SaaS – Let go the High Paying Customer

Sometimes it makes sense to let go of your high paying customer

In the only economics paper we had, I remember reading about buying power and consumprion. As the buying power increases for a consumer, the consumption of the product increases. But after a threshold the demand comes down as the consumer moves to premium product.

I think the example was cheap tobacco and cigarettes.

This is applicable for enterprise applications as well. As a customer grows, they might need a different software. If the segment is SMB it is not rare.

The issue comes when the original software provider tries to retain the customer. This usually means adding new features to satisfy this client. And that too in a quick time.

The pressure to retain a high paying active and growing customer is hard to resist. Also this looks like an usecase for levelling up.

Issue is now the scope effectively increases to next segment and becomes specific to a customer. Unless an informed decision is taken the product becomes half baked and current roadmap goes for a toss.

It should be okay to let go of a customer if their requirement changes.

Basecamp were clear in this. They were happy for the customer to move on. So they can continue to focus on the customers who were in their segment.