April 5, 2017

Lincoln Murphy: Weeding Out Your Bad-Fit Customers

This special edition of B2B Nation live from the 2017 Revenue Summit features Lincoln Murphy of Sixteen Ventures. Murphy’s labor of love is helping companies grow by focusing on their most valuable asset: the customer

We discussed:

  • Defining what customer success looks like for your company
  • Finding bad-fit customers
  • The importance of communication
  • Metrics to follow for customer success

Below are a few highlights from the interview: 

Defining Customer Success

“Customer success is not just a team taking over the account after the sale to make the customer happy. I define customer success as: when customers achieve their desired outcome through interactions with our company.

“That doesn’t have to do with sales or operation, but it should be a philosophy. We need to understand what success is [from the customer’s perspective] and go after that.

“There are two main reasons customers don’t succeed:

  1. The customer had no success potential, and you shouldn’t have signed them in the first place
  2. You dropped the ball: you could have had a repeat customer but something didn’t go right

“When the customers leave, they don’t just take their revenue with them. They also take:

  • The cost to acquire them
  • The cost to serve them
  • Some undefinable number of other customers based on negative referrals.

“Look at customer churn in that bigger way, because it’s a symptom of the underlying disease. Churn isn’t the disease, it’s the symptom that customers aren’t receiving their desired outcome.”

Find Your Bad-Fit Customers First

“Figure out what a bad-fit customer looks like, and what a customer with success potential looks like. If you don’t know that, nothing else matters, because you’re bringing in the wrong customer, and they’re never going to succeed. Then look at your existing customer base and see how many of those are bad-fits. This will give you a good idea of the eventual churn for your company.

You’re bringing in the wrong customer, and they’re never going to succeed.

“This means getting deliberate. Go after the right customers and don’t sign the ones that have no potential. Take the ones who do have potential through a process that onboards them and ensures success. Use logical segmentation to give them the appropriate experience for that segment.”

Communication is Critical

“You also have to communicate the profile of a bad-fit customer across the organization, so that sales doesn’t sign these accounts. If you don’t give them a bad-fit profile, some sales reps might sign a customer because they’re almost a fit. If you define what a good fit vs. a bad fit looks like, the sales rep can’t unlearn that, and are less likely to sign a bad fit.

“Go to marketing and stop the pipeline that pays to get in front of the bad fit, too. You shouldn’t have to wait until you’re really sick to get help. What could you be doing that would help you thrive?”

* * *

You can follow Lincoln Murphy on Twitter @lincolnmurphy or connect with his team at sixteenventures.com.

B2B Nation is a podcast for B2B sales and marketing professionals, featuring expert opinions and advice on the most important topics in the industry. Check out our other episodes on SoundCloud, or follow us on Twitter: @Technology_Adv.

Looking for software? Try our Product Selection Tool