What is a bad fit customer?
A bad-fit customer is a customer who is not likely to be successful with the product or service being offered. They may not have the resources, skills, or desire to use the product or service, or the product or service may not meet their needs. You can recognize a bit-fit customer through the following scenarios:
- You cannot deliver immediate value to the customer
- You cannot deliver the required future value in a reasonable timeframe.
- There is an inherent misalignment between your organization and the customer’s structural or ideological makeup.
- You can only service customers by solving individual problems, not broader use cases.
What is a stretch-fit customer?
A stretch-fit customer is a customer that requires more attention and customization when it comes to product offerings, services, and support. Unlike bad-fit customers. with stretch-fit customers:
- You can deliver initial value.
- You can deliver required future value in a reasonable timeframe. There’s no hard and fast rule on what constitutes a reasonable timeframe as it will depend on your products, contracts, and buyers. But you must be able to solve some problems for the customer during this interim period.
- You can service customers by solving for broader use cases shared among your customer base
One characteristic of a stretch fit customer is that they tend to be more demanding and need to be communicated with on a more personalized level due to the fact that your current product or service does not completely meet their needs.
When dealing with stretch-fit customers, it’s important to respect your boundaries. By preliminary vetting stretch-fit customers, sales can identify a customer’s constraints and non-negotiables, and where your company is willing to make concessions. This prevents burning a bridge with not only the potential customer but internal teams as well.
How to determine the difference between a bad-fit customer and a stretch-fit customer?
Distinguishing between these two customer types can be difficult. Sales is inclined to believe that a bad-fit customer is a stretch-fit customer. Customer Success is inclined to believe that a stretch-fit customer is a bad-fit customer. And the truth is there’s no hard line to draw a distinction between the two fits. When you’re in doubt or teams are at odds, go back to the broader context of your product and its purpose. You’ll know you’ve ventured too far from your ideal customer profile, when you consider product requests that serve an isolated customer need, instead of benefiting the majority of your base.
What is the cost of selling to a bad-fit customer to your business?
For subscription businesses, selling to a bad-fit customer damages your revenue and your reputation. Bad-fit customers are more likely to leave early and never upgrade or renew. They become your “squeaky wheel” customers who are never happy, eating up all your support and training resources. A heavy focus on them can deliver a below average customer experience to your best and happiest customers who you inadvertently neglect by only giving an ear to the loudest voices in the room.
And the voice of an unhappy customer carries – reverberating off review sites to social media to one-on-one conversations. Knowing this, over time, your negative customer reviews can easily start to outnumber and drown out the positive ones you’ve worked to surface and build.
Of course, disqualifying a bad-fit customer before they enter your sales funnel is the ideal scenario. But if a bad-fit lead does slip through, the faster you weed them out, the better. The later a lead is disqualified, the more likely they are to walk away with a bad impression of their experience.
On average, your sales team should disqualify about 20% of the leads they receive. If they disqualify less than that, you might have bad-fit customers who are sneaking in. And if they routinely disqualify more than that or spend a disproportionate amount of time on lead qualification, that may be a sign there’s something off with your lead generation activities.
How can Customer Success better influence customer fit?
As a relationship-driven function, Customer Success has a history of relying on anecdotes and emotions over data and analytics when making business decisions. So, when a customer isn’t an exact fit, this can cause Customer Success to respond in an emotive way. For Customer Success to have a voice in defining their ICP, they need to lead with hard numbers first and use anecdotes as supporting evidence as opposed to the only evidence. Identify the major criteria for determining gaps in your product-customer fit and any benchmarks to substantiate your rationale. Make sure your own bias aren’t unintentionally dictating the data; stay as objective as possible.
- Blog: Churn Monster: Bad-fit
- eBook: The Ultimate Guide to Customer Success
- Research: 2022 Customer Success Leadership Study