Your Best Customers Probably Aren’t

Are your best customers really your best customers?   Or are they simply your earliest adopters, the ones who write you the biggest checks, or the ones with the name everyone recognizes?

When you’re a product manager joining a new organization, you inherit a whole slate of existing customers. However, you’ll be the one responsible for building a product that creates contract renewals and new customers.

So it’s critical for you to push beyond asking “Who are our most important customers?” and ask “Why are they so important for us?”

Potentially misguided answers:

They’re a huge revenue source (B2B):

What percentage of our revenues does [Customer X] contribute?  While a contract with a lot of zeroes on it means money in the bank, it also means risk.  Does the company rely too heavily on that single source of income?

Having one or a few customers providing a large percentage of your revenues gives them a lot of power over you – power that translates into demanding new one-off features, hours of customer support time, or hefty discounts on professional services rates.

Speaking of professional services: does that represent a big chunk of how these customers spend their money?  ProServe can be a great money maker, but it’s also harder to scale and can be hefty on opportunity costs.  If your best people are doing custom work for this “great customer”, they’re not concentrating on the product improvements that will bring in the next twenty or fifty customers.

They have a great brand name (B2B):

But do they have enough in common with other potential customers?  A recognizable name gives you instant credibility, but it doesn’t necessarily translate into the next sale.

“[Company X] is definitely our best customer,” said our beaming sales rep.

“Great! How much are they paying us?”

“Well, they aren’t. But we have the opportunity to put together a revenue sharing deal with them in the future – as long as we can improve performance–”

“Wait, what’s wrong with their performance?  Isn’t the product working for them?”

“Of course! They’re very excited about us.  It’s just that they probably didn’t deploy it in the best way…”

In this case, having this big-name customer got us initial meetings, but once those prospects took a closer look, we didn’t get a second one. Time spent keeping the “big fish” happy would’ve been better spent finding a more appropriate reference customer and making everything work beautifully for them.

I’ve also heard “you’ve done a great job with [Customer X], but we’re totally different” many times.  For example, a solution that worked for RyanAir – a successful but definitely non-traditional airline – may actually deter a high-touch, full-price airline like Singapore Airlines.

They’re so easy to work with (B2B, B2C):

How, exactly? This often means one of two things: a) they never bother us, or b) they tell us exactly what they need and we do it.  Neither one is good.

When you don’t hear from customers, it doesn’t mean they’re fully satisfied. It means you’re not that important to them: you’re not mentioned in internal meetings, they aren’t worried about incorporating you into their next release, they forgot that you’re there solving whatever problem you solve.

“Ugh, stupid gym bill!”

“I didn’t even know you belonged to a gym.”

“I hardly ever go – the cardio machines are always full, and the classes start way earlier than I get off work.  Then I feel too guilty to complain. I should just cancel my membership.  Whatever you do, don’t join [Gym X].”

When customers tell you exactly what they need and you build it, you’re missing an opportunity to understand a wider market need.  Customers who work with you to articulate their problems provide great insight into where to look for the next killer feature; customers who tell you what to do keep you tunnel-visioned.

They’re obsessed with our product (B2C):

What’s the ROI on these customers?  Are they profitable enough to compensate for the additional attention they require?

Most companies would love to have rabid fanatic customers like Apple, Harley, or Starbucks, but don’t realize how expensive those customers are.  They generate more customer service calls. They demand more features. Their expectations are sky-high … and they don’t hesitate to spread the word if you let them down.  In some cases, their presence may even “scare off” more mainstream and lower-maintenance customers.

Answers You Want to Hear

We solve a big problem for them (B2B, B2C):

When your product/company solves a painful problem for a customer, you create more partnership opportunities.  You’re empowered to ask more questions, and they’re happy to provide you with information in the hopes that it will further diminish their “pains”.

Just make sure that the “big need” you’re filling is, in fact, something that you’re good at and can charge enough for.

They always want to know what more we can do for them (B2B, B2C):

When you can be integrated into multiple points within a company, or within a customer’s life, it’s hard for them to un-integrate you.  That equals revenue security, and increases the chances that they’ll look to you when they have a new problem that needs solving.

“We have an RFP from [Company X] – this product is on your roadmap, isn’t it?”

“Yes – but it’s not ready yet and our competitors already have an offering.  Are we really in the running for this?”

“Definitely.  Since we’re already providing them [Product X] and [Service X], they’d rather stick with us than integrate another vendor.  This could be a great partnership opportunity – we’d learn from them and they’d fund part of our product development.”

They represent exactly the [industry/demographic] we’re targeting (B2B, B2C):

The most reference-able customer will always be one where future potential customers look at them and say “they’re like me!”  Brand-name recognizability is trumped by situation-type or industry-type recognizability.

Local credit unions have all heard of Bank of America, but they’re more likely to look at other local credit unions when deciding what technology decision to make.  Diet-conscious users have all heard of Jillian Michaels, but they’re more likely to ask their friend who lost twenty pounds what online tools they used.

They use our product really well (B2B):

Did they deploy it well? Anyone who has worked in enterprise software knows that 50% (or more) of a customer’s success with your product depends on how they use it.  If your product is not integrated into their processes, or their employees are not trained, or usability guidelines not followed, it will look as though your product is ineffective.

Even if the customer is satisfied with their results, they’re unlikely to look impressive enough to win over a new prospect.  At best, you’ll win another deal… but risk having this new customer go through the same shoddy deployment process that guarantees them mediocre results.

They love to talk about us (B2B, B2C):

You can usually convince a satisfied customer to be a reference for you, but there’s nothing more valuable than one who evangelizes you on their own. A company who mentions you in their press releases or marketing, or a user who blogs about you and recommends you to friends — gives you credibility and authenticity.

In short, benefits need to go both ways.  It’s easy to get so caught up in providing value to your customers that you don’t stop to analyze what value they’re providing to you.  Cash is great, but when you’re building a business, it’s not enough.

If your “best customers” aren’t, look at other existing customers to see if they’re a more strategic fit.  Figure out who would be the “ideal customer” – and check with your sales team to compare that with their prospects.

8 Responses to “Your Best Customers Probably Aren’t”

cindyalvarez:

Your Best Customers Probably Aren’t: New blog post: http://bit.ly/rk224 #prodmgmt
This comment was originally posted on Twitter

pricing:

Read this every month, minimum. RT@cindyalvarez Your Best Customers Probably Aren’t http://bit.ly/rk224 #prodmgmt
This comment was originally posted on Twitter

idoliov:

RT @cindyalvarez Your Best Customers Probably Aren’t: http://bit.ly/rk224 Must read for every PM, CEO, and Sales Team
This comment was originally posted on Twitter

sjohnson717:

RT @cindyalvarez: Your Best Customers Probably Aren’t: New blog post: http://bit.ly/rk224 #prodmgmt
This comment was originally posted on Twitter

michelelinn:

“Your Best Customers Probably Aren’t” by @cindyalvarez via @Jim_Holland: http://bit.ly/rk224 #leadership #marketing #b2b #b2c
This comment was originally posted on Twitter

Stewart Rogers:

It always comes back to understanding the buyer and making people aware. Maybe the new perceived ‘best’ customer changes the shape of that buyer persona, but bring the focus back to who the ideal buyer is.

Stewart

Stewart Rogers:

It always comes back to understanding the buyer and making people aware. Maybe the new perceived ‘best’ customer changes the shape of that buyer persona, but bring the focus back to who the ideal buyer is.

Stewart

parajumpers:

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