The looming downturn or recession is an official topic for debate. Many tech companies are already witnessing the impact. Many companies saw the investment fall off a ridge, employees lost confidence, and profits were soaked up. And although it’s genuine to believe that we must decrease burn at all costs during rough times, this kind of thinking can be more damaging to your business’s survival than anything else.
On the other hand, individuals and businesses who decided to dial back on spending and embrace a “wait and see” practice rode the rollercoaster ride.
There are a lot of apprehensions, particularly among folks in high-growth environments with large numbers to crash. Many SaaS companies are readying to enter survival mode, with up to 80% of companies halting investment in marketing and re-evaluating their earnings to make cost efficiencies.
Yes, the recession has reached many countries, and from the looks of it, it appears like it’s here to stay for at least 2 years. Besides, the rising interest rates and descending valuations have hit many startups. SaaS companies documented on the stock market have also had much lower valuations this year as compared to the year 2021.
With these chilling updates in the market, it is essential that every SaaS leader must train his company to pass these challenging times and save themselves to see the good times after the recession is finally over.
Various SAAS-based companies will have diverse strategies to face the recession. Let’s look at some of the top ways in which companies can grow their revenues during the recession.
1. Hold your existing customers
We have always learned from our parents that during tough times, stick to your near ones. The same case is with the recession; during this uncertain time, it is best to lean on those who have our back.
Your existing customers can be a significant source of new business while also providing you with an understanding of the things you may require to do to lower churn and continue growing. Here are some ideas for leveraging your existing customers:
- Offer them a referral incentive (e.g., after every reference to a friend and they can avail of free service next month)
- Create an easy case study of a thriving customer, reminding them of all you have achieved together, and then ask for a referral from them. Remember, words of appreciation are vital for the growth of your business.
- Incentivize consumers to take a survey in order to collect product feedback that may guide them to an improved user experience and ultimately lead to more positive word-of-mouth advertising for your business.
2. Build in budget and cuts
With a mandate to lessen the burn rate, you may be required to cut spending on stuff like paid advertising to preserve cash flow during distrustful times.
SAAS companies must persist in R&D and development costs to improve value for their current customers by cracking more problems for them or even diversifying their product offerings in the same vertical or thoroughly moving to other verticals as well if needed.
During the recession, many good developers look for great opportunities as they may be laid off. Such great developers will be available at much lower salary ranges. This is a good chance for many companies to hire the finest developers available in the market.
One technique that always works excellently in a recession is to scour hiring remote programmers in other countries. Companies that support time and effort into finding amazing remote offshore partners are able to reduce their burn rate enormously.
Also, you can try running cold email and LinkedIn automation campaigns to forge positive conversations with candidates. These channels need zero ad spend and can be a wonderful way to develop sales calls/sign-ups while reducing burnout autonomously.
3. Focus on CRO (conversion rate optimization)
One of the most significant opportunities during a recession is on the paid advertising front. With competitors moving to more traditional spending, ad networks are trim competitive and more reasonable when it comes to acquiring your target market. This delivers an incredible opportunity for you and your company to succeed in new users at a fraction of the purchase cost.
You must comprehend your funnel and have an appropriate process for optimizing conversion rates to ensure that you are as cost-effective as viable during this tough time.
Besides, you can invest in critical areas like organic marketing, software development, and sales. As many other companies will reduce their spending, this can be a useful opportunity to rank your site on the top SERP on the google search keywords.
A recession is probable to happen at any point in time. Hence, many SaaS companies need to consider marketing cutting on reflex.
But smart SaaS companies will learn that marketing is not a cost base and construct strategic investments such as doubling down at the right moment to secure that their growth is sustained and their long-term growth rate is elevated.
Along with these, SaaS companies can make more pleasing marketing determinations by doing the following four things:
- Making the best use of dollar cost averaging in good times
- Building pipeline at the right time.
- Investing at a time when others are withdrawing
- Hiring outstanding marketing talent from their counterparts.
Good, sustainable growth is the outcome of long-term thinking and smart marketing investments. With the bulk of your competition likely hindering their acquisition steps, now is the time to explore deeply and put together a technique for attacking the current market trends.
Author : Ravikiran Sk (Paybooks)