Coronavirus: Existing customers key to getting through crisis

The importance of keeping existing customers satisfied has been underlined by analyst Gartner, which warns that those relationships will become crucial as the economic situation worsens.

There are growing fears that the coronavirus pandemic will spark an economic downturn and tech firms will not be immune from the impact.

Many in the channel have already been focusing on current relationships, rather than looking to recruit fresh customers, partly because of the challenges in promoting services during the lockdown, but also because of the need to show support for existing customers.

Speaking to MicroScope last month, Paul Garvey, vice-president of Europe, Middle East and Africa (EMEA) sales at Forcepoint, said those that stood by and supported their existing customer base would exit the pandemic stronger.

“We want to make sure every experience that customers have is a positive one,” he said. “We need to know the state of health our customers are in and ensure they have deployed the technology properly and have no issues.

“Partners are recognising that existing customers are the way they will work through this, making sure they are delighted. It is about existing customers and getting through this with our partners and making sure that every one of our customers is able to operate through this period.”

That approach has been backed by Gartner, which has been looking into the state of preparedness that tech CEOs have made for a downturn triggered by Covid-19.

The analyst found that although many are worried about a recession, the reaction to that prospect has been slow.

After what was a decent March for many, the pandemic is now starting to have an impact at a vendor level, with Nutanix and VMware among the latest to look at furloughing staff, along with cutting salaries and staff bonuses.

“While the survey found that 43% of tech CEOs were worried about an economic recession impacting their revenue growth in the next 12 months, many delayed taking action to prepare for this eventuality,” said Patrick Stakenas, senior research director at Gartner.

The analyst’s advice was to batten down the hatches and focus on existing relationships for the foreseeable future.

“As funding and available capital becomes scarcer in the weeks and months ahead, even after the Covid-19 outbreak slows down, tech companies will have to survive off existing customers and cash in the bank while the current market persists,” said Stakenas.

The channel can expect to see more focus from vendors on cashflow and cost-cutting to keep things running in the months ahead as the pandemic plays out. Life will get particularly difficult for startups that don’t have the funds in the bank that their established tech counterparts have access to.

“Companies that have less than 18 months of financial runway must eliminate all possible costs,” said Stakenas. “The reality is that startups strapped for cash will need to run the business very lean to survive.

“Cashflow is the key measure of success or failure for companies in these current circumstances. Startup tech CEOs must measure cashflow on a weekly basis. With a ‘worst case’ forecast in hand, they can determine the crunch points and assess the company’s ability to survive Covid-19.”