The global economy is teetering on the verge of a recession, causing many organizations to retrench, either by slowing investments or aggressively cutting costs. Retrenching can be an effective protective measure for defending against inflation and slowing sales, but how can founders proactively drive growth in a recession?
Over the last few decades, many tech companies have managed to withstand, and even grow, through economic downturns by redirecting assets and focusing efforts toward creating customer value and boosting retention. New business is critical to growth, but there are no guarantees that a first-time customer will become a lifetime customer. In periods of economic uncertainty, companies cannot rely on new customers alone, and maybe not at all.
A more dependable growth strategy is managing existing customers and broadening the products and services they use over time. Profitable and mature companies with large, active customer bases are better equipped to handle downturns, especially if more than 75% of their revenue comes from existing customers.
Here are a few ways a business can shift focus to a growth-through-retention strategy that prioritizes customer experience:
Account management is not just about cross-selling or upselling — it’s also about genuinely putting long-term customer goals ahead of the company’s short-term interests.
Centralize first-party data
Customer data is first party, and businesses have access to critical information regarding the products their customers already use, their line of work, where they’re located, relevant spokespeople and decision-makers, and more. As opposed to third-party consumer data, which may be misappropriated or misinformed, first-party data is exchanged in good faith.
In other words, first-party insights presume an existing, positive relationship between a business and its customers, and those customers justifiably assume their information will be leveraged to support any future interactions and guidance from their vendor. If a company knows all the products and vendors a customer is using, it can position itself in multiple ways to save the customer money and bring more value to the table.
The challenge is that customer records rarely contain this type of information. Depending on the size of an organization, first-party data is likely stored across multiple departments and systems, including marketing, customer advocacy, sales and support.
During a recession, look to drive growth through customer retention by Ram Iyer originally published on TechCrunch