Bad to the Bone

(This article is cross-posted at onproductmanagement.net)

In this week’s #prodmgmttalk, (on Twitter Mondays at 4 pm pacific) there was a big discussion on what to do with “bad” customers; how did they get to be called “bad”; how do we know they are “bad”; and, what do you do with them. It’s amazing how many points you can make in 140 characters, in a 20 minute timeframe!

While there was enough content to write a book on a “bad” customer, the focus here is to understand why your product even has “bad customers”.

First, let’s get rid of the word “bad”. It implies that something is naughty, and mean, not nice. Our customers, even the ones who demand excessive time and support are not mean. We value our customers, all of them. If you aren’t sure about that, go read the motivational statement on the poster in the break room or on your web site – you say it to others – We value our customers. So, believe it.

Start at the Basic

Once you get past labeling the customer, let’s look at the root cause. Why are they asking so much of us and our resources? Did someone along the way, not necessarily sales, over-promise on delivering functionality or features? Did you find a customer whose problem wasn’t an exact fit to the solution you provide, so much so that you have to change that solution to fit their problem.

Problem/solution misfit is the number one reason for a customer being a drain on your resources. When you have to build everything to their needs, and explain it individually since you don’t have the information disseminated (it is out of scope of the plans you set forth,) and then train the support team on how the features are designed to work – that takes a lot of effort. It pulls you off the path you had set. And, it started because someone along the way – sales, executives, product management – committed that the solution you sell will fix the problem they have.

Another reason why customers become misfits to our solution is simply because we outgrow them, or their problem outgrows us. In this case, see the misfit statement above.

It All Comes Down to a Simple Fact

But, in the end, the main reason why our customers don’t fit is that we didn’t listen to them. We didn’t listen when they first described the problem they had. We didn’t listen when they explained how their internal processes worked. We didn’t listen when they requested more features to solve their problem, and then included that information in the contract. We didn’t listen to the problems that caused broken processes on their back end; rather we focused on how the product was originally designed to work. We didn’t listen.

When we dig the hole with our customer because of our actions, we have two possible courses of correction that are available to us. First, we can bend over backwards and do all that is necessary to make them happy, correcting and adding features and functionality, going onsite to offer additional training, support and service, and promising future discounts and products to “apologize” for the inconvenience we put them through. Or, second, we can simply fire the customer.

Most executives hate the idea of firing a customer. When you tell a customer that you can’t help them any further, it will translate to lost revenue recognition on the books. But, take a fiscal view of the cost of that customer. Most likely, you have already spent more than the value of the contract on support, development and management efforts to try to make them happy, or at least satisfied. Losing revenue is hard, but if you didn’t listen to the customer up front, this is a small price to pay for correcting your own mistake. It’s not a mistake, it’s a learning experience.

Looking in from the outside, in reality there is no such thing as a bad customer. You simply need to understand who is and isn’t a fit for your product; and, put your focus on finding the customers who fit. Your product will be rewarded when that happens.