Markets can change quickly. One day an account may be healthy and thriving with all the signs pointing to expansion. The next day the economy turned and suddenly this company is laying off employees and cutting costs. You are no longer in business development mode, you are now all on deck to avoid unsubscribing.
What’s happening in the tech industry right now is reminiscent of the conversations our team had in March 2020 when the pandemic hit. At the time, I was an account manager at Ada, a brand interaction platform used by fast-growing companies to automate customer interactions, reduce operational costs, and improve the quality of their customer experience. . We had difficulty determining which of our accounts might be at risk and where we should focus our efforts to maintain our operations. It wasn’t as simple as “all e-commerce brands will take off” because it depended on What they were selling. Also, our idea of “essentials” was changing rapidly – remember how toilet paper became the new currency?
We have therefore proposed a model taking into account two factors: the demand for the product/service of the brand and the demand for customer support. (As you can see below, the chart took on the familiar form of a dual-axis or dual-continuum chart, like the infamous Political Compass or the infamous Approval Matrix for a different reason). The idea was that the vertical axis, business income, would tell us who could afford our solution, while the horizontal axis, volume support, showed us who could benefit to of our solution. We mapped our accounts into these four quadrants and then developed different account management and marketing strategies for each.
4-Quadrant Analysis for Managing Accounts in an Unstable Economy
We have divided our accounts into four groups: the rare anomaly, at risk, the positive pain and the negative pain.
The 4 account types in our quadrant analysis
- Rare anomaly
- At risk
- Negative pain
- positive pain
1. The Rare Anomaly
It was (and still is) rare for a company to be in the upper left quadrant – increased demand for products/services, but decreased demand for support. That’s the goal of any organization, especially in today’s economy: to grow the business while adapting operations to reduce costs and increase margins. If we encountered a company like this in the wild, they could afford our solution but wouldn’t need us. None of our accounts fell into this quadrant, nor did we prospect in industries that we thought would land here. It was an obvious waste of time.
2. At Risk
Some of our accounts have landed in the lower left quadrant. Demand for their product/service has gone down, as has customer demand for support. This included a number of loan companies, retail stores and travel businesses that depend on tourism. These brands were highly threatened. How long could they continue to operate during the pandemic with such a steep drop in revenue? These are companies we have renegotiated contracts with to help them weather the pandemic and help scale their operations as the pandemic (hopefully) subsides.
For example, we were working with a European company that helped organize shuttles between airports, hotels and cruise ports. Their incomes plummeted as tourism dwindled and customers canceled trips in droves. Many people’s jobs were at stake. We offered to reduce their contract expenses for a period of time so that they could continue to operate, which earned us trust and gratitude. With the return of travel and tourism, this particular business is now in a much better financial position and is counting on our product to help it grow. They have since resumed their pre-pandemic spending with us and view us as a long-term partner.
Not all of our accounts in this risky category were able to sustain operations and recover, but we felt it was important to our brand reputation to act as true partners and support these companies in difficult times.
3. Negative pain
A number of our accounts fell into negative pain territory. These are companies like airlines, cruise lines and travel aggregators whose business dried up while customer service was inundated with extraordinary demand. We invested heavily in these accounts to ensure that our product was doing everything possible to help these companies extend their customer support. At the same time, we renegotiated contract terms on a case-by-case basis to provide these brands with some expense relief during the most challenging quarters in their history. We were an operational lifeline for these companies. Generating maximum value and getting creative with our contracts during the pandemic has earned us a permanent place in their tech stack.
As for new business, Negative Pain businesses desperately needed our products and services, but couldn’t afford them. We halted our marketing efforts with these companies, knowing that they were unable to buy our product when they needed it badly. However, we continued to invest in greater brand awareness in these industries to ensure that we would be ahead when they started to recover. For example, we held webinars and marketing materials for airlines to educate them about our solution and showcase our success with Airasia. But we did not attend any airline events or target accounts at that time. Instead, we redirected our direct marketing dollars to target industries we knew were experiencing positive pain – those that needed our solution. and could afford it.
4. Positive Pain
And yet, a number of industries were clearly experiencing positive pain. Customer support volumes were skyrocketing as the demand for these brands’ products/services was also surging. This included video conferencing platforms, health and wellness e-commerce stores, health software, meal delivery services, and more. These were companies that, if they hadn’t implemented some sort of automation yet, needed it ASAP and could absolutely afford to buy it. We focused our marketing efforts on these types of businesses, knowing that these investments would pay us the most.
We’ve doubled down on our existing accounts that are experiencing positive pain, again ensuring that our team and product are doing everything possible to help them scale. In many cases, the value of our contracts increased in this segment because these brands needed more of our product and could afford to invest.
Applying our quadrant analysis to the present moment
So how does this model relate to the current economic situation? Well, one thing is for sure, not every economic downturn lasts forever. Many previously risky and negative pain brands have recovered and are thriving (like the aforementioned Shuttle Company). What is important to know is that the markets operate in cycles. As Heidi Klum said so well of fashion, “One day you’re in, the next day you’re out.” In the same way, you could also be away and then suddenly back. So while today’s economy may look dire, rest assured there will be a recovery eventually.
However, the timing of this recovery will not be the same across all industries. This phenomenon is described in a recent McKinsey article, which charts the historical timeline of decline and recovery in different sectors. For example, while consumer discretionary spending is often the first to decline, it is also one of the fastest segments to recover. Compare that to energy companies which are slower to experience a downturn and even slower to recover from a recession.
For Account Managers and CSMs who are held accountable for retaining and growing existing business — hang in there, it won’t last forever. Additionally, some segments experience positive pain even today. For example, credit unions and some discretionary spending (like online gambling) tend to hold up much better than other industries during a bear market.
How to do your own 4 quadrant analysis
The best thing you can do to focus your time and make an impact is to develop your own positive pain model by following these steps:
- Draw a graph and note the company’s revenue on the vertical axis.
- Update the horizontal axis with a business difficulty that your product/service solves for.
- Plot your accounts on the chart and identify trends in industry, geography, segment, etc.
- Share your mapping within your CS team and compare notes. As a team, align on strategy to serve accounts based on their quadrant and the timing of their industry’s historic recovery from a recession.
- Share your findings with your sales and marketing managers. Your business volume is the best indicator of the whole market. Everyone in your organization can benefit from understanding these trends when deciding where to spend their time, attention, and money.
For brands heading into tough months ahead — those whose focus has been on cutting costs and increasing efficiency (I’m looking at you, big tech) — this stressful time is a in time. Know how your industry has historically recovered from a recession and how quickly so you can plan ahead for a possible recovery. Although it may seem distant today, there will come a time when you will start to see demand for your product/service picking up again, which means that the request for support will not be far behind. Prepare for a smooth recovery by investing today in the systems, processes, people and technology you’ll need to succeed tomorrow.