What are the characteristics of a Bad-Fit Customer for your business?
It’s great to know who your Ideal Customer is (my Ideal Customer Profile Framework is constantly updated), but it’s much easier – and I say required – to first identify the types of customers that are a bad fit and the characteristics that make that so.
Like any good idea, though, there’s always some pushback… things like “but we’re a startup, we should take on any customer we can” or “how are we supposed to grow and evolve if we don’t stretch to work with bad-fit customers?”
I get it… and yes, there are times you should stretch, startup or not. But don’t try to convince yourself that you’re just “stretching” when you’re actually trying to justify signing bad-fit customers.
I always share the difference between bad-fit customers and stretch customers with my clients…
…and I’ll share this with you, too.
Bad Fit Customers
A customer should be considered a Bad Fit when you cannot deliver immediate value, nor can you – based on where you’re at today, your available resources, etc. – realistically deliver future value in the required timeframe for these customers.
You should avoid doing business with these customers; it’s not worth all of the problems that’ll come up when you sign a customer that has zero Success Potential.
In the spirit of Customer Success, it’s better to pass on these customers for now and be able to go back to them later – when they’re a potentially good fit – than to sign, churn, and burn them today.
A customer should be considered a Stretch when you can definitely deliver initial value, and – though you’ll have to hustle (again, based on where you’re at today, your resources, etc.) – you believe you can honestly deliver the required future value in a timeframe that works for the customer.
That said, you have to be sure that this “future value” is worth delivering; meaning it’s (hopefully) valuable to more than just this one customer.
It’s often worth taking the chance with Stretch customers – assuming you’re honest about your ability to deliver that future value to them – but I always suggest that you get very clear on what the “stretch” part is, why it’s worth it, and how stretching for that customer will help you make other customers successful, too.
This last part is a good sanity-check against any potential one-off “stretches” that end up being a distraction.
You should revisit the profiles for these types of customers frequently as your business and product continue to evolve.
A bad fit customer today may not be in 6 months.
And a stretch customer today may be your ideal customer tomorrow.