Firing Customers
Yes, sometimes you need to fire customers.
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In this age of high growth companies, there is something special about every customer. Businesses are measured by customer satisfaction, customer retention and customer spending growth. You work so hard to close customers you never want to let them go.
Every customer is precious.
As a result, many businesses will do anything to retain a customer! Discounts, premium service and upgrades are handed out to make sure customers stay customers. It sounds like good business!
In the early days of any new product, this is a mistake.
New products are in search of their ideal customer profiles. Hopefully you have a hypothesis on who that is before you launch, but as you learn from the launch that will change! Maybe the customer is slightly different than you expected, or perhaps the best customers are a small sub-set of the customers you are targeting.
As products evolve, the right customers come into focus and the product evolves to better serve them. The more you know about how people use the product, and who you want those people to be, the more the product changes. Eventually the product will look a lot different than it did when it started.
The biggest danger is that these teams still try to hold on to every customer as hard as they can. Even though the ideal customer profile is shifting, and even though the product is evolving, they don’t want to let go of any customers.
This leads to a big problem. You have a growing list of customers who are not in your ideal customer profile, and you need to support them even though the product and business is moving away from them. It becomes like maintaining multiple product lines as the main product becomes so different from what these mis-matched customers initially wanted.
Instead, you need to fire those customers.
It sounds strange to talk about firing customers. All businesses fire employees, but there is something special about customers. Customers might stop using a product, but a business stopping a customer? That feels odd.
Regardless, you absolutely need to do it. The cost of dragging all these mis-matched customers along with you is far too high. The velocity and focus you need is lost the minute you try to serve two audiences, and as it becomes clear a customer doesn’t fit your ideal profile you need to let them go.
You don’t need to be mean! Thank them for being a customer, give them a full refund and explain you aren’t offering the product they wanted anymore. While it might be painful, focus always is.
Firing customers might mean you go through a lot of customers to find a small group with the ideal profile. You might fire 20 customers to get to only 5 that are the right profile! Those 5 ideal customers are gold for you, as you can use them as a prototype to build your business. The 20 customers you had to fire aren’t wasted time, they were just steps on the learning curve for you.
Of course there are other reasons you might fire customers, including verbal abuse. There are some customers that are not worth retaining because they verbally abuse you, your team or your partners. I’ve been there and listened to someone scream obscenities at me for entire meetings. Life is too short to put yourself in these situations, and you should fire them no matter how much revenue they provide.
However, I’m hopeful that won’t happen to you more than a handful of times in your career! Much more common is this problem of having legacy customers that no longer fit the business you are in today. Loyalty is commendable, but distractions will kill your business.
So, maintain your focus and fire customers when they no longer fit your ideal customer profile. While it might feel like a step backwards, it will help you run forwards even faster.
For more on Sales and Customer Success, see:
Preach.
Really profound, articulate and true. Thanks for taking the time to write this piece, Sean.