No matter the business you’re in, all CEOs are currently grinding through this unprecedented black swan event called COVID-19 and are looking to learn from others. The following is my perspective on how to embrace current conditions to reimagine business as a whole.
Now more than ever, leadership must rethink their business, often from the ground-up. This is certainly true in the enterprise software/systems market where our normal assumptions about customer access and general go-to-market operating norms have been turned upside down. We are living in a new reality with significant changes, some of them profound:
- Customers and employees are working from home.
- Revenue in many customer verticals has been severely impacted.
- Travel is largely not possible.
- You can no longer meet people readily, even in your own city.
- Budgets are very tight – for customers and you.
In a nutshell, all general assumptions about your business are out the window and the outlook can look dire.
As counterintuitive as it may seem, now is the time to radically rethink your business and go on the offense. Chances are very high that your leadership team will resist any drastic re-think and will feel like you are forcing them into very uncomfortable corners. They will want to play defense. Convert them, or if necessary, replace them. Your board may want to play defense as well. Politely convert them because changing your board is harder! (Lesson – always think carefully about board composition.)
It would be a huge mistake to embrace a defeatist view and there will be plenty of that around you during this crisis period. You want to play to win, period. To be clear, I am not advocating blitz scaling, which was popular just six months ago when capital seemed limitless. You can’t afford to. But you can break out of the box. In fact, you must if you are going to build a company of consequence in these times.
So what does a radical rethink look like and what are the core elements to address? I am going to dive into three critical areas:
- Marketing and Sales strategy
- Product strategy
Building a Customer First Culture
Culture is a cliché at most companies. It’s something any self-respecting leadership team will talk about but usually do a bad job executing. During this time, you have to place an inordinate focus on this because a great culture will carry your company through this crisis. You have employees that are unsettled and customers who are on the edge. The bar is suddenly way higher for companies to make a case to customers that they should stick with them or buy from them. And it’s not all about having the best products. You may think this is common sense and not radical. Remember that most companies get this wrong, so getting it right will be a radical departure.
Every company has their list of values that make up their culture. I am going to focus on just one. Build a Customer First culture. Easy to say but extremely hard to do. One of the most critical elements of a customer first culture is aligning every single function behind enabling customer success and being maniacal about this.
I have worked at companies where the culture was engineering or sales first. These companies were certainly successful but eventually became toxic. It’s the CEO’s job to make sure Customer First is in the DNA of the company and that everyone is unified behind this. This is super hard to pull off and you will likely have to carry out a few visible firings to prove that you are serious. The upside when Customer First is done well is incredible; you’ll have a company that is focused on one of your most important assets: a referenceable customer base. No amount of marketing spend can create equivalent customer advocacy. And right now, you don’t have a lot of money to spend on marketing.
If you take nothing else from this blog, I would strongly urge you to embrace the Customer First value. For Vectra AI, besides our software IP, this is our secret sauce.
Scrap Traditional Marketing + Sales Models
Let’s move onto how you market and sell. Here is the good news – marketing events are dead. I don’t know about you, but I have always disliked most of the events we did, especially trade shows where you are obliged to show up for some perceived brand/lead generation value. And the list of events was endless with the general strategy being the bigger the top of funnel, the better.
You now have an amazing opportunity to scrap all traditional pipeline generating paradigms, starting with zeroing out the budget for events. Yes, part of your sales force will be up in arms. That’s ok because there is no better place to start with zero based budgeting than with events. Take a draconian approach to this. And even as the world opens up, maintain the discipline of resisting events. They were generally a waste of money four months ago and will remain so when they are back in force.
What is the alternative? Well, going digital of course. There is the standard point about being great at social media. True enough. But the more powerful opportunity is to revisit how you think about your pipeline funnel. In the enterprise space, a lot of us use pipeline funnel metrics laid out by SiriusDecisions (or similar). These metrics have been around for a long time and are frankly antiquated. They are derived from the classic model of generating a pipeline that is as big as possible (3x to 5x revenue targets). This model also assumes a high degree of inefficiency in conversion metrics as the leads progress in the funnel.
Challenge your team to discard the classic model and aspire to double the efficiency metrics. This will seem like a bridge too far but that is precisely the point: force your team out of their comfort zone and change their thinking around what efficiency could look like.
Key to having a shot at these seemingly impossible efficiency goals is to get laser focused on building a customer propensity model that tightens the aperture on who your likely buyers are. A propensity model will at first decrease your top of funnel. That is okay because you will have a higher quality top of funnel to start with. Then focus intensely on execution of the funnel and use data/metrics religiously. Data and metrics are your friends. The net result should be a lower cost per lead (CPL), a more efficient funnel and lower overall customer acquisition costs.
Focus on Long Term Product Strategy
Let’s switch gears to product strategy. If you are a company that has ARR greater than $20M and already has a strong product offering, now is the time to innovate. Regardless of what space you are in, chances are high that you have an engineering organization and product management team that is constantly telling you that they are oversubscribed. I am sure that is true but I am equally certain they are mired in what they think the roadmap needs to be over the next 6-9 months. In short, a near term focus.
Here is a thought experiment to carry out. What if your 12 month roadmap was discarded completely? Is your business going to crater? Again, assuming you have a market leading product offering already, the odds are very high that you will be just fine. This is an extreme thought experiment and the bigger point is you can jettison a lot of your near to mid-term roadmap and use those resources to radically rethink product strategy that is focused on the next 2-3 years. Do this well and you will both cement your lead in the market and set your company up for longer term growth.
The adage that the best companies emerge from the crucible of crisis is correct. COVID-19 is an incredible opportunity, crazy as it seems. We’re all going to look different coming out of this crisis than we did going in, but recognize you have two options: let the recent events control you, or you can take control.
Now is the time to embrace the crisis, be courageous and drive transformation.
*Let me know what you think! Reach me at firstname.lastname@example.org or on Twitter @hitesh_vectra