Recessions don’t give a lot of warning, and they won’t wait until you’re ready to happen. As the Key Account Manager or Customer Success Manager, you’re especially susceptible to harsh economic conditions and decreased growth. Your job revolves around retaining and growing the most valuable customers.
For the best chances of success, you need to know what you’re facing and how to move forward despite a shrinking economy. There’s a lot of work involved in this, and it starts before the recession does.
The Only Variable Is When
If you look at data from economies around the world, you’ll find periods of growth always followed by periods of recession. In the US specifically, data from Q1 in 1970 through Q2 in 2018 shows a number of economic recessions. While some were worse than others, such as the Great Recession in 2009, all the recessions in that time period represent shrinkage.
What we know is that in the US, recession of some magnitude will always follow growth. From this, we can determine that the current period of growth will transform into a period of recession at some point. When it will happen, how severe it will be, and how long it will last are all unknowns.
A recession is coming. We just don’t know when.
Planning Before Panic
Since we know a recession will happen in the future, the best course of action is to plan for it ahead of time. Growth periods are the best times to plan for recession, since you will likely have extra resources available and little to no pressure to act immediately. Creating a plan for a recession is best when you don’t have to rush it.
Don’t wait until you see growth slowing and industry trends turning downwards. At this point, it’s already too late. You’ll be pressed to act quickly, panicked about the potential impact on your company, and worried about the uncertain future.
For Key Account Managers, planning ahead is even more vital so you can brace yourself before any real impact is felt. Because the B2B playing field relies so much on large customers, any shrinkage can result in devastation for unprepared providers. Build your recession plan now so you have time to lay a solid foundation for yourself before you need it.
What Happens During a Recession?
To plan for a recession, you need to know what to expect. As we saw before, the severity of a recession is unpredictable. But, each of these effects is likely to be felt in some way:
1) Market Constriction
During a recession, the market is shrinking instead of growing. This leads to the market you’re in also constricting. The pool of new customers will shrink, while your existing customers may also disappear or drop you as a client. Market conditions are more difficult in a constricted market because there is less money on the table.
2) Tightened Budgets
Companies are likely to cut different operations in response to a reduced flow of income. This budget tightening usually results in low-value operations being cut. They could be either scaled back or cut completely. As income is reduced, budgets for all companies effected will naturally reduce in response.
3) Reduced Wiggle Room
Whereas during growth you may be able to expand a client’s budget through up-selling and cross-selling, a recession will usually limit these options. You’ll have fewer options to grow your accounts through expanding existing contracts.
4) Slowed or Stalled Growth
By definition, a recession is a period where the economy is shrinking. While individual companies may still experience some growth, many will have difficulty growing during a recession as the economy at large is shrinking.
5) Vendor Consolidation
Many companies are keen to cut off vendors who produce the least value for them. As the budget tightens and revenues shrink, companies will reconsider who they’re working with and may consolidate their vendor list to cut costs.
6) Broken Contracts
With vendor consolidation comes some contract severance. It may be that a company can’t afford to hold up their part of a contract anymore so they choose to break it instead. The vendors on the other end of the contract will be cut off from the remaining potential revenues. Contracts may also be broken if a client you’re dealing with goes bankrupt.
Focusing on Customer Value
As a Key Account Manager or Customer Success Manager in a B2B company, recessions are a terrifying prospect. Loss of even a few of your accounts can have a disproportionately large impact on your company. You need to get ahead of the loss and make sure you’re providing the kind of value that your customers can’t live without.
Value provided is one of the only metrics that your customers will care about when a recession hits and they have to choose who to continue working with. If you’re not providing the right level of value for the money they’re spending with you, you’re at risk of being cut from the list.
To avoid this, you need to make sure you are focusing on the value you’re bringing to your customers. Their revenues are your source of income, so by helping them achieve their goals you’re increasing your own potential income as well. Becoming value-focused creates a win-win scenario that your customers won’t want to miss out on.
In order to be value-focused, you need to upgrade your account relationships to strategic partnerships wherever possible. Strategic partnerships are resilient and adaptable to changes, even the negative changes that come with a recession. Forming a strong partnership with your customers before the recession hits will make you a more valuable vendor on their list.
Becoming Indispensable
What do you need to do to make sure you’re always on the right side of the vendor cuts? You need to become indispensable. The value and benefit you provide to your customers must be integral enough to their operations that they don’t consider dropping you. This means acting in a few specific ways before and during a recession:
1) There is no margin of error
When budgets are tight, competition for customers increases. If you make too many mistakes, cut corners, or skimp on providing value, you could be replaced. Do not tolerate mistakes with your key account customers, and fix any mistakes that occur as soon as possible.
2) You must continually demonstrate your value
If your customers aren’t seeing the value you’re providing, they won’t be able to make an informed decision about you. Don’t waste your time trying to show off, but you should be proving your results to your customers. Show them what you’re bringing to the equation and how your company is helping them to succeed. Be as specific and measured as possible.
3) Fill every need – open or hidden
Your customers have many needs associated with their goals. Some of these needs will be open for you to see while others will be kept more privately. Part of your job as an Account Manager is to seek out the hidden customer goals and make sure you’re doing what you can to fulfill those too. Remember to focus on goals that add value to the customer.
4) Be ready for a constricted market
Leave some buffer in your annual budget to make sure you’re prepared for shrinkage. If your budget is too tight or your plans are too dependent on a growing economy, you could run into a harder time during a recession. Growth can turn around at any time, so you should be ready every year in case of a recession.
5) Don’t push it
Your focus during difficult market times should be retention, not account growth and extra sales. Increasing revenues is still possible during recession, but it won’t happen if you try to push sales too much. When a customer sees you as a pushy supplier, they may become guarded and resist any attempts you make to expand the account.
6) Work closely with your customers – be adaptable
Your customer’s needs may change rapidly and dramatically during recession. Be prepared to adapt with them. Flexibility is vital in a difficult economic environment. If you’re too rigid in how you operate and how you provide for your customers, you may not be able to keep up with their evolving priorities.
Align to Customer Goals
Your goal now, before the next recession, is to build a solid foundation with you customers. Start now; don’t wait until budgets are decreasing and pressure sets in. Focus on aligning your company and your services with your customers’ goals. The more closely you can align with their goals, the more you are associating what you offer with their success.
As times get more difficult, companies naturally try to ease the financial strain. But, if your company is linked closely enough to customer success, a continued working relationship will be the obvious choice. By successfully joining with your customers as a strategic partner, you’re working to solidify your position as a vital part of what they do.
Now, you’ve recession-proofed your company.
Conclusion
Strategic partnerships don’t just happen spontaneously. They must be built over a long period of time. Your responsibility as an Account Manager is to make sure you’re always working towards stronger partnerships with the right customers. Doing this consistently will keep you prepared to face periods of recession without worrying about losing your whole customer base.
