Pushing the customer forgiveness threshold to death 💀
The only way to see what your company is capable of is to test its limits and, with it, the limits of your customers. As you focus on growth and rally your team toward breaking your business systems on its behalf, you learn that customers are forgiving.
A customer can have a rough shipping experience. An app can crash on them. A deliverable can be a day or two late. You can be out of stock of organic avocados. Your website can load slowly.
And they'll understand when you tell them "we're a startup" and offer a free product as a peace offering in exchange for their retention. They'll stick around. But that grace has limits, and scale will test those limits.
I subscribe to the Y Combinator adage and Mark Zuckerberg's motto of "move fast and break things," but there's a reason Zuck refined the phrase to "move fast with stable infrastructure" as his company matured. It's because pushing the forgiveness threshold is an inescapable test within a startup, it may even be part of the rush, but it's a dangerous game to play in a scale-up.
“Forgiveness Threshold - When a customer is no longer willing to forgive your sloppy bullsh*t due to your stage of business or inability to manage it.”
Suppose you maintain this "customers are forgiving" attitude as a scale-up, where you've got product market fit and are trying to use the customers you've created as a startup to scale to significant growth. How far can you take it before you run the risk of decreasing retention cannibalizing growth, or in many cases, a steep decline where you'll wake up one day only to realize customers are over the mess you thought they were loyal to? If you've ever been broken up with over text as I have, you know the pain of an unexpected, detached departure from someone you thought cared about you.
Okay, so we've gotta be careful pushing it, but what's the breaking point?
The only way a brand has any value is if it can establish what feels like a meaningful relationship to its customer. Brand equity is a one-way street, and the company is on the giving end. If a customer doesn't have a relationship with you, a relationship doesn't exist. As mentioned, these relationships have elasticity; you can push the forgiveness threshold, but similar to human relationships, a relationship lives and dies on one thing.
Trust.
I have to give credit to Gareth Edwards, who wrote this article on what he calls the Trust Thermocline that was dropped into my inbox from Every this week.
““At its simplest, the trust thermocline represents the point at which a consumer decides that the mental cost of staying with a product is outweighed by their desire to abandon it.” ”
In the article, Gareth says businesses overlook the risks of sudden customer loss because they view customer experience through a linear system. To simplify it (if you run from the word systems like most of us), leaders build and test customer experience and loyalty in a way where cause quickly leads to effect. "If we increase this product's price, we know it may affect a few customers, and that we can plan for" making CEOs and founders feel in control of their customer's loyalty.
📈 (Linear Systems) They’re easier to measure and execute strategy around because they imply that there is a “straw that will break the camel’s back” that, correctly identified in time, can be avoided: prices can be gradually raised, a product offering diluted, terms and conditions changed.
But if trust is the point of no return for customers, it's rarely broken instantly within an immediate cause-and-effect system. Instead, the hidden risk of losing customers comes from a non-linear system (sorry, that word again).
🕳️ Nonlinear systems - systems where causes can happen far in advance of their effects, even when a direct relationship between them can be identified.
You may wake up one day years from now to a mass exodus without a direct or recent cause, which is an out-of-control unfathomable moment for a CEO unaware trust has been eroding. Your behavior today, even if the effect isn't immediate, chips away at trust, and what caused them to leave today may have been something you chose to ignore years ago.
You keep playing many roles as a CEO, and one of them is Brand Publicist. Publicists are in the trust protection game, and as a CEO, you are too. This newsletter stemmed from my intrigue in company damage control that has been rampant in the US over the last few months.
We have Norfolk Southern trains derailing, Southwest canceling flights, Starbucks fighting union battles, Elon tweeting about issues with Twitter, a TikTok ban bill, and tech companies laying off 5-10% of their workforce. Here's an interesting question: Which of these is enough to break our trust that we'd walk away from being a customer? All of them. Maybe none. Maybe you had frustration with Twitter years ago, pushing you over the forgiveness threshold, or perhaps each of these is a moment of trust erosion. Only you can answer that based on your threshold as a customer.
🤔 Which of these is enough to break our trust that we'd walk away from being a customer of any of these brands?
Now within your business, what are you doing today that is chipping away at the trust you think you'll have tomorrow?
There may be a linear moment in time that causes a customer to leave you, but businesses rarely have catastrophic moments like trains derailing. Yet, we still lose customers, and that's the trap of linear thinking.
How can we prevent waking up one day to a mass exodus of customers?
Pay attention to activities within your company that press into that forgiveness threshold and erode trust, even if it seems petty.
Some examples may be:
Simple disorganization in a service business
Changing the person managing a client after establishing trust
Building what we think customers want and charging more for it
Being apathetic about the security of customer data
Doing nothing about repeated customer complaints
Not listening to our employees about requests from consumers
Making the same product but charging more like with Disney+
Eliminating sharing like with Netflix
Increasing costs overall, even with inflation
What may be okay today because "we're still growing" and our customers are "loyal" may cost you everything tomorrow.
At that point, trust is gone, and so are they.
