Riding Out the Downturn: Proven Strategies for B2B SaaS Success

Navigating a downturn ain't easy…

Churn is up, lead flow is down, deal sizes are shrinking. Scary stuff.

Focus on these three things and you'll get through it:

☎️ Dial-in your ICP

In a downturn, getting laser-focused on your Ideal Customer Profile (ICP) is even more critical than ever.

Every feature, marketing effort, and advertising dollar should be aimed directly at this ICP. There's no room for experimenting on new markets, so double down on what's already working and be as efficient as possible.

Channel your inner "hedgehog" - what can you be the best in the world at, and for whom?

🏷️ Resist discounting

You'll be tempted to offer heavier discounts to combat the slowdown in acquisition. But before you do that, consider offering more value instead.

Sure, it might seem counterintuitive to do this when customers tighten their belts, but think about it this way: acquisition will be challenging during a downturn, no matter what. And discounts will hurt you in the long run, especially since the CAC trough you'll be climbing out of will be even deeper than it is now.

So, take a look at your data and see where your customers are hitting limits or could benefit from additional features. Maybe you can relax volume limits, offer some add-ons for free, or remove some feature gatesFeature GatingFeature gating is the practice of restricting access to specific product features based on a customer's pricing tier or plan level.Read more → to higher ticket plans. Just be sure to set a time limit on these relief packages; as we enter the recovery, it will be essential to re-capture that value.

🔎 Focus on NDRNet Revenue RetentionNet revenue retention (NRR) measures the percentage of recurring revenue retained from existing customers over a period, including expansion, contraction, and churn. An NRR above 100% means existing customers are spending more over time.Read more →

It's also time to shift your focus from acquiring new customers to expanding and retaining your existing customer base. Net dollar retention (NDR) should be your primary focus.

Increased churn in more price-sensitive segments and reduced deal flow is a reality, so a deeper focus on cross-sells and upsells to existing customers will go a long way to ease the pain.

Consider relaxing payment terms to help alleviate renewal and new customer commitment fears.

And above all, show up for your customers by providing excellent support, building and engaging in the community, and offering extra training and onboarding. Switching to a proactive model shows your customer that you care, and they'll remember that when it comes time to renew.

So, the downturn is here…

Use the data you have to Dial-in your ICP, favor incentives over discounts, and focus on NDR.

What are you experiencing? Increased churn? Deal compression? Restricted deal flow? Continue the discussion on LinkedIn here.

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