Uncompromised Reduction | Customers, Etc.
Maintaining high quality by targeting the right customers.
This the fourth post in a series based on the HBR article Breaking the Trade-Off Between Efficiency and Service. The first post in the series was about co-production and the most recent post was about low-cost accommodation of customer variability.
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“I don’t understand,” you lament. “We built out an amazing self-service onboarding program and completely overhauled our documentation. Some of our customers are using the heck out of it, but others don’t even bother. Everything with them has to be a phone call—what’s going on?”
You had hoped that after taking a low-cost accommodation approach and investing in your self-service infrastructure, you could reduce the variability in service delivery. Besides, your software-as-a-service product is really simple—it’s not like it requires a great deal of complexity to get up and running. But for some reason it’s just not working. Some customers still want you to hold their hand. You decide to bring it up at the next team meeting.
Your work for a small company. Your CEO normally doesn’t attend these kinds of meetings, but she joins to help facilitate the discussion. “Tell me about the kinds of customers insisting on high-touch onboarding,” she starts. Your head of CX chimes in, “it’s a mix. For a handful of the customers, I totally get it—they’re paying us a lot of money. But for most of the ones that insist on getting on the phone, they’re buying the minimum base plan we offer. It’s barely even worth it.”
“Gotcha. And what would happen if we just said no to onboarding calls altogether?”, she probes. The head of sales weighs in, “Our largest customers would be upset, and besides, our team is working aggressively to close every last deal. The minute they say white glove onboarding is off the table, the customer is blowing up their email. We’re accommodating because we want to get the sale.”
“Hmmm.” The CEO is thinking. “What if we charged for it? If there’s a segment of the market who would happily pay for white glove onboarding and we would be happy to provide it because the price they’re paying makes it worth it, would that take care of the problem?” One of the sales reps speaks up, “For our larger customers, sure, but they’re not our problem. It’s the small ones I’m worried about. The majority of the pipeline we get from marketing are small businesses. I’m afraid if we charged for it, we’d be wasting our time on half of the prospects in our funnel.”
“Then maybe it’s time to change who we’re targeting and how we’re qualifying leads.” Your CEO pushes forward with her solution. “We’ve invested heavily in a self-service product experience so that customers can get their team onboarded quickly with little help from our customer experience team. Our marketing and lead qualification need to reflect that strategy. For customers considering purchasing our basic product, we should be up front and clear that only self-service onboarding is available out of the box. Customers who want to pay for white glove onboarding can still do so.”
The head of sales offers one final counter, “But won’t we lose sales?” Your CEO smiles, “In the short term, perhaps. But by being clear about what we’re able to offer at a particular price point, we’re providing an uncompromised reduction in service without sacrificing quality to the customers who do want what we have. Let’s change who we’re targeting.”
Uncompromised Reduction
Unlike the low-cost accommodation approach to customer variability, where you invest in scalable solutions that allow customers to be co-producers in service by doing some of the work themselves, taking an uncompromised reduction approach frequently means changing the type of customers you target.
In the HBR article, four of the five types of customer variability involve changing who you target if you’re taking an approach of uncompromised reduction:
Intuitively, this makes sense. If we’ve clearly designed our service offering, we should only offer that service to customers who are content with what we have to offer. And yet, how often do we find ourselves trying to make customers happy who were never going to be happy because we don’t offer what they want?
This is extremely common at start-ups. It doesn’t happen intentionally. Early on, when startups are just scraping by trying to find product-market fit, they’re delighted that anyone wants to be a customer. Their main focus at this stage isn’t usually perfecting their messaging; it’s usually survival.
In the attempts to survive and try to reach the next phase of growth, many businesses will look back and say, “gee, our customers are amazing, but there are a few we’ve sold to that clearly aren’t a good fit.” And that’s painful, but it was only clear to you after they became a customer.
The short term solution might appear to be to “fire” the not-such-a-good-fit customer—and in some circumstances that might be correct. But the better solution, especially for the long term, is to be much clearer about the businesses you target to become new customers.
By changing who you target, you reduce who you consciously intend to serve, not the quality of the service you provide.