Avatar of Evan Hamilton

You’ll make more money if you send your customers to your competitors

I’m absolutely serious.

empty bird cage with an open doorNot every customer, of course. But the ones that aren’t right for your product offering? Send them away.

We’ll call them a wrong-fit customer. They have an edge case you can’t support, your product isn’t set up to handle traffic of their size, or they actually need a different type of product. We all know these customers don’t belong with us yet we try to convince them to stay with our product.

It’s a natural instinct: keep the customer at all cost! That’s money! My CFO likes money!

The thing is, you can actually make more money by sending a potential customer away than by keeping them.

If you wrangle a wrong-fit customer into continuing to use your product, they will cost you in:

  • Time you spend answering their emails asking for things you can’t do
  • Reputation damage via their public complaints about how your product isn’t satisfying them
  • Even more reputation damage when they finally announce they’re moving to a competitor

If you let a wrong-fit customer go, especially if you point them towards a company who is a better fit, you get:

  • One-to-one word-of-mouth promotion: if a friend asks the wrong-fit customer about you, they’ll rave about how nice and helpful you were
  • One-to-many word-of-mouth promotion: if you really pleased someone, they might write you a good review or post to their social networks about you
  • A potential future customer: if your tool is ever right for them in the future, they’ll use it in an instant because they remember how helpful you were

As we’ve said before…you can make money with your support team.

Example 1: Dr. Scott McKinzie

Last month I finally went to the dentist for the first time in 3 years. I called the best place I could find on Yelp: Dr. Scott McKinzie. They discovered that my copay was going to be immense. Instead of trying to convince me to go with them, they pointed me to a competitor who would have a cheaper copay for me.

Storefront with a sign that says word of mouth What’d I do? I immediately wrote them a glowing Yelp review, which will undoubtedly contribute to other people (with different insurance plans) choosing them.

Example 2: T-mobile

My poor little G1 smartphone was getting pretty long in the tooth and I wanted a new Android phone. But I’m very picky. I hopped on T-mobile’s live chat to see how hard it would be to cancel my contract.

Evan Hamilton: I’m thinking about switching to Verizon for the Droid 2 because there are no good T-mobile QWERTY android phones right now (in my opinion).
~John D.: That's fair enough. Looks like your contract is going to end on 10/22. It’ll be $50 to cancel now.

That’s fair enough!? Where’s the upsell, the begging, the threatening?

It never really came. John Doe mentioned the myTouch, I said I didn’t like it, and he proceeded to be incredibly helpful explaining how to port my number to another carrier, how not to lose my archived text messages, etc.

The Droid 2 ended up not being my cup of tea, so I kept my eye out for new phones. When rumors surfaced of the G2, the sequel to my phone on T-mobile, I was more than happy to wait the two months until the phone came out. I bought it on the first day it was available.

By not forcing a sub-bar phone on me and making it easy for me to leave, T-mobile actually got me to sign on for 2 more years as their customer.


So…why aren’t you sending your customers to your competitors?

Birdcage photo courtesy of Ulf Bodin.
Store sign courtesy of Paull Young.