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By: Prannoy Nambiar, Head of Product and Growth at Careerlist
The first step in the face of an economic slowdown? Curbing costs and maximizing cash balances. Once that's done, it's time to evaluate your product/offering in light of any sudden market changes. Consider shifts in supply and demand. How are your customers changing? What does this mean for you? A company's response will determine their success for months, or possibly years, into the future.
Dive Deeper into your Best Customer Relationships A potential slowdown in business offers a valuable opportunity to re-dedicate attention towards your best customers. Once you identify what they love about your product or service, there is an opening to explore what needs you might be able to better support. The way your customers approach a downturn may also inform how their business is changing, what priorities have arisen, and how you approach them going forward. As your customers focus on adapting their own organizations, there’s a distinct opportunity to help them drive growth.
The most recent example of this is Zoom, the videoconferencing platform. They traditionally offered enterprise products for organizations to conduct meetings and client calls.
During a period that required intense social distancing and enhanced remote and virtual tools, Zoom leadership identified what needs their current customers had, and loosened the reins to increase engagement. They offered significant discounts on their product, which increased the amount of licenses they provided. They also offered their product to large scale public enterprises, such as schools, for free. Their share price sky-rocketed quickly (by ~44% in 30 days) and they were able to solidify their relationship with current customers while securing the trust and engagement of new customers for the long-run.
Determine Mission Critical Criteria In difficult economic circumstances, the team must put aside a few things. Side projects, “nice-to-have” features, and other tangential endeavors must take a back seat for now. The focus must be on mission critical issues and challenges that your customers are currently facing.
The origin story of Nutanix serves as a great example here. The cloud-computing software company focused on simplicity and reliability rather than a feature-packed product offering. Leadership understood that the basic, foundational product expectations, not the feature-rich, complicated offerings of the time, were the highest priority to fulfill for their potential clients. As a result, the mission of their product was clear and, despite the slower economic times, Nutanix quickly found product-market fit, eventually becoming a billion-dollar public company in less than a decade.
<aside> 💡 Overview: Lego experienced a rocky path prior to the 2008 financial crisis. They lost sight of their target audience and strayed too far from their core value. It was not until Lego refocused on what their customers really needed that allowed them to thrive, despite a devastating recession. We can learn from Lego’s history on how to remain relevant.
FOCUS ON KEY CUSTOMERS
Before the recession, Lego pushed out a variety of new toys to boost sales. However, too much innovation was paired with too little research, and this did nothing but drive costs up. The company hastily invested in new product lines that were not profitable, because they lost sight of their key customer. Jørgen Vig Knudstorp invested in “a kind of research the company had never done before—deep ethnographic6 studies of how kids around the world really play.” This provided them with deep insights on their most important consumers.
FOCUS ON CORE VALUE