With near constant news of layoffs in tech, rumors of another interest rate hike from the Federal Reserve, and the will-we/won’t-we talks of a recession, the business world can seem like an uncertain and scary place right now.
In a new survey of Pavilion Executive members, 68 percent of respondents reported missing their revenue target for July and nearly one in five have already laid off employees because of market conditions. Top-of-funnel performance was soft, too, leading to less pipeline for August.
Written together like that, it can seem like the SaaS world is spiraling. But it isn’t so cut and dry. If you take anything away from this article or this market, it should be that nothing is set in stone. You have more control over the outcome than you think, but it does require reframing and refocusing on what actually works for your business and making the necessary adjustments.
Don’t Panic. Reassess.
While a large portion of respondents missed July targets and likely won’t hit their original 2022 revenue goals, three in four reported adjusting their goals only by 10-30 percent to much more achievable numbers. And 46 percent still feel confident in their company’s performance.
Where is this confidence coming from? The market uncertainty has yet to have a significant impact on existing customer churn. In fact, 57 percent of respondents reported churn was lower than expected in July. This tells us that the market isn’t preparing for heavy losses. They aren’t needing to cut budgets like you’d expect based on the headlines in the first paragraph. This is a good sign.
While we are absolutely in the throes of a market correction after sky-high valuations and funding in 2021, this is also an opportunity to get to the core of your business — and your customers — and dig into the things that will set you up for success in the future.
Marketing Matters in a Downturn
So you’re ready to look your data in the eye and make some choices about your business. The first place I’d recommend to start is marketing. To market through a downturn you should look to reallocate marketing budgets and bet on the things you know bring in leads and build your pipeline. And you likely need to generate demand now more than ever.
We found that an indicator of success last month was spending. Those who indiscriminately cut marketing budgets actually performed worse than peers who invested in key channels. Members who missed targets were:
- 4.5x more likely to cut paid search
- 2-3x more likely to cut display, paid social, or other channels
- 2x more likely to characterize staff reductions as layoffs, rather than performance-related dismissals
On the flip side, those who met or exceeded July numbers increased spending on owned field marketing (46 percent), paid search (46 percent), paid social (36 percent), and hiring sales development reps (36 percent). Winners also tended to reduce staff based on performance, rather than wholesale layoffs.
These people, and their companies, understood that killing your growth engine hurts you now and hurts you six months from now. Indiscriminate, across-the-board staff reductions can kneecap you at the worst possible time. You need all of your A players on the team right now.
An important piece of this is to focus on your customer. They will tell you what they need. Pivot your messaging to align with what prospects say they need and what current customers say they want. If you can deliver on your promises, you will successfully leverage this opportunity.
I understand that budgets are tight right now, but smart spending will always win out over panic and short-sighted reductions.
Let Sellers Sell
If you’re prioritizing the marketing channels that work and investing accordingly, your sales team will be able to capitalize on this demand. The best sales reps are adaptable, creative, and data-driven. They understand how to use the resources available (even if there are fewer of them). Selling in a downturn requires an even greater understanding of your customer, their pain points, and the channels they’ve prioritized during this economic uncertainty. Just like with marketing, encourage your team to find what works, and throw even more weight behind it.
The wrong decisions now kill 2022 and, worse, jeopardize 2023. This is not a traditional recession and navigating this environment will take skill, data, agility, and judgment. But you can do it.
