How do you deal with losing a customer for the first time?

Question

I and 2 others run a boot-strapped B2B SaaS startup that is bringing in moderate revenues after 2 years of operation. Despite coronavirus disruption, we have improved on our cash position in the past 6 months, surviving relatively unscathed and improving on where we were this time last year.

We just however got told by a customer of ours that they are ending their subscription, opting instead for a subscription with a tech giant whose tech is far superior and more broad than ours, so as to allow them to fulfill their requirement within a single platform as opposed to a number of smaller, more tailored offerings (which included a subscription with us).

This is our first loss of a customer. Whilst it’s not devastating, I guess it’s a big blow for me personally to lose a customer like this. It’s stuck in my head that we could lose more customers and then quickly find ourselves in trouble. This is despite the fact that I know the majority of our customers are very happy and not thinking of ending their subscription or anything like that.

It’s causing me a lot of stress and so I just wanted to check in with people. We are growing well, currently looking to raise and building more exciting tech, with a full scalable plan for the future, but it’s hard to see past the loss of the first customer – I understand that attrition will always happen regardless, but it just hit a bit harder than I expected.

Answer

Churn will happen whether you’re big or small. And I know as an early founder it can be hard on you, that’s completely fine. It’s okay to feel that disappoinment. However, take the opportunity to learn from it. Similar to how HR does exit interviews with employees that leave, hold an exit interview with your prior customer (hopefully they do it for free but you may need to incentivize them).

It seems like you have some info on why they’re leaving but try to dig further. What made them realize they needed an all in one solution? What frustrations were causing this need? Could they see your product filling that role someday in the future, why/why not? What did they love about their time with you? Etc.

I don’t know anything about your product or market strategy, but it’s very possible that your solution is ideal for a specific segment and once someone grows out of that segment, they go elsewhere. As another person said above, be happy that their business grew to that point and you were part of that journey.

Not all companies will stay with Wave or QuickBooks as they become more sophisticated. Same with Trello or Asana for project management. And similar for payments with Stripe or Braintree. What you need at one phase is not always the same at a future phase.

Be the best you can for your target market. Sometimes people will churn because they’re no longer a good fit. That’s not a bad thing. You can’t be everything to everyone.

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