“Can you commit to losing one of your customers before we meet next week?”
The question was asked by Sachin Bhatia, co-founder of Exotel and a mentor at SGx - SaaSBOOMi’s flagship growth accelerator program. The request was for one of the startups in the currently running third cohort SGx3. The startup recently increased the pricing for their product so that it better reflects the value they deliver and they now had the daunting task of onboarding all their existing customers to the new pricing structure.
Let’s take a moment to analyse that request.
Why would you set a goal of losing one of your existing customers? Aren’t you supposed to do the opposite? That is, persuade 100% of your customers to be onboarded onto the new pricing structure without any hiccups? What is happening here?
I was flummoxed when I heard Sachin say that. But I was also curious to play out the scenarios in my head. What could possibly happen when you put effort to “lose” that one customer?
The bad outcomes, first.
1/ You will lose one of your customers. You will feel bad that you lost that customer, the feeling could linger for a couple of days maybe.
2/ Your recurring revenue (MRR / ARR) could take a hit (depending on the ticket sizes for your product).
Now, what are the good outcomes? Come to think of it, there are a few interesting ones.
1/ You might lose that customer, but it’s also a great opportunity to learn why they decided to churn out. Usually when we talk to a customer who wants to stop using your product, your instinct is to salvage the situation and do what it takes to convince them to continue on your product. You might succeed at retaining them, but you lose the opportunity to understand what’s not working. You are in the selling mode and not in the listening mode. But with a mandate to lose one of your customers, you can take that burden off you, and instead focus on the lessons from the dialogue.
2/ The conversation about increase in pricing is a hard one. No customer ever tells you, “I’m so happy that you increased the pricing by 50%. Good job!” There would be resistance. As humans, we procrastinate efforts that could invoke an undesirable emotion in you, and confronting the customer with a hike in pricing can sure top the charts for a SaaS founder. However, by committing to a goal of losing one customer, you can go at it without carrying too much baggage.
3/ You talk to the first customer, with the intent to lose an account. But what if they convert? You still have the unmet goal to lose an account. So you talk to the next customer and keep at it till you finally lose an account. What’s happening here? You are executing faster this time, you are not scared of the situation anymore, and you might also be closing deals as you go.
4/ You are a less anxious person, and chances are that your customers also like how you’re not pushy (or okay to be pushed around) in a negotiation like this. You stand firmly by the value that you are offering to them.
4 pros versus 2 cons - isn’t this incredible?
I was also thinking about the scenarios where this approach could work well. My answer - in any daunting task in which losing the first time doesn’t kill you (so, not skydiving).
1/ Want to raise funds? Set a timely goal for your first rejection?
2/ Looking for a job? Work towards that first rejection.
You will surprised at how much momentum this new goal positioning will get you. The only thing to keep in mind is that it would help to order your list of bouts or confrontations from low to high impact / priority. That gives you an opportunity to learn from losing while still keeping the impact of failure low. For instance, in the job hunting example you might want to get started with companies that are expendable for you while keeping the wish-list for the end.
What are the other scenarios where it would make sense to commit to lose? Let me know.