Should You Fire Some of Your Customers?

As a CFO, I've always hated how much of my day is choosing between control and speed.

You either get real-time visibility or you get your team moving fast — never both.

My Brex card is different. Brex gives me the controls I need without slowing down important expenses, like Wally’s dog treats or Producer Ben’s cool gizmo sound things. With Brex, receipts are automated, expenses hit in real time, and categorization doesn't require three people and a spreadsheet. I can see exactly where money's going while we focus on growing the Mostly Metrics world empire (also, Sales Guy Matthew, just because you CAN expense and eat $32 of Chipotle doesn’t mean you HAVE TO).

Finance doesn’t have to slow companies down - it can and should push them forward.

See why 35,000+ global companies (and me!) use Brex to spend smarter and move faster:

Gee wiz. I run a recruiting company now. Life comes at ya fast.

Mostly Talent is currently filling positions for a Director of Strategic Finance, Controller, FP&A Manager, and VP of IR across Series B through Pre-IPO companies. These searches move fast.

I have an exercise for you. It goes like this:

So to summarize - we’re coming up with a view that pulls in customer spend, CS hours, and customer NPS.

The results are probably not what you thought. For many companies, their lowest value customers take up the most CS resources, and are also the least likely to promote them.

As my dad would say, “That and a dollar will get ya a cup of coffee!”

(He came up with the saying pre inflation, obviously).

So yea, not exactly a winning formula!

It creates a P&L blackhole that can go undetected for years, one that you continue to fund even though it creates a non linear pull on the rest of the org’s bandwidth.

I was talking to Cassie Young on the Run the Numbers podcast, a serial Chief Revenue / Customer officer at growth stage startups. She brought me back to a time when she was running CS at Sailthru. They ran the analysis I described above, and what they discovered broke their mental models:

They came to the conclusion that if these smaller, needier customers were going to stick around, they needed to pay for the resources they were consuming. They presented them with three options:

Some customers left. But remember, they weren’t great customers anyway.

Shockingly, most stayed. And they also took the first option, ponying up an incremental $1K per month, which brought the profitability profile of the segment back in line.

It’s scary to communicate this negative message to anyone who’s giving you money (even if they are giving you seventy five cents for the dollar of resources you are giving them). Regardless of the unit economics, it’s awkward turtle.

But the reality is, they probably don’t want to be a ‘bad customer’. Your customer probably sells something too (hint: all customers also sell something, which is how they have money to be your customer). So they are empathetic to the dynamic.

(Plus, keep in mind, they are using your CS team all the time. So it’s not like they think everything is “going as planned”.)

Not to mention, you risk being in a situation where your roadmap starts to get dictated by the loudest, yet usually not the largest, customers.

OK, so you’ve done the analysis above and come to the conclusion that you need to cut the crops.

Before you let that email rip, two things to keep in mind:

First, the tone, and the quality of the off ramp, really matters.

Blasting out an email saying we will not serve you anymore, you stink, we’re turning the lights off in a week, is not a great look. The blast radius will reverberate back to the customers who you DO want to retain. And they will think “do I really want my eggs in this basket if it could happen to me?” Bad news travels fast, and between segments.

In the Sailthru example, they gave customers three options, none of which said “Vacate the premises in 30 days.” The “firing” was really customers firing themselves… they were self selecting out based on the optoin set. It put the onus on them. And, hey, if they chose the door, Sailthru was nice enough to move them to a month to month plan (if they were on annual) when they really didn’t have to do that.

Finally, keep in mind that it’s OK, even perfectly normal, for your ICP to shift over time. It’s a sign of maturity that your product is deep enough and serves valuable enough use cases to earn a corresponding increase to revenue.

I hate to say it, but the harsh reality is that not all the customers who got you here will get you there.

It doesn’t mean you are disrespectful or ungrateful. It simply means you shift your resource allocation over time to be more in the way of the money. And honestly that’s probably what they are doing with their respective company’s as well.

Just make sure to do it with data and respect.

Cassie Young brings hard earned lessons from a career spanning CRO roles, customer success leadership, turnarounds, and now investing as a General Partner at Primary Venture Partners.

We talk about:

Hoping we aren’t in a bubble,

CJ