Currently, there's a lot of uncertainty around what's happening in the market. Customer behavior has changed so fast it's impossible to know what's next. As an operator, this makes it tough to make decisions, because there isn't a ton of data out there to guide our decision making.
To help, Reforge + Profitwell co-hosted 3 webinars about Growth in Turbulent Times with the smartest people we could assemble on short notice. Huge thanks to Patrick Campbell, Cyan Banister, Dan Hockenmaier, Elena Verna, Fareed Mosavat, Guillaume Cabane, Mark Fiske, Mark Roberge, Noah Freeman, and Russell Glass, who brought data and valuable prospectives to share with our community.
We highly suggest watching the webinars in their entirety (LINK to the recordings), but we know people are short on time so we've assembled this blog series for a fast skim. You'll get more out of this if you read all the posts rather than just one in isolation, but we've broken them up into sections so they are more digestible. Here’s the breakdown:
Building a Framework for Your Response (this post)
We hope this is helpful to you. If you have more questions or suggestions, please let us know on Twitter or connect with us on LinkedIn.
Building a Framework for Turbulent Times
Phases of Crisis: Shock → Adjustment → New Normal
As growth leaders, our first responsibility is to understand where we are and provide context for our teams. That's tough to do when uncertainty is this high, but Fareed Mosavat, Former Director of Growth at Slack, provided a helpful framework for how all crises unfold: Shock → Adjustment → New Normal.
Right now we are in Phase 1: Shock, where a major event has suddenly changed how customers behave, which in-turn impacts businesses. Specifically, the world is battling the coronavirus through quarantines, social distancing, and other measures. We're all just trying to weather the current storm as safely as possible.
Later, all crises enter Phase 2: Adjustment, where the storm has passed and a broader recovery begins. As the coronavirus is brought under control and lockdowns are lifted, the Adjustment Phase will see individuals, companies, and governments try to repair the damage from the outbreak. At this point in time, it's impossible to say what the extent of the damage from coronavirus will be.
Eventually, each crisis establishes a "New Normal" in Phase 3, where life finds a balance and sense of stability, which may or may not be substantially different from before the crisis.
No one knows how long and how severe each phase will be. No one. Faced with that level of uncertainty you need to maintain optionality and be proactive in responding. Dan Hockenmaier (Growth Advisor, Basis One & ex-Growth @ Thumbtack) provides a really helpful framing of optionality and what recoveries might look like in this post.
Don't wait for things to go back to how they were, because they might not. Be proactive and maintain perspective. Here's our panelists' best recommendations for developing your response to turbulent times.
1) Throw out your OKRs & Goals. This is a 4-6 week sprint.
Just accept that whatever plan you had for Q1 and Q2 are now gone. Even if your business is largely unchanged so far, the context of your customer's lives and businesses has been disrupted. Your planning and operational horizon should the next 4-6 weeks, according to Mark Roberge, Managing Director @ Stage 2 Capital. You need to act quickly and deliberately to collect new data and understand the current landscape of your industry. Your operating cadence should increase to daily so you can learn and react as quickly as possible to what's happening in Phase 1. This does NOT mean that we'll be past the coronavirus outbreak in 4-6 weeks and that we'll be on to Phase 2. Nobody knows what the world will be like in 4-6 weeks. But a 4-6 week sprint helps you organize your focus and activities while gathering more information to make longer-term decisions.
2) Deploy your rapid response team & don't make unforced errors
You need to re-examine all your messaging and touch-points throughout your entire marketing, sales, onboarding, and retention processes. Photos of groups of people on your website? Probably not appropriate right now. Old automated sales emails still going to prospects? Those likely need to be substantially updated or paused. Do you even know what ads you are running? Elena Verna, ex-SVP of Product & Growth @ MalwareBytes, recommends organizing a single cross-functional rapid response team with executive sponsorship that can make quick decisions about what to remove, what to reposition, and what to double down on. The first priority is to avoid unnecessary mistakes and seeming out of touch. (See post #2 for a rapid response team check-list and lots of tactical items).
One thing that doesn't seem to be effective is mentioning COVID-19 in your marketing or sales messages. Noah Freeman and the team at Social Fulcrum have been testing consumer messages over the past few weeks and mentioning COVID appears to be a strong turn-off. Instead, Noah recommends focusing on how your product solves the new problems that your customers are encountering. Which brings us to point #3...
3) Understand how your customer's lives have changed
Over the next 4-6 weeks, you'll be making calls based on intuition rather than lots of statistical data. Chances are your product-market-fit or one of your other four fits just changed because your customer's lives have changed. You need to understand their new motivations and behaviors as quickly as possible so that you can revalidate your core personas and core value propositions.
Go back to the drawing board with a cross-functional team on the most basic of questions: who you sell to and why they buy your product. Start by talking to customers and prospects. Ask how their motivations and budgets are changing. Find out how they feel. If you see new types of buyers purchasing your products, interview them as well. Ask previous customers why they stopped buying. Get the CEO on the phone with customers if necessary. Use this qualitative sprint to detect shifts in value propositions. In the B2B space, Patrick Campbell and the team at Profitwell have seen a rapid shift toward offers that focus on 'saving costs' rather than "increasing revenue". If appropriate, do some message testing with new value props via ads or a segment of your email list.
4) Develop an Endure or Adapt Strategy
To paraphrase Paul Graham, there are two paths through a crisis like the current one: Endure or Adapt. Based on what you're hearing from customers, you can decide to hunker down by cutting costs and waiting it out. Or you can decide to find new opportunities and adapt in a way that makes your business stronger when Phase 3 eventually arrives.
How you select your path depends on 3 factors
How your specific business, customers, and industry are impacted at present. If you see the emerging landscape before your competition you may be able to adapt before them. If your business has heavy capital infrastructure that cannot be redeployed, you may have to endure. After you've done your customer re-discovery, you'll be in a better situation to answer a bunch of strategy questions...
Does your product solve one of the new problems your customers just encountered?
If not, can you shift something about your product or value prop that does solve a problem they now have?
Is there a market segment that you couldn't sell to before who might be more willing to talk to because their revenue just fell off a cliff?
Do you need to fundamentally rethink part of your business model in light of potential enduring headwinds?
If you've been holding off on making a strategic long-term shift because it could impact short-term revenue, is now the time to consider the move if revenue is already down?
Your level of risk tolerance. Choosing to adapt now can be a tough choice because it will likely increase your risk by introducing new variables into an already volatile situation.
Your balance sheet and cash position. Your ability to adapt or endure will ultimately be enabled or disabled by your finances. Do you have enough cash to invest in adapting? If you plan to endure, are you profitable? If not, how much runway do you have?
5) Replan your financials accordingly
This advice is primarily for the CEOs, Founders and executives, but it's helpful for everyone to understand. First, cash is king right now. Funding may dry up or at least become more difficult to obtain over the coming months so it's critical that businesses have at least 12 months of runway, although some panelists recommended 24 months (More on fundraising in the Leadership post). To understand your new runway, you have replan your financials based on current changes. Russell Glass, CEO at Ginger, recommends doing 3 new scenarios if your revenue is currently down.
Base: Take the most conservative scenario that you previously presented to the board and make that the new base plan. If you didn't have a conservative plan on file, go through your customer discovery and take your best guess and how their spending might shift by segment.
Worse: 20-30% below your Base Plan depending
Worst: Another 20-30% below your Worse Plan
On the other hand, if your business is booming do 3 new upside scenarios in a similar fashion. Either way, you'll be able to better assess your options and act accordingly. You'll also want to update the scenarios regularly based on new information and changing macroeconomic factors.
Hopefully this strategy overview is a helpful way to frame your overall approach. However we know that people need tactical advice as well. The rest of the blog series will focus on specific advice by sub-topic.
If you have more questions or suggestions, please let us know on Twitter or connect with us on LinkedIn.