The goal: is to either formulate proactive strategies to combat any potential churn or to make a collective decision about whether you should flag the customer as “expected churn” (because the combination of the pre Covid 19 situation and their risk rating leads you to conclude no amount of additional effort is likely to turn the situation around).

Flagging a customer as “expected churn” can be a really challenging call to make (in some ways it’s antithetical to how good CS people think), but it’s far better for you to deploy your limited resources where they can be most effective and it’s much better for your own company’s contingency planning if they have an early heads up about likely loss of revenue (trying to mask or down play churn risks in the current climate is really one of the worst things you could do).

• Maturing — these are the customers that have successfully deployed, on- boarded and are demonstrably seeing value from your product and where the bulk of your focus has been working with them to “up-level” the sophistication of their use by educating them on additional capabilities and more sophisticated use cases (i.e. making them “stickier”)
• The goal: is to work out what the best content, channel and cadence is to engage with these customers in order to continue up-levelling their use. Even if a “maturing” customer has a low risk rating, they may be much busier than before (e.g. recruiting and on-boarding hundreds of new delivery drivers) so it’s safe to assume they’ll be less responsive or have less time to engage with you. Thinking about additional communications channels like an online community or shared Slack channel and approaches like building a “Message Calendar” where you decide on the schedule and channel to send out key content and messaging could be helpful here.
• Growing — are the customers you were either actively qualifying for expansion or were in discussions with about new revenue opportunities. In short, these are customers you would have previously been confident to include in your forecast for the quarter.
• The goal: is to re-qualify the opportunity quickly and decide if it’s still valid for the quarter, if it needs to be pushed to later in the year or to conclude that it is not going to happen at all. Again the risk rating will give you a good sense of the likely outcome and engaging with your stakeholder and customer champions quickly will help to validate your forecast.

Prepare your negotiating toolkit now

There will come a point (I suspect within the next 7 to 10 days or so), when the initial shock and panic that businesses have been experiencing will begin to subside a little and some acceptance of the “new normal” will steadily begin to take hold.

This is likely to be the period in which many of your customers will start to reach out (if they haven’t already) to talk to you about their subscription. It therefore makes a lot of sense to get ahead of this and start the internal discussions and decision making process on what “levers” you are willing and able to pull in order to keep customers with you.

Having already decided what you can offer customers that need to negotiate new payment terms, discounts, moving to cheaper plans or who want to cancel entirely will involve many internal stakeholders, so prioritising and preparing for it now will certainly minimise disruption for you and your customers and should help to make any negotiations smoother and faster.

What you are willing and able to offer will of course greatly depend on your own circumstances and cash position, but I would generally favor the approach of trying to lead with offering additional value.

For example can you -

• Upgrade their subscription for 6 months so they get additional features and capability but at the same price point
• Offer early / preview access to key new features
• Provide additional resources that you would ordinarily charge for such as education or professional services
• Offer a 3 month payment holiday
• Reduce your price point in exchange for a longer contract period

These are just some of the ideas that are worth considering, but the key thing is to prepare the toolkit now so you’re not expending a lot of additional time and effort on dealing with each customer on a case by case basis.

And finally.…

Now is a really good time to remember to shine a light on the work your CS team is doing internally.

Customer focused teams often have metrics that are lagging indicators so in normal business conditions it’s often not clear to leaders just how much work goes into creating the conditions for customer renewal and growth.

Reporting to the board level on all the additional initiatives and new approaches CS are putting in place to retain customers, demonstrating how they are prioritising and risk rating customers and how the team is on top of its numbers and forecasts will all help to show how the work they are doing is materially impacting your company’s bottom line during a period when new revenue is likely to be slowing down.

Equally important is to make sure you are sharing any positive feedback from your leadership back to the CS team as it’s a great way to keep everyone motivated and engaged during this highly disruptive and difficult period.