5 Reasons Selling to Wrong Customers can be Deadly for Startups

 

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It is always tempting for any startup to sign on as many customers as possible in order to gain rapid growth. Startups get caught up in the excitement of sales as they are under tremendous pressure to grow quickly and close every sale possible. Sometimes, they are short-term focused, emphasize on immediate growth and end up selling to customers who are not a great fit. But, getting the wrong customers on board will not help in the long term success of the company. Wrong customers turn out to be unhappy and will also kill your business. Failing to sell to the right audience will eventually add to high rates of churn.

Instead, startups should focus on long-term relationship building and ensure that they bring right customers who can derive the best value of their product or service. These new businesses must train their sales staff to devote their time on finding and closing the right deals and not pursue someone just for the sake of another sale.

Let’s learn the consequences of selling to wrong customers:

Higher Support Costs

If you have sold the product to a customer who is not able to use it easily, he will be confused, frustrated and will constantly complain about it. He will require a great deal of support to understand how to use the product efficiently. Your customer service staff will end up wasting a lot of time in training the customer and handling his complaints, thereby leading to higher customer service costs.

You can easily determine if the customer is a good fit for your product by giving him a free trial. If he can make the best use of the trial and is able to test the features and obtain some results from it, you will not have to devote much of your precious time on customer support.

Greater Churn Rates

Bringing wrong customers means bringing unhappy customers which eventually lead to higher churn. If the customers are not able to deal with your product and it is of no use to them, you will witness greater churn rates. Remember that retaining a customer is easier than gaining new ones. But if they are not comfortable with your product, they are bound to leave you. Loosing current customers and attracting new ones to replace them can prove to be really costly and would let all your time and investment to go waste. Also, start-ups which are looking for fund-raising can get affected as higher churn rates can damage their reputation in the marketplace.

Lower Morale of Employees

Dealing with customers who don’t appreciate what you do is simply discouraging for your team. No one likes to deal with an unhappy customer who is angry and infuriated because of an inappropriate product sold to them. It becomes very difficult to stay calm when customers raise their voices and display a violent behaviour. This is highly demotivating for the staff members and leads to lower morale. The employees find themselves in a hopeless situation where nothing they try is going to be successful.

Selling to right customers will surely reduce the probability of situations like these and thus boost the confidence of your team.

Damaged Reputation

Wrong customers won’t get value from your product and they not only leave, but tell everyone about their bad experience. Unhappy customers spread negative word of mouth by venting their frustration on social media and badmouthing your company to their peers and colleagues. A customer is more likely to share bad experience with others rather than a pleasant experience. Negative word of mouth can severely damage your reputation as your company is painted in a bad light that might cause a loss of potential business.

Wrong Product Development

Companies decide which product feature to enhance and what more should be added to increase the value of the product by collecting feedback from the customers. But when you have sold to wrong customers, you will be collecting feedback from the wrong people as well.  This will result in bad choices to your future product roadmap and development.  So, to get valuable feedback for product development, sell the product to the right people.

 

Rather than focussing on closing as many deals as possible, focus on closing better customers. Make sure that every customer who purchases your product, gets a value out of it and succeeds with it.

Try to capture the following questions before pitching your product to a prospect:

  • Who are my ideal customers?
  • What are their needs and wants?
  • Which industry do they belong to?
  • What is the size of their business?
  • Are they using a similar product or are first time buyers?
  • What is their budget for this kind of product?
  • Who is the decision maker?
  • Who are the end users of my product?

This will help you in finding the perfect customers who will adore your product and gets profit by using it.

Also Read, Startup Success Mantra: Stay insanely focused on Customer Experience!