Thread
How bad will this year be for your business?
After analyzing data from 33.6k companies - not good, but there's hope:
- B2B on an uptick, but not why you think
- Consumer $$ still tanking
What should you do?
- 5 ways to not lose
- 3 ways to win
Thread time 🧵
After analyzing data from 33.6k companies - not good, but there's hope:
- B2B on an uptick, but not why you think
- Consumer $$ still tanking
What should you do?
- 5 ways to not lose
- 3 ways to win
Thread time 🧵
Let's first look at businesses who sell to other businesses (B2B).
Here's revenue since 2020.
Notice how growth started slowing at a rate we haven't seen since the 2008 recession. 📉
But wait - is that an uptick at the end of the graph?! 😳
Here's revenue since 2020.
Notice how growth started slowing at a rate we haven't seen since the 2008 recession. 📉
But wait - is that an uptick at the end of the graph?! 😳
Q1 for the B2B market is strong. 💪
What's funny is *where* the growth is coming from:
Upgrade and expansion revenue.
New sales are slowing, but current customers are spending more (similar to past downturns).
This is good news, but there's also some bad news 🙈
What's funny is *where* the growth is coming from:
Upgrade and expansion revenue.
New sales are slowing, but current customers are spending more (similar to past downturns).
This is good news, but there's also some bad news 🙈
Customer cancellations are at an all-time high in B2B.
In recessions, you typically see three big waves of cuts as businesses normalize to the environment.
Here we're seeing more of a slow burn of churn.
Don't worry.
There's more bad news. 🙊
In recessions, you typically see three big waves of cuts as businesses normalize to the environment.
Here we're seeing more of a slow burn of churn.
Don't worry.
There's more bad news. 🙊
Here's growth data for consumer, media, and ecom companies.
Not good.
Not getting better.
This is worrying.
If these markets don't improve, we don't pull out of this funk.
If they get worse, the B2B uptick will just be a blip.
"PC - ummm what do I do?"
I got you 🫂
Not good.
Not getting better.
This is worrying.
If these markets don't improve, we don't pull out of this funk.
If they get worse, the B2B uptick will just be a blip.
"PC - ummm what do I do?"
I got you 🫂
Best case we've got another 9-12 months of funk. Worst case - longer.
Here's how the best survive:
1 Attack costs
2 Shore up customers
3 Accelerate cross-sell
4 Nuke current segments
5 Slash discounts (ironic, I know)
Let's walk through how they do each 👇
Here's how the best survive:
1 Attack costs
2 Shore up customers
3 Accelerate cross-sell
4 Nuke current segments
5 Slash discounts (ironic, I know)
Let's walk through how they do each 👇
1. You should have already cut costs to get runway to 24 months.
Pull out the Amex bill.
Load the P&L.
Open payroll.
Scrutinize everything and cut, cut, cut.
"But PC - I run a tight ship"
No. You've been a drunken sailor the past two years.
We all have.
Here's some waste.
Pull out the Amex bill.
Load the P&L.
Open payroll.
Scrutinize everything and cut, cut, cut.
"But PC - I run a tight ship"
No. You've been a drunken sailor the past two years.
We all have.
Here's some waste.
Recruiting spend?
You're not hiring.
Team fun budget?
Halve it.
7 tools because "preferences"?
We use 1 now.
Lower procurement review thresholds and cancel cards to start new.
You'll find mucho dinero.
Re-forecast with your pre-drunk 2019 assumptions.
You'll find more.
You're not hiring.
Team fun budget?
Halve it.
7 tools because "preferences"?
We use 1 now.
Lower procurement review thresholds and cancel cards to start new.
You'll find mucho dinero.
Re-forecast with your pre-drunk 2019 assumptions.
You'll find more.
2. Shore up customers
Surprise - customers are re-evaluating costs, too.
Hard hit customer segments are gone.
Nothing you can do.
BUT you can clean up your unforced retention errors.
How?
Target "tactical" churn.
"PC - what the heck is that?"
🤫 - I got you.
Surprise - customers are re-evaluating costs, too.
Hard hit customer segments are gone.
Nothing you can do.
BUT you can clean up your unforced retention errors.
How?
Target "tactical" churn.
"PC - what the heck is that?"
🤫 - I got you.
Tactical churn's the nudges you do to keep or bring back customers who are near cancellation.
Here's how:
- Payment failures: 20-40% of your churn. You can cut it in half. 🤯
- Salvage offers: you can save 10-25% of the people who hit cancel (data below)
Want more?
Here's how:
- Payment failures: 20-40% of your churn. You can cut it in half. 🤯
- Salvage offers: you can save 10-25% of the people who hit cancel (data below)
Want more?
- Convert monthlies to annual: 200-800% higher LTV (data below on how many you should have).
- Reactivation campaigns: send every 60 days to bring back 5%.
All these add up, but you haven't implemented any.
If not now, when?
"PC - ok I will, but what about *new* revenue?"
- Reactivation campaigns: send every 60 days to bring back 5%.
All these add up, but you haven't implemented any.
If not now, when?
"PC - ok I will, but what about *new* revenue?"
3. Reevaluate your target segments.
Your market shifted.
That's ok. Just reevaluate.
Some verticals you target are dormant for a while. They'll take your call, but won't buy.
Other verticals you're ignoring will get massive tailwinds.
Shift budget and focus ASAP.
Your market shifted.
That's ok. Just reevaluate.
Some verticals you target are dormant for a while. They'll take your call, but won't buy.
Other verticals you're ignoring will get massive tailwinds.
Shift budget and focus ASAP.
4. Accelerate cross-selling
Remember how customers rethink buying from you?
If they stick around, you have a massive signal - they chose you!
They value you.
In the past 4 downturns, expansion revenue stayed consistent or increased.
Take advantage and sell them more stuff.
Remember how customers rethink buying from you?
If they stick around, you have a massive signal - they chose you!
They value you.
In the past 4 downturns, expansion revenue stayed consistent or increased.
Take advantage and sell them more stuff.
Ways to cross-sell customers more:
- Multi-product: +30-50% growth vs. single product strategy (data below).
- Value metric pricing: scale pricing with usage/value = double expansion rev
- Add-ons: Customers with add-ons have 18-54% higher LTV
"PC - I need to move quickly!"
- Multi-product: +30-50% growth vs. single product strategy (data below).
- Value metric pricing: scale pricing with usage/value = double expansion rev
- Add-ons: Customers with add-ons have 18-54% higher LTV
"PC - I need to move quickly!"
Pricing Poppa's got you.
Add-ons take a week to launch and have massive upside.
- Find features used by less than 40% of users.
- Pull some out and charge for them.
Everyone reading this can charge for "priority support" - pure profit for just answering an email or call first.
Add-ons take a week to launch and have massive upside.
- Find features used by less than 40% of users.
- Pull some out and charge for them.
Everyone reading this can charge for "priority support" - pure profit for just answering an email or call first.
5. Cut discounts in half
Discounts over 20% have *double* the churn rates (data below).
Guess what happens to conversion rates 9 out of 10 times when you cut your discounts in half?
Nothing.
Oh, except you make more revenue. 😏
Discounts over 20% have *double* the churn rates (data below).
Guess what happens to conversion rates 9 out of 10 times when you cut your discounts in half?
Nothing.
Oh, except you make more revenue. 😏
How do we *win* the next 12 months in a downturn?
Here's how the best of the best do it:
1 Increase accounts en masse
2 Draft off anxiety
3 Go after competitors
Let's go 👇
Here's how the best of the best do it:
1 Increase accounts en masse
2 Draft off anxiety
3 Go after competitors
Let's go 👇
1. Increase leads significantly
Whoever holds on to the most users at the end of this wins.
Full stop.
We talked about saving customers, but now is the time to acquire as many accounts as possible.
Implement freemium.
Make more free.
"PC - freemium? I need revenue!"
Whoever holds on to the most users at the end of this wins.
Full stop.
We talked about saving customers, but now is the time to acquire as many accounts as possible.
Implement freemium.
Make more free.
"PC - freemium? I need revenue!"
If someone isn't buying right now, would you rather:
A. Reach out to them cold every 3 months
B. See them use your product daily
People get freemium wrong. They think about it as part of their revenue model.
It's not.
It's part of your acquisition strategy.
A. Reach out to them cold every 3 months
B. See them use your product daily
People get freemium wrong. They think about it as part of their revenue model.
It's not.
It's part of your acquisition strategy.
Think about freemium as a really premium ebook.
After all, what better content do you have than your product?
You then own the right to nurture that lead and use usage as a signal of when they're ready to buy.
After all, what better content do you have than your product?
You then own the right to nurture that lead and use usage as a signal of when they're ready to buy.
Freemium is the best way to plant accounts in a down market and then harvest 'em later in the upmarket.
Plus, customers who convert from free are *much* better:
- NPS is double
- Retention is much higher
- CAC is much lower
This is the way, but what if you can't afford it?
Plus, customers who convert from free are *much* better:
- NPS is double
- Retention is much higher
- CAC is much lower
This is the way, but what if you can't afford it?
2. Draft off anxiety about the future
We're scared right now.
Not in a shark attack way, but in a "I don't know what to do" way.
It's a powerful force and YOU can be the person to calm those fears.
People are craving community and answers.
Provide them.
We're scared right now.
Not in a shark attack way, but in a "I don't know what to do" way.
It's a powerful force and YOU can be the person to calm those fears.
People are craving community and answers.
Provide them.
Right now you should:
- Publish more content
- Host mucho webinars
- Do more in-person events
- Build out a community
You'll convert customers now, but you'll also be the brand prospects remember as helpful when ready to buy.
Plant seeds now. Harvest later.
- Publish more content
- Host mucho webinars
- Do more in-person events
- Build out a community
You'll convert customers now, but you'll also be the brand prospects remember as helpful when ready to buy.
Plant seeds now. Harvest later.
3. Implement competitor strategies
Customers are re-evaluating purchases consistently right now. They're willing to flock somewhere.
You can be that somewhere.
How do you get them to look at you?
Value, awareness, and my favorite cost-saving tactic.
Customers are re-evaluating purchases consistently right now. They're willing to flock somewhere.
You can be that somewhere.
How do you get them to look at you?
Value, awareness, and my favorite cost-saving tactic.
Most of your competitor's customers don't know you exist.
Sure, you email them, but they're busy.
Start sending "anxiety relief" content.
Visit them in person.
Update your competitor pages.
Be helpful and go all out.
Next we'll hit them with value and cost savings.
Sure, you email them, but they're busy.
Start sending "anxiety relief" content.
Visit them in person.
Update your competitor pages.
Be helpful and go all out.
Next we'll hit them with value and cost savings.
Being helpful gets you in the door. Being valuable keeps you in the room.
Position your product for the downturn - you'll help them do more with less.
Then comes my favorite objection: "We'd love to switch, but we've got 9 months left on our contract"
Oh - do you? 😏
Position your product for the downturn - you'll help them do more with less.
Then comes my favorite objection: "We'd love to switch, but we've got 9 months left on our contract"
Oh - do you? 😏
Right now you should offer to give your product away for free for the rest of your competitor's contract.
"PC that's a lot of money!"
Is 9 free months for a 60+ month partnership, too much?
Considering your alternative is no customer?
It works brilliantly.
"PC that's a lot of money!"
Is 9 free months for a 60+ month partnership, too much?
Considering your alternative is no customer?
It works brilliantly.
Ok - need to do some work.
If you shore up your flank and make moves to win, you'll be fine. Just cuddle with the chaos. That's your job.
Hope this helped. Show some love to the thread:
If you shore up your flank and make moves to win, you'll be fine. Just cuddle with the chaos. That's your job.
Hope this helped. Show some love to the thread:
Mentions
See All
April Dunford @aprildunford
·
Mar 6, 2023
Great thread, as always.