Do the right thing (and fight the zombies)

We are back with Lincoln Murphy, who shares customer experience. His word!

I once received an email about how SaaS business model clients 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 essence of this letter boiled down to the following question: “What should I do if the client paid regularly for six months, but still did not start using the SaaS product?” By the way, I call such people zombie clients (“I paid you are six months old, but have never logged in ”(translation of the picture)).
I tried to give the most reasonable answer to this question, but very soon I realized that a really comprehensive answer would affect much more details than I could cover in this article ..

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

Here is Susan's question:

“Hi, Lincoln. You talked a lot about the fast system of attracting customers, 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 six months now (some even more) and have no use for our products. I’m somehow uncomfortable 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 ... Everything is 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 Customers of SaaS Business Model

Change your process of attracting users during the development of the application in order to lower the threshold for newcomers, and then try to ensure the most comfortable interaction between the client and the application throughout the entire process.

Part two: Do ​​the right thing

“I am aware that some of our subscribers pay us every month, but in fact they don’t use our SaaS applications” (picture translation).

Contact immediately those customers who show no signs of life for one to six months. You can review the first part, described above, in order to understand how best to do this (the monitoring idea may turn out to be especially useful).

As for those who simply 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 quite possible that you will have to somehow contact him.
• Write a check for everything that your client paid for six months (or more) before he used your system. It is better not to include CC fees, administration fees, and anything that can make you petty ... just consider this money as goodwill gestures.
• Compose some nice letter (something like this): “Thank you for staying with 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 can’t charge you for not using our application. Inside attached return check for the last six months in the amount of XXX dollars. We froze your account and stopped accepting payments. One way or another, 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. Full name, position, and all necessary contact information. ”
• Put your check and letter in a FedEx envelope (or equivalent).
• Send this envelope to the customer address.
• Contact him by phone or online the day the envelope is due to arrive at him and let him know that your message is two steps away.
• Smile. You did the right thing.

Return to part one and make sure that this does not happen again in the future.

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

From a moral point of view, this is a very right thing, and returning money to such clients here, you will even feel like you are righteous. But I already anticipate the disapproving exclamations of many people. I think I even know what these people want to tell me ...

An excellent bike ... But who really did this already?

When I share thoughts like the one above, with me, whatever one may say, they require me to provide compelling 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 ... perhaps people are thus looking for confirmation that someone else thought they thought the idea that seemed successful to them. I mean ... if you think the idea is bad, you won’t be interested in who has done this before, will it not? You will simply forget about it and go about your business.

But if you think a certain idea is successful, but, in view of distrust of your own instincts, you cannot be courageous to bring this idea to life, then you need a clear certainty 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 history of mankind, given the endless reincarnations and parallel worlds, has ever done this? What if I composed this answer, right to the bone, for Susan just because I thought it was a good idea?

So, what is next? This supposedly good idea - your words, not mine - will not be backed up 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 stupid Vine post?

Maybe you should start doing the right things just because they seem right to you personally (both on a business and ethical level) and not pay attention to the fact that nobody has done anything like this before you? Would you become an innovator, don’t you think?
So the answer is yes. I already did this before, and my actions had the desired effect (but I won’t tell you which of my clients did the same).

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

Ideology versus reality

But, believe me, I am not one of those ideologists who scatter advice in all directions, without even thinking about the possible consequences of my actions.
I understand that this act will reduce the amount of your money. And if this leads to the fact that you "drop out" of the business, then perhaps returning money to zombie clients is not the most reasonable step at this stage of your career.
After all, everything is connected. Use your judgment and common sense. If you can’t get the money back because you lose your job, hurt your family, or even worse, then just work out the first part, described above, so that this never happens again.

But at the same time, understand that if you can’t do the right thing just because it will reduce your income and risk losing your business, then it turns out that you built your business on not-so-good things ... Think about it for a moment.
Based on this, if the vast 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 in any case, something needs to be done, and faster.

Type of “client of the fitness center”

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

If money were returned to all truants in the gyms, there would be no fitness industry. They would be more happy to return money to people for coming to classes. So it would be cheaper.
So how do we align this fitness center membership information with the SaaS business model?
Well, firstly ... I personally have some connections with the fitness industry, and those with whom I work do everything in their power to inspire people to return to the gym. In their case, the number of “unused subscriptions” is noticeably lower than the country's total percentage.

And secondly ... Do not bind. This is SaaS ... And not a rocking pass. Truly anecdotal cases indicate that people are much more valuable to have the notorious subscription with them than the ability to attend the gym. This is something on a psychological level. They feel so better. Sometimes it’s even healthier. And, moreover, for the health of some it really benefits.

Recognizing inactive customers and their benefits

You need to know your customers. You can hide from them, but you should know, nevertheless, anyway.
If you suddenly 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 your phone (as an option, use some kind of Internet application) and call your customers.
Find out why they’re paying, but don’t use your application.
Maybe they have a good reason. Can. But I do not like these "maybe."
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 the fact that we do not work directly with each other? Definitely. Because I am always at their service when they need them.
Counselors, lawyers, and other professionals all practice communication with their clients through intermediaries, and this communication is built on that same inaction.

So can payment of your inactive customers be considered a kind of intermediary fee? And do you think they’re worried that their current situation may worsen just because they were unable to contact 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 that you simply haven’t heard of, and they already use it with might and main?

Or, maybe, the whole point is some budget problem, which, alas, you were not dedicated to, but which regularly makes people buy things they don’t need at certain times of the year? And what does the thought that they might need this thing one day push them to buy it?
I don’t know ... and you won’t know until you talk to your customers.

Zombies feed on your reputation.

To summarize, we can confidently say that zombie clients are bad. Why? Yes, because they come back to life from time to time and become wildly angry when they realize the fact that you have not been paid for what for the past six months and have not received anything useful for yourself.
And, whatever one may say, these customers who pay you and do not get any benefit from it ... those from whom you are hiding ... they are a real threat to potential profit.

They will understand that they are paying you for something that they never use. And then they will leave.
And with great probability they will be very disappointed in you.
And after they advise all their friends to use your products, moreover, they will come up with thousands of reasons for this, which have nothing to do with reality. After all, these guys cannot admit in their circle that they paid for something that they never used.

Do the right thing and raise your profile. Point.