According to the International Monetary Fund, the global economy is expected to slow by nearly 3 percentage points this year from 6.1 to 3.2, and decrease again in 2023. Inflation rates are expected to remain high.
There are several things you can do to prepare your go-to-market teams for changes in your prospects’ and customers’ buying behaviors and priorities.
I spoke with FastSpring’s former VP of Revenue Operations about this, and you can stream our entire conversation at the bottom of this piece. I’ve also expanded on some of the strategies we discussed.
1. Reconsider Segmentation to Find New Growth Opportunities
You’re likely already looking at external data for signs of whether your total addressable market (TAM) is shrinking. Depending on your market, there may be public reports or market surveys on expected changes in budgets and tech spend, etc.
But in volatile markets, these may be out of date as soon as they are published.
Another place to get fresher takes are industry thought leader interviews and posts. What are industry CEOs and advisors saying on LinkedIn about their markets?w
As for internal data, on a high level, you should be consistently monitoring your net retention rate, bookings, and average deal size. But where many companies go wrong is staying at too high a level when looking at their market.
Not all segments of your TAM are going to be impacted by external pressures in the same way. For instance, we know that some industries are more recession-proof than others. And if you haven’t already identified these industries within your ICP, that’s a good place to start.
There may also be specific countries or regions that you do business in that are less impacted by inflationary pressures or economic slowdown.
Account-based sales companies are accustomed to defining sales regions. If you’re a more location-agnostic company, you likely put less energy into sales and marketing efforts based on where your customers or prospects are coming from. But in a tighter market, identifying healthy regions can be a huge advantage.
Of course, in particularly volatile markets, the health of specific regions or industries can change rapidly. This is why it’s so important to be able to test the ROI of any investment you’re making as quickly as possible.
Note: FastSpring helps companies scale with fewer company resources. Learn more here.
2. Speed Up Your ROI Measurements
You don’t always have time to compensate for unexpected events in your market, but the key is to speed up how quickly you can measure the impact of the investments you’re making today.
- If you’re accustomed to measuring the ROI of new product investment after six months, change that to six weeks. What leading indicators can you use to measure faster?
- If you beta test new products for six months before releasing them to your full customer base, see if there’s a way to get an MVP into production within three.
Think about how to test any time or financial investment you’re making — so you can fail or succeed more quickly and pivot as needed at a much faster pace.
The other benefit of this is getting new value to your customers as quickly as possible. If your customers are tightening their budgets, you want to demonstrate that you can continue to add new value to them.
3. Train Your Sales Team to Handle New Prospect Priorities
The value propositions that work really well in growth periods might not work as well in periods of slow or no growth. Do your sales teams know how to pivot?
For instance, buyers who historically have cared most about how a product helps the company grow revenue might suddenly be more concerned about how it will help save staff time and other company resources.
In general, we’ll see more and more conversations centered around cost and about what a company will spend if they go with one solution over another. They might be looking for measurable ROI as opposed to potential growth opportunities.
What we are not encouraging you to do is lower your price, which encourages your customers to get used to devaluing your product.
Instead, sales needs to be more rigorous than ever in their ROI calculations, educating buyers on how to justify the cost of your product and realistic, proven ways that it will benefit their company.
4. Find New Ways to Add or Promote Value
Inflation rates are surging around the globe with no signs of slowing down. So along with decreased growth trajectories, you’re likely facing increasing internal costs.
You might be in a position where you need to raise your prices or find new ways of increasing revenue from your existing customers.
No matter what strategy you’re using, the key is to tie it back to value.
Provide More Education Around the Value You’ve Added to the Product
If you do decide to raise prices, tie those numbers into how far your product has come.
- Whenever possible, personalize added value messaging for specific users.
- Create content around platform upgrades, new features, etc. that customers might’ve missed.
Provide Training and Case Studies Around Unused Features or Add-Ons
If raising prices is not the ideal strategy, look for other ways to increase revenue from your existing customers.
Based on our internal data, add-ons or offer upsells are often 30% to 50% of our customer’s business. These are avenues where you can really justify your prices and maintain the average deal size that you’re trying to capture without raising your prices overall.
- Have you identified customers who could benefit from the next tier or a different plan?
- If you’re preparing for a renewal conversation, how can you come armed with proof that they aren’t taking full advantage of your company’s offerings?
Bottom Line: Focus on Value and Prepare to Be Flexible
The good news is that periods of steady growth tend to follow recessions. All you have to do is be ready for them.
The companies that are the most prepared for market upswings are those with the best value positioning. They’ve invested in their product and in their customer relationships. And they’re able to prove that value.
Note: FastSpring can manage the complexities of billing, subscription, tax management, and more on your behalf, allowing you to focus on improving your product and customer relationships. Sign up for a demo to learn more.