Do the right thing (and fight the zombies)

Lincoln Murphy is back with us and he shares his customer experience. His word!

One day, I received an email about how customers of the SaaS business model can benefit from it. And I must say that it dealt more with the ethical side of the issue and other karmic things than with a real business approach.
The whole point of this letter came down to the following question: “What should I do if a client regularly paid for six months, but at the same time did not start using the SaaS product?” I, by the way, call these people zombie clients (“I paid you are six months old, but have never logged in ”(image transfer)).
I tried to give the most reasonable answer to this question, but very soon I realized that a truly comprehensive answer would touch on much more details than I managed to cover in this article ..

In short, it was a very simple question, requiring the same simple answer ... with which you will completely disagree!
So…

Here is Susan's question:
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“Hello, Lincoln. You talked a lot about the fast customer acquisition system, in which they could immediately use your application without any problems. So, we have a couple of customers who have been paying us every month for some six months (some even more) and don’t use our products. I don’t feel comfortable taking money from them, since they don’t use our software, but they don’t want to say anything - what if they stop paying? What do you think? Susan

And here is my answer. Hmmm ... It's very simple, the answer can be divided into two parts. And ideally, these two parts should be executed in parallel.

Part One: Technical Benefits for SaaS Business Model Customers

Modify your user engagement process during application development in order to lower the learning threshold for beginners, and then try to ensure that the client interacts with the application as comfortable as possible throughout the entire process.

Part Two: Do ​​the Right Thing

“I’m aware that some of our subscribers pay us every month, but in reality I don’t use our SaaS applications” (image transfer).

Immediately contact those customers who do not show signs of life for one to six months. You can view part one above in order to understand how best to do this (the monitoring idea may be especially useful).

As for those who just passively pay more than six months - they are zombie clients - they require a special approach. It is presented below:

• Stop looking at it through your fingers and freeze / disable their accounts.
• Find out the real name of the client and his email address, because it is possible that you have to somehow contact him.
• Write a check for everything your client has been paying for half a year (or more), until he has used your system. It’s better not to include CC fees, administration fees and anything that can make you petty ... just consider this money as goodwill gestures.
• Write some nice letter (something like this): “Thank you for remaining our client for the past six months! It's great. But we noticed that you have not used your account since you signed up, and we simply cannot take money from you for not using our application. Inside there is a return receipt for the last six months in the amount of XXX dollars. We have frozen your account and stopped accepting payments. Anyway, let us know when you are ready to return to [app name], and we will unfreeze your profile. If you have any questions, please contact us. Name, position, and all necessary contact information. "
• Put the receipt and letter in a FedEx envelope (or equivalent).
• Send this envelope to the customer’s address.
• Contact him by phone or via the Internet on the day when the envelope is due to arrive to him, and let him know that your message is already two steps away from him.
• Smile. You did the right thing.

Go back to the first part and make sure that this does not happen again in the future.

If a client does thank you for a generous refund, ask carefully why he did not join the overall process. And if you do not thank, then God is with him.

From a moral point of view, this is a very correct act, and, returning money to such clients, you even feel like real righteous ones. But I already anticipate disapproving cries of many people. I think I even know what these people want to tell me ...

Great bike ... But who has really done that?

When I share reflections like the above, from me, whatever one may say, they demand to provide convincing examples. References to real cases, if you like. Everyone wants to know who, when and where has already done this.
Why? I'm not quite sure ... maybe people are thus looking for confirmation that the thought that seemed successful to them was deemed worthy by someone else. I mean ... if you think the idea is bad, you won’t be interested in who turned the thing around before, would you? You just forget about it and go about your business.

But if you consider a certain thought to be a good one, but, in view of not trusting your own instincts, you cannot have the courage to put this idea into practice, then you need a clear confidence that someone more intelligent and successful has already managed to extract good benefit from the same thought.

What if (believe me, this is purely hypothetical) no one in the whole history of mankind, given the endless reincarnations and parallel worlds, ever did that? What if I composed this right to the bone answer for Susan only because I thought he was a good idea?

So, what is next? This supposedly good idea - your words, not mine - and will not be supported by the deed just because some Twitter star did not express it first? Or because the next idol of the Internet generation did not share this idea in his senseless Vine-post?

Maybe you should start doing the right things just because they personally seem to you right (both in business and ethical terms) and do not pay attention to the fact that no one has done anything like this before you? You would have become an innovator, don't you think?
So the answer is yes. I have already done this before, and my actions had the desired effect (but I will not tell you which of my clients acted in this way).

But, on the other hand, there were cases when my advice to return the money hit the blank wall of misunderstanding. And the wall was built by a man who, just a second ago, said that he was embarrassed to withdraw money from clients who did not use the application.
So ... I can't get you to do the right thing. I can just give you advice.

Ideology vs. reality

But, believe me, I am not one of those ideologues that they scatter advice in all directions without even thinking about the possible consequences of their actions.
I understand perfectly well that this act will reduce the amount of your money. And if this leads to the fact that you "fall out" of the business, then, perhaps, the return of money to zombie clients is not the most reasonable step at this stage of your career.
Everything is connected. Use your judgment and common sense. If you cannot get the money back because you lose your job, harm your family or worse, simply work through the first part described above so that this will never happen again.

But at the same time, understand that if you can’t do right just because it will reduce your income and lead to the risk of losing a business, it turns out that you built your business on not quite good things ... Think about it for a moment.
Based on this, if the absolute majority of your customers are guys who pay monthly, but do not use your application, you are unlikely to want to use the above money-back algorithm. But something to do with this in any case is necessary, and quickly.

Type "client fitness center"

According to data from the fitness industry itself, 67% of all subscriptions to gyms and fitness centers remain unused. Of course, we know very well the favorite saying of all coaches, “The best client is the one who paid and did not come,” but, in fact ... 67% is something beyond.

If money were returned to gyms in the gyms, then there would be no fitness industry. They would be more happy to return money to people for coming to classes. So it would have been cheaper.
So how do we link this information on subscriptions to fitness centers with a business model of SaaS?
Well, first of all ... I personally have some connections with the fitness industry, and those with whom I work, do everything in their power to encourage people to return to the gyms. In their case, the number of "unused subscriptions" is noticeably lower than the total percentage in the country.

And secondly ... We will not bind. This is SaaS ... And not a subscription to the rocking chair. Truly anecdotal cases indicate that people are much more valuable to have the notorious subscription with them than to go to the gym. This is something on a psychological level. They feel better this way. Sometimes even healthier. And, moreover, for the health of some, it really does benefit.

Recognition of inactive customers and their benefits

You must know your customers. You can hide from them, but you still need to know.
If suddenly you find that the number of your inactive clients somehow vaguely reminds you of those numbers from the fitness industry, then this is definitely bad and it's time to make inquiries.

Get the phone (as an option, use some Internet application) and call your customers.
Find out why they pay, but do not use your application.
Maybe they have a good reason. Can. But I do not like these "may."
Make sure that your business is not built on a terribly fragile house of cards (here you can insert a pun with a credit card ... but I will refrain).

But there may be legitimate reasons explaining such a crowd of inactive customers.
For example, I contacted some of my clients through an intermediary. They may not talk to me for months, but when they really need me, they are always ready to turn. So do they benefit from not working directly with each other? Definitely. Because I am always at their service when they need them.
Consultants, lawyers and other professionals polls all over the world to communicate with their clients through intermediaries, and this communication is built on that very inaction.

So, is it possible to consider paying your inactive clients something of an intermediary fee? And do you think they are worried that their current situation may worsen only because they could not reach you in time?
Are you always in touch if they need them?
Or maybe it's something else ...
Maybe it all depends on a certain seasonal element in your industry, about which you simply have not heard, and they are already using it with might and main?

Or maybe the whole thing is in some budget problem that you, alas, were not devoted to, but which regularly makes people buy things they do not need at certain times of the year? And that the very thought that they themselves might need this thing one day pushes them to buy it?
I don't know ... and you won't find out until you talk to your customers.

Zombies feed on your reputation.

Summarizing, we can confidently say that zombie clients are bad. Why? Yes, because they come back to life from time to time and are wildly angry when they are aware of the fact that they have paid you for what they did not know for the last six months and at the same time have not received anything useful for themselves.
And, whatever one may say, these clients that pay you and do not benefit from it ... those from whom you are hiding ... they are a real threat to potential profits.

They will understand that they are paying you for something that they never use. And then leave.
And with great probability they will greatly disappoint you.
After that, they will advise all their acquaintances to use your products, and they will come up with thousands of reasons, with reality having nothing in common. These guys, after all, cannot in their own circle admit that they paid for what they did not use.

Do the right thing and increase your value. Point.