As a small, highly motivated team, there are only so many problems you can work on. Yes, there’s a long list of features that customers have requested over the years, and yes, you have a dozen notebooks filled with notes on where you can lead your company. However, at the end of the day, there are only 24 hours and a finite number of people available to work during them. These constraints are unavoidable, so you need to prioritize some things over others.
This wouldn’t normally be a big problem, but chances are that over time your priorities have grown out of sync with the ideal direction for the company. Customers have come in that like some of the features you provide, but not all of them. They begin to request features that sound great on paper, but would fit better with a different product. You don’t want to say no to the customer, but at the same time you understand that many of the things they’re asking about are tailored for a specific niche.
Customers like these need to be intentionally churned. You need to let them be dissatisfied and allow them to cancel their subscriptions. Intentionally churning customers may hurt a bit in the beginning, but you need to do it to move on with your life. We’re going to show you how to get started.
The Difference Between Good and Bad Customers
When you start to intentionally churn customers, you need to be absolutely positive that the customers you’re losing are the ones that should be lost. You don’t want to find out six months from now that you’ve lost 20% of your best customers and there’s no way to get them back. It can be a nuanced question and you should use your best judgment, but this is a great way to figure out the difference between good customers and bad customers:
|Do they…||Good Customer||Bad Customer|
|Use more than just the core feature?||✓||✖|
|Provide detailed feedback on the product?||✓||✖|
|Refer additional customers to you?||✓||✖|
|Continually ask for small changes?||✖||✓|
|Provide criticism on the direction of the company?||✖||✓|
|Avoid offering constructive feedback?||✖||✓|
Why Reducing Your Customer Count Can Lead to New Breakthroughs
Once you figure out which of your customers are providing value beyond what they’re paying you and which ones are a drag on the bottom line, you have a choice. You can either take steps to reduce your total number of customers or you can continue on the way you’ve been going.
Breakthroughs come when you have an uninterrupted chunk of time to focus on a single problem. This may seem like a calendaring issue, but even if you set aside an entire week to focus on one challenge, there will always be other issues in the back of your mind. That’s why intentionally churning some of your customers can be so valuable.
When done right, you can get rid of 10% of the distractions – the feature requests that the Bad Customers keep asking about – and focus on the problems that will help the 90% of customers you do want to keep around.
Many of your breakthroughs will come from the right confluence of unrelated events all happening at the same time. Right after a brainstorming session with your team, you’ll receive an email that frames the same problem in a new light and shows you how to revolutionize your product. These are the types of moments that you want to optimize for.
Sadly, when your inbox is cluttered with emails from the 10% of customers that are dragging down your company, the breakthroughs are few and far between. Instead, you’re spending your time replying to conversations that aren’t going to move the needle. By intentionally churning your customer base, this dynamic changes immediately.
How to Fire Your Bad Customers
Firing bad customers doesn’t need to be as emotionally intensive as laying off a teammember. Instead, it can be as simple as signalling that your company is going to be focusing on a specific set of problems in the future and making it clear that many types of requests won’t be worked on. There are two ways to do this.
To begin with, you’ll want to publicly state the purpose for your company. This means clearly stating on your website why you exist, who you exist for, and what people should expect from your team. These may seem like simple statements to make, but they go a long way towards weeding out potential customers that don’t fit into your picture for the future.
These types of proactive statements don’t necessarily need to be world-changing for most companies, but they should be concise and written in everyday language. That way, when the average visitor stumbles across your website, they’ll immediately know whether or not they’d fit in with your company.
Some customers will read your company’s mission and mistakenly believe that they’re an ideal customer. While unfortunate, this can’t be avoided 100% of the time. However, once they become a customer you have the opportunity to make sure that they know they’re not an ideal customer. It’s not as harsh as telling them that over the phone, but it does need to be direct.
For example, when they reach out to ask about a feature that doesn’t fit in with your direction, don’t hedge your answer. Explain that it won’t be built and why it won’t be built. It won’t cost you anything aside from potentially losing a customer that you don’t want in the first place.
Intentionally churning your customers is a big decision. It can feel like you’re moving back in time and it might even change your metrics to temporarily look like the company is flailing. However, once you get past the initial shock of focusing your customer base on the types of customers you want to be serving, the benefits become clear. Not only does it enable you to focus more of your product, it gives you a better understanding of who you’re building it for. From there, renewed product innovation will drive new growth all on its own.
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