Whether you’re in Sales or Post-Sales, we know that retaining revenue is always a top priority. In this blog post, we’ll explore the strategies that companies can employ to retain their customers and weather the storm of an economic downturn. We’ll delve into the three key axes that determine customer retention: the value your product provides, your customers’ business health, and the profitability of each customer. For each type of customer, we’ll outline the strategies you might want to follow in order to help you maintain strong relationships and ensure your business’s survival during challenging times.
One of the key sources for this text is the fantastic and insightful Playbook for Retaining Customers in an Economic Downturn published by Gillian Heltai and Jake Saper at Emergence. So make sure to give it a good read if you want to dive even further into this topic!
🚫 Scarcity on all fronts – Budgets are tighter, resources are limited, and customers are more likely to churn.
💔 Internal politics internally & externally – As companies make cuts, there may be more internal competition for resources and a higher likelihood of turnover.
🚨 Change in priorities – Customers may focus on short-term wins and be less likely to invest in long-term solutions, while internal teams are pulling into different directions.
That’s why it’s more important than ever to have a solid customer retention strategy in place. Below you’ll find the visual of the Downturn Retention Strategy Framework. We find it incredibly helpful to assess your customers’ business health, identify opportunities to deliver more value, and develop a plan to retain your most important customers.
We want to deep dive into mapping your customers to the four quadrants of that exact framework. This is an essential step in developing a retention strategy, as it will help you identify which customers need the most attention and what kind of interventions are most likely to be successful. The four quadrants are:
Customers in this quadrant show a high value perception of your product, but find themselves in a low business health for varying reasons. These customers require a strategic approach that focuses on demonstrating the value your product provides and aligning with their current priorities. To effectively retain these customers, the following following strategies might work for you:
If one of your customers is in this quadrant where they are thriving with the help of your product, it is the perfect opportunity to solidify your position as a trusted partner and drive further growth. We recommend the following strategies to further strengthen your relationships with customers, maximizing their value and establishing your company as a key driver of their success.
For customers in this quadrant, your focus needs to shift to rapidly demonstrating the value your product can deliver and aligning it with their evolving needs. By demonstrating your agility and commitment to their success, there is a great chance to tap into their high business health and make them loyal advocates.To effectively retain these customers and capture their potential, we would suggest the following strategies:
While it may seem counterintuitive, for customers who neither see great value in your product nor have a prosperous business health, the most strategic decision may be to gracefully exit the relationship. This decision should be made with careful consideration and a focus on long-term profitability and customer satisfaction. For a CSM to effectively manage these relationships, we advise the following best practices:
The economic downturn is having a significant impact on businesses, causing tighter budgets, limited resources, and increased customer churn. So all of us need to have a solid customer retention strategy in place to weather the storm. For that purpose, we believe in mapping your customers to the four quadrants of the Downturn Retention Strategy Framework. It helps you identify which customers need the most attention and what kind of interventions are most likely to be successful. From demonstrating the value your product provides and aligning with changing current priorities to considering gracefully exiting the relationship, there are best practices for each situation that can help you navigate turbulent times!