When Is The Customer Not Right?
By: Nate Munson
Tags: Product Design, Sales, Customer Experience, Business, Product Management

We’ve all heard the cliche saying, “the customer is always right.” And, for the most part, it is true that the customer is “always right.” After all, it is the customer’s money that contributes to a business’ revenue. It is the customer who validates a product’s place in the market. Clearly, the customer is the primary focus in the equation…right?

To grow revenue and market share, everything must first flow through the customer.

However, what if this is wrong approach? What if we’re placing too much value on the customer to the point in which the customer defines the business instead of the business defining its customer? With such a convoluted web, a lot time, personnel, and money is invested by the business in order to acquire any new customer. Therefore, the business places immense value on each customer due to the resources it has devoted to gain that customer. While every customer is appreciated, not every customer carries the same value. If you place too much value on a single customer, it can impede the functionality of the entire business — so, finding the right balance is important.

I see it on a frequent basis within my own company. Our employees get tied up with clients that go from satisfied to churn risk in the blink of an eye and usually because improper expectations are set, or deliverables are over-promised. Our sales personnel that are the most successful are the ones who clearly define the scope of the product to their customers, and when there are issues it’s normally a legitimate bug that needs to be addressed. Our service people who are in leadership roles got there because they have consistently been able to corral their customers within the scope of the product. However, when we don’t do this, we waste valuable time “herding cats” because our customers did not fully grasp what the product is, or their situation did not stay within the scope of what we offer. When this does happen, it forces us into a nearly crippling log jam that ties up entire divisions of our company, which is not a good experience for our other customers. But, God forbid we risk $1000 in monthly revenue…Which exposes a fault in the model we’re looking at now.

Starting off in the red at the point of sale is not good, and you have to retain the customer for a significant period of time just to get in the black, and then even longer just to be profitable — which is why some companies freak out when a “small” customer is at risk to churn. This, of course, creates a slippery slope, because then the business has to play defense and meet each customer’s needs — where as the ideal model would allow the business to proactively address customer needs before they’re a churn risk. The constant demand of customer needs/wants will continue to stretch the product out of scope to the point that reaches its limits, and that’s when over-promised deliverables fail to meet customer expectations. Unsatisfied customers churn, and existing revenue is lost to a competitor.

So, there’s an obvious problem, but what’s the “right” solution? Several business models have come out, and success can be found in each of them, but they all have their faults still.