Your worst customer might be your best

We spend a lot of time here trying to keep our customers happy. That’s not just happy talk. We only make money if our customers stick around to pay for our software year after year.

“Happy” is a relative term. The same things don’t make different people happy. They show they’re happy in different ways. And sometimes, no matter how hard you try, you can’t please everybody.

For a long time, we figured that anybody who kept paying us was happy enough. Getting paid is the ultimate validation for a business, isn’t it? If clients are shelling out for our software then we must be doing a good job. But over time we realized that wasn’t enough. We didn’t want to find out that a customer wasn’t happy when they didn’t pay their invoice for another her–we wanted to know ahead of time, so we’d have a chance to find out what was going wrong and how we could fix it.

So we developed internal metrics to get a handle on customer health and happiness. Danielle led the charge and continues to do an amazing job figuring out how to make our clients successful. But the more work she did to help us get to know our clients, the more mystifying some of their behavior was. People who we were convinced hated us would pay us year after year. Others were low maintenance, steady users who would disappear when the invoice showed up. What was going on?

And more to the point: what could we do about it?

Danielle and I came up with a simple matrix that’s helping us make sense of which customers are happy, which ones aren’t, and what we could do about it.
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Who's a happy customer?Each of our customers fits somewhere along these two axes:

Engaged or unengaged? Does the customer use our software a lot? Do they ask a lot of questions? Are they promoting it internally? Do we ever hear from them?
Easy or difficult? Does need a lot of help, or none? Do they complain? Are they nasty on the phone when they call? What’s the tone of their suggestions?

When we plotted specific customers in this matrix, it was remarkable how much it predicted their happiness level and what we should do about it. Most important, it showed us how valuable some of our “worst” customers really are to us.

Easy and engaged. These are your net promoters. They’re the customers who you love to hear from. They always give you positive feedback and when you bring them new products or features they’re happy to pay for them. What do you do with these guys? Easy: love them.

Difficult and unengaged. The opposite of your loved customers, obviously. Who knows why they signed up. Maybe they just took a flyer on the software but now they don’t care, and they don’t want to be bothered into caring. As much as it stinks to give up hard-earned revenue, these are the customers you fire–you’ll never please them, and it’s not worth the cost and effort to try.

Easy and unengaged. This one is deceptive. These clients are a mystery unless you get to know them. The problem with easy, unengaged customers is that you might take it for granted that they’ll be clients for years and years–they might even just renew on autopilot without ever getting their money’s worth. That seems like a dream, but it gives Danielle and me nightmares. These guys might just as easily not renew and you’ll never know why. These clients get the most attention from our account strategists because they’re ours to lose. We spend a lot of time and money training them to be good clients, to get and value what our product gives. The goal is to move them to the right–to be easy, engaged clients that we love.

Difficult and engaged. Who gets the most attention from me, the CEO, and our whole product team? These guys. That’s because they’re our toughest critics. They bought our software because they expected it to solve problems for them, or make them look good, or to get to another level. They want and expect everything to be great. They give you a hard time when it’s not, and sometimes they’re really nasty about it (I won’t name names, but if you’re reading this you know who you are).

But these difficult and engaged customers also make us better. Some of the most important decisions about priorities on our roadmap are set by these customers, and you know what? The other “easy” customers are thrilled, because even though they don’t like to criticize us, they want things better too. The challenging customers keep me paranoid about the value of our software and constantly investing in and improving our product.

A word of warning, though! Some of these difficult, engaged clients simply bought the wrong product and shouldn’t be customers. Either they invested hopes and dreams that were bigger than our solution into it, or one of our guys sold them vaporware (never!), but the result is the same: these clients want something that we don’t sell. That’s why I spend so much time with this category: I want to separate the critical-but-good feedback from the critical-and-inapplicable dross.

We continue to fine-tune this model so that we get better at identifying easy, engaged customers even before they sign up, and to catch the unengaged ones early. But trust me: if you want to be great, you’re doing to need some very valuable PITA clients keeping you hones