Addressing Uncertainty: Increasing Runway and Customer Acquisition during Crisis
During an economic downturn, Startups must extend every dollar as far as possible. This article discusses the ways businesses can manage and extend the runway, build relationships, and strengthen their position during crises. The following are five takeaways:
1. Leverage data to identify opportunities and risks
Plan to track and measure or plan to fail. If you don’t measure it, there’s no hope for optimizing anything, so marketing automation and CRM technology are critical for even the smallest businesses. You can track all significant marketing and sales metrics with some measure of predictability. These technologies allow you to accurately identify where leads and campaign sources of spend are occurring, what’s moving the needle for your company, and which marketing channels and sales campaigns drive sales.
Your decisions need to leverage metrics and data tracked across all teams and departments – including engineering, recruitment, and customer experience. These technologies allow you to measure customer acquisition strategies across all channels to determine LTV: CAC ratio, and base your business decisions on numbers like conversion rate, expense, and ROI.
The focus on sustainable growth rather than expansion at all costs – and don’t underestimate the affordability of marketing automation and content services for startups. As you scale your business, a reliable measurement infrastructure will make it very easy to approach strategic decisions methodically. Another pillar of vital importance is keeping your data updated and organized can make it easier to move your business forward.
2.Organize expenses and build a robust financial infrastructure
Although often overlooked by startups, the financial organization of your business is critical for sustained growth. Re-focus establishing a strong financial foundation to increase control and visibility over expenses and bolster it with a trusted finance task force. A strong foundation is much easier to install when a startup is just getting started and invaluable as it matures, especially during challenging times. Centralize financial spend onto one credit card and identify inefficiencies and overlaps quickly and refer back to your measurement model, often determining financial cuts.
Regular assessments of each channel and operations of the business are crucial. The litmus test for asking yourself and the team is: “Given today’s climate, would we build the product and business again from scratch and how would we do it differently. This regular exercise helps you stay lean to optimize results in a shifting environment.
3.Leverage opportunities to create a sustainable advantage
Uncertainty can bring many problems, but approach crises as a chance to grow and remain relevant. The entrepreneur mindset is to always look for opportunities, even in dire circumstances. The need to double down on a digital-first strategy is upon us. The internet is already rampant with noise, so startups need to differentiate their brand value and stakeholder messaging. In a new digital-first world, focus spend on content marketing, marketing automation, email marketing, SEO, online paid media, webinars. Seek out assistance for discovering opportunities created by the digital shift, and use them for a long-term advantage.
Following the COVID outbreak, you may spot a unique opportunity for customer acquisition and pivot to a new landscape to position your product as the best solution for newly incorporated businesses in a digital era. Working, now, ever more closely with customers and prospects and determining where their needs are shifting can benefit them (and your long-term strategy) beyond 2020/2021.
A few essential keys:
- What value and problem does your product solve in the market?
- Identify the COVID impact and the resulting shift in the market.
- Are you riding a tailwind for your industry?
- How can your product add value to the current WFH climate?
- Are there new opportunities you can consider in a digital world?
- What do customers need to succeed in the new normal? E.g., New safety protocal features?
4.Evaluate your market position, and focus on long-term success
The million-dollar question is to ask yourself if your startup is at an advantage or disadvantage in the current environment and whether you have the runway to act. Back into relying on established metrics and financial models to determine if revenue has increased or declined because of Covid-19 and the digital shift. Once you have a clear perspective of your situational analysis, decide whether you have the resources to invest in product development and growth. If you cannot leverage current growth, you’ll need to leverage long-term sustainability, and shifting spend. Most startups typically should have 18-24 months of runway to make this investment comfortably.
The crisis is the time to accept that this is not a massive growth year. How can you not focus on preservation, customer engagement, and relationship building? Continually focusing on product design and strategy will serve your company moving forward. The reality is that the current climate is a significant struggle, but that doesn’t mean that you can’t set your business up for success when the economy turns around. Ask yourself with each decision if your actions are putting yourself in an advantageous position for when that happens.
5.Empathize with your customer
Remember, your customers are your lifeblood. Everyone on planet earth shares the struggle through this unprecedented crisis. Empathy takes on new meaning with your employees, customers, and partners. It’s more than just sending out email messages and posting statements and resources on your website. Genuine compassion and relationship building are mission-critical, and those businesses that practice what they preach will distinguish themselves from the competition. Customers are distracted and concerned, so consider what might be on their minds before going headfirst into asking for that renewal payment. It’s imperative to develop a crisis communication plan that addresses current situations, stakeholders (employee, customer, partners, etc.) and how to address and improve circumstances. Of which, have been flipped upside down with WFH and economic uncertainty. Crises communication plans are designed to address internal and external issues and further demonstrate a commitment to pushing through this awful situation successfully. The plan should also be nimble and evolve with the circumstances, but customers and employees will better understand that your company cares and shares a commitment to their evolving needs. When we get through the crises, this type of loyalty will be reciprocal.
Startup businesses must focus on remaining relevant and responding to their customers’ needs amid uncertainty. Robust financial and measurement foundations provide the clarity needed to swiftly and confidently make difficult decisions and focus on keeping your business afloat and thriving. During times of crises, focus on the long run in all decisions, and keep your dream alive – You’ll need it on the other side.
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