This is post 4 of 6 recapping Reforge’s recent webinars on Leading Growth in Turbulent Times. You can watch all the webinars here.
For reference, here’s the table of contents for the series.
B2B Growth in Turbulent Times (this post)
This post focuses on insights provided by Guillaume Cabane (Growth Advisor, G2 & ex-VP of Growth @ Segment & Drift), Mark Roberge (Managing Director @ Stage 2 Capital), and Fareed Mosavat (Reforge EIR & ex-Director of Product @ Slack) during our B2B webinar on leading growth in turbulent times. You can watch the entire B2B webinar here
Industry variance and warning signs on the horizon
Some SaaS businesses, especially in the work from home space, are booming. While others are seeing strong headwinds as businesses pull back on incremental spending. SaaS as a whole is trending slightly down as of 3/26 (according to the Profitwell Growth Index). But there are significant warning signs on the horizon. It's likely we're going to see substantial increase in cancellations as we move into April billing cycles and some businesses may begin actively cutting SaaS costs. As Guillaume Cabane (Growth Advisor, G2 & ex-VP of Growth @ Segment & Drift) points out, a substantial portion of SMBs are experiencing massive revenue declines during shelter-in-place orders. Those SMBs are facing the first order effects of the coronavirus impact. SaaS companies will be impacted when those businesses actively cut costs or go out of business, which are second order effects. The impact to SaaS may just be delayed. Unless your business is thriving, you should be prepared for what second and even third order effects may mean for your revenue.
Focus on generating cash, not just bookings
As we've stated previously in the series, Cash is King because it preserves optionality and will hopefully give the economy time to recover. Patrick Campbell, Founder & CEO of Profitwell, suggest trying to update your terms to collect more cash upfront. If you have existing clients on monthly plans, can you move to quarterly or annual plans by offering a small promotion?
Additionally, about 30-40% of SaaS churn is from credit card payment failures. This type of mechanical churn is often unintentional can be recovered. Turn on recovery programs as a way to boost revenue. Try to prioritize this at the beginning of the month when a lot of automated billing takes place.
For businesses deploying promotions, Patrick strongly recommend bundling additional features into a base price or offering one or two extra free bonus months. Bundling and bonusing are often more effective than discounting and they provide more cash immediately. Finally, offering an unlimited plan for the short term may make sense and could even be a strategy to capture marketshare during this upheaval.
Many B2B acquisition tactics are not working
Obviously Field Marketing and In-Person Sales are gone. Acquisition costs for some paid digital channels are increasing. Many RFPs are on hold. If you were using IP detection software to see which companies were visiting your website, that's no longer effective as people are now work from home IP addresses. Even sales demos are more difficult as many working parents are too busy to talk to salespeople.
Therefore, any working acquisition assumptions about CAC and LTV need to be immediately recast until you get a better read on how customer behavior and conversion is changing. Guillaume Cabane recommends immediately exiting high CAC, low LTV channels as they are unlikely to be profitable.
Look for Ways to Adapt
Mark Roberge (Managing Director @ Stage 2 Capital) suggests that you should start by updating your Ideal Customer Profile and your Core Value Prop to fit the current situation. Can you shift your industry focus to verticals like telemedicine, food delivery, or work-from-home that are skyrocketing right now? Do you have value prop that solves the new pain points that your customers are facing? Start testing immediately to find new product-market fit. Marketing and Sales leaders should be attending or reviewing recorded discovery calls every single day to get a sense of how the market is changing and how customers might respond to new messaging.
Take care of your sales team
If macro-economic factors are negatively impacting your business, that's not your sales team's fault. This is an unprecedented event in modern times. Consider temporarily updating your comp plan and reducing quotas for the next 4 - 6 week while collecting more data about how you'll be impacted. This shouldn't be a long term comp adjustment, just something to help lower the anxiety. This can be a great opportunity to set the tone that everyone needs to be hustling but that we're all on the same team.
Other posts about Leading Growth in Turbulent Times:
B2B Growth in Turbulent Times (this post)
If you have more questions or suggestions, please let us know on Twitter or connect with us on LinkedIn.