Last week, I had an email exchange with a customer, Alex Charfen. At first, I didn’t think the exchange was terribly special, but then he tweeted and wrote to me, “Clate I am more impressed by this email than with any communication I have received from a vendor in a long time.” What did I tell him to warrant such high praise?
Essentially, I told him it was time for us to part ways. I explained to him who our target customer is and that his company’s meteoric growth with Infusionsoft had resulted in him outgrowing our solution.
To me, this was a very natural email to write. It happens. Customers outgrow our solution. As I reflected on this email conversation and considered how much pressure we’ve received over the years to serve larger businesses, I realized that it’s very rare for a vendor to say “no” to a customer.
That’s a shame. In the end, the customer gets hurt, the vendor gets hurt and growth is stunted when the vendor tries to serve a customer who isn’t the right fit. In order to optimize growth, an entrepreneur needs to know exactly who their target customer is and stay true to that customer. In short, need have discipline to say “no” to the wrong kind of customer, even if especially if that customer begs to pay you much more money than your average customer.
We have always maintained, somewhat stubbornly, that our solution is for entrepreneurs who want to grow fast using the power of the internet. Our solution is for companies with fewer than 25 employees. By the time a customer gets up to 100 employees and/or about $10 million in annual revenue, they will need to graduate from our system to something else. It happens every once in a while. Some folks think we’re crazy for patting the customer on the back and helping them transition to a different system. We know our business is stronger because of it (and theirs are too).
Additionally, we routinely turn away prospective customers that are too big. We know larger businesses will have needs and demands that, if delivered on, will pull us away from our target customer and weaken the solution we provide. Plus, our passion at Infusionsoft is not in serving the mid-market. We’re all about the little guy who wants to grow his or her business. Our sweet spot is a customer with 2 – 10 employees, generating $200K – $2M in annual revenue and doing email marketing. Sure, we have some customers who are smaller or larger, but about 60% fall within this sweet spot.
What’s your sweet spot? And are you willing to stubbornly say no to a customer that falls too far outside of that sweet spot? What are your boundaries? If you don’t firmly set them, I guarantee you the boundaries will magically stretch to fit whoever wants to pay you some money for your solution.
Don’t let that happen. Stay true to your customer and you’ll grow your business the right way.
[Image credit: Victor Chapa on Flickr]
