Weathering COVID-19: What Tech Revenue Execs Need to Know
What specific actions are tech revenue leaders taking during the current COVID-19 crisis?
The global COVID-19 pandemic combines the life-altering scale of natural disaster and the severe disruption of sudden, sharp economic downturn in a single event. For revenue leaders, the challenges are particularly acute. As in any economic downturn, effectively managing the business requires intense focus on top- and bottom-line results. However, the ability to drive these outcomes is diminished due to social distancing and abundant economic uncertainty. In consultation with many of our clients, Alexander Group (AGI) has assembled a list of actions for tech revenue leaders of marketing, sales and service functions. This list will undoubtedly evolve and grow as the crisis endures.
Driving Digital Enablement for Commercial Teams
AGI conducted a survey of revenue leaders across industries to gauge responses to the pandemic. Over 25% of the respondents (60+ companies) were from the tech industry. 70% of those respondents tell us that they’ve shifted all commercial activity exclusively to phone. We expect this number to rise as more states and municipalities mandate social distancing for all non-essential personnel. As such, revenue teams must be able to perform their functions digitally.
Sales managers should ensure that field sellers have the ability and access to tools required to work remotely. Tools include:
- Mobile phone
- Device with Wi-Fi connectivity (tablet or PC)
- Video conference software
- VPN network access
- CRM or customer database access
- Web camera
- Headset with microphone
- Instant messaging application or client
AGI recommends that sellers be reimbursed for any approved digital enablement technology they do not currently possess.
Field sales managers should adopt management techniques utilized by inside sales to improve productivity and share best practices.
- Encourage more frequent team meetings and one-on-ones (preferably by video) to share best practices and align on effective messaging/talk tracks
- Establish more programmatic/campaign-driven activity to supplement traditional ad-hoc sales pursuit
- Support sellers by automating the prioritization of selling activity, providing a clear expectation for seller tasks
- If possible, link field teams into productivity enhancement software utilized by inside sales teams
- Drive nurturing conversations with existing customers; take advantage of the increased available sales time due to lack of travel to deepen relationships with customers
Maintaining Operational Flexibility While Protecting Talent
According to our COVID-19 survey, 41% of tech companies are forecasting at least a 6% reduction in YOY revenue. 53% tell us the impact will be negative, but cannot quantify it yet. During times of severe economic disruption, our clients often ask us which levers they should consider pulling to be responsible fiscal stewards without risking the livelihoods of their employees and emerging from the downturn flatfooted and under-deployed. 70% of tech respondents indicate they are keeping staffing at current levels; however, 62% say they are curtailing or considering curtailing new hiring. Meanwhile, just over 50% of our respondents say they’re considering quota relief and/or compensation guarantees for sales people.
Adjustments to sales compensation and quota should be aligned to organizational compensation philosophy. The most common actions we see (with the underlying compensation philosophy in parentheses), appear below.
- Lower quotas and reset plan (“Keep Everyone Whole”)
- Lower quotas and under-allocate goal (“Keep Everyone Whole”)
- Provide guarantees or non-recoverable draws (“Keep Everyone Whole”)
- Eliminate plan thresholds and/or hurdles (“Keep Everyone Whole”)
- Adjust acceleration rates up and excellence points [point on the pay curve that pays the top rate] down (“Retain Top Performers”)
- Transfer open territory accounts or house accounts to top sellers to broaden available opportunity (“Retain Top Performers”)
- Provide SPIFs and contests to keep more reps in the game (“Maintain Pay for Performance Culture”)
Giving Every Commercial Resource a Customer Success Mandate
In normal times, a robust customer success function builds strong, vibrant user communities, secures renewals and creates a platform for upsell/cross-sell expansion. In disruptive times, customer success is on the front lines of preserving revenue and mitigating churn. In a recent AGI survey, approximately 80% of tech companies told us they had invested or were investing in a customer success function. Whether your organization has formalized the function or has other post-sales resources (renewal reps, account managers, customer service), it is vital that companies protect existing revenue streams now.
Tech companies should utilize and supplement customer success resources to identify and mitigate potential revenue churn risks in the existing business. We have captured some of the actions we believe to be best practices below:
- Develop a comprehensive plan and communication strategy for CSMs (customer success managers) to empathetically reach out to clients; focus on instilling confidence and reinforcing business value of solutions
- Elevate the visibility of product telemetry and user data up the management chain
- Reevaluate customer health criteria to ensure accurate assessment of customer risk
- Utilize excess capacity from functions such as marketing and business development to supplement customer success coverage
- Provide a self-serve portal with communication and FAQs about your company’s approach to mitigating COVID-19 impact for smaller customers if live coverage is impractical
- Provide alternative communication events for CSMs such as team meetings, one-on-ones, social virtual meet-ups to boost group and individual morale
AGI will provide more information as this situation develops. We are available to answer any questions or provide additional insight on how organizations are managing through and eventually, out of this crisis. Please contact us.