• Read Time 6 min
Defining the Gray Area Between Stretch-Fit and Bad-Fit Customers
Your product or service is not going to be right for everyone. And just because you can sell a customer your solution, doesn’t mean you should. But where do you draw the line on customer fit? When is it OK to push your selling boundaries? And how do you know when you’ve gone too far?
When assessing a customer’s fit, defining what’s a reasonable stretch versus a fundamental mismatch is murky territory. Conflating or wrongly defining these groups has long-lasting consequences including increased customer churn, reputational damage, and cross-functional animosity. While the whole organization plays a role in defining customer fit, Customer Success is the one who’s forced to bear the brunt of a bad-fit customer’s unhappiness and frustration. But by putting in the upfront work to clearly define your range of customer fit, you can avoid both customer heartaches and headaches – building greater trust across your market, customer base, and organization.
In this article, we’ll cover:
- What’s an Ideal Customer Profile?
- What’s the Difference Between a Stretch-Fit and Bad-Fit Customer?
- What’s the Cost of Selling to a Bad-Fit Customer?
- How Can Customer Success Better Influence Customer Fit?
What’s an Ideal Customer Profile?
Before you can understand the differences between a stretch-fit and bad-fit customer, we first need to set the context with Ideal Customer Profiles (ICPs). Establishing a clear definition of your ideal customer and identifying their attributes is one of the main determinants of your company’s success. From your product roadmap to your positioning, ICPs have a direct impact on almost every decision you make. ICP factors may include a customer’s maturity, motivation, capacities, potential for success and expansion, brand activism, and procurement process.
Who Should Define Your ICP?
When defining your ICP, you want to include any department that engages with the customer – whether directly or indirectly – during their lifecycle. Most often, this includes Product, Sales, Customer Success, and Marketing. Because your industry, product, and customers constantly change, reassessing your ICP should become a regular exercise. Treat your ICP as a living document that changes as your context does.
Should You Ever Sell Outside of Your ICP?
It’s likely that you’ll sell outside of your ICP. But before you blame Sales, this is normal behavior. Very few organizations, if any, only sell to customers who fit their ideal profile. You test and evolve your ICP by selling to customers who aren’t a perfect fit and seeing if they can realize success, or a version of it, from your product. As the functional group that’s closest to the customer and chiefly responsible for their success, Customer Success can help develop and enhance your definitions of a stretch-fit customer and a bad-fit customer.
What’s the Difference Between a Stretch-Fit and a Bad-Fit Customer?
Let’s start by defining the traits of each customer type.
For a customer to be considered a stretch fit, they must meet the following criteria:
- 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.
For a customer to be considered a bad fit, they must meet the following criteria:
- You cannot deliver immediate value, nor can you deliver required future value in a reasonable timeframe.
- Marked by an inherent misfit between the organization and customer’s structural or ideological makeup.
- You can only service customers by solving for individual problems, not broader use cases.
It’s not uncommon to encounter disagreements between Sales and Customers Success when differentiating between a stretch-fit customer and a bad-fit customer. Each team has their own perception of these customer fits which is shaped by their functional role and responsibilities within the organization. Sales tends to perceive a bad-fit customer as a stretch-fit customer, and vice versa for Customer Success. It can be hard to objectively say who’s wrong or right when treading in this gray area, as again, it can be a matter of perception.
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 ICP, when you consider product requests that serve an isolated customer need, instead of benefiting the majority of your base.
Also, 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.
What’s the Cost of Selling to a Bad-Fit Customer?
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. Because it’s not just the customers who churn that you have to worry about dirtying your name. 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.
Make Customer Success the Conductor
At first blush, it makes sense to assume that retention is a Customer Success problem. But the reality is, at a certain point, there’s only so much a Customer Success Manager can do to prevent churn when a customer is a bad fit for your solution from the start. Customer Success will never be able to achieve your company’s retention numbers alone. There are simply too many variables for one team to control. After all, customers choose to renew, or not to renew, based on a number of reasons and experiences.
So, instead of expecting your Customer Success team to improve retention on their own, make them a conductor. Expand their role to organize, monitor, and improve the work of any team whose function supports retention and affects churn. Your Customer Success Managers should maintain an open line of communication with Sales, Product, Customer Support, and Marketing. Like the conductor of an orchestra, Customer Success Managers can’t play in every chair, but they can help put the players in the right positions and unify their vision and voice.
For more resources on the role of customer fit in retention, check out:
- [Webinar] Should New Sales be Held Accountable for Churn?
- [Blog] Churn Monster: Bad-Fit – our blog series that looks at life-like scenarios involving our “Churn Monsters” with a plan of action to defeat them
Customer Success Around the Web
- 3 Strategies for Best-In-Class CSM Onboarding– Learn three areas to consider in order to ensure your team onboarding is effective.
- How Customer Success Leaders Can Weather (Or Avoid) A Labor Crisis– Discover steps to take to ensure your CSMs are in it for the long haul and feel fulfilled and rewarded in their position.
- How to Create an Effective Customer Journey Map– Find out how to map out your customer’s journey using these examples and templates.
Fighting Churn is a newsletter of inspiration, ideas and news on customer success, churn, renewal and other stuff and is curated by ChurnZero