
How to detect a toxic customer - swombat
http://www.softwarebyrob.com/2010/12/09/how-to-detect-a-toxic-customer/
======
spolsky
This detection process doesn't detect toxic customers, it detects corporate
customers at large companies.

It's fine for a small startup to cater to small startups, but the big
companies have big budgets, and eventually, you'll be making 80% of your money
off of them, so learning how to deal with them can be helpful.

1\. Big companies often have purchasing departments actually do the purchase.
They are trained to expect discounts and the people in the purchasing
department know a lot more about asking for discounts than they know about
software, because that is their specialized role in the organization. If you
politely tell them that you have one price for everyone, they'll still
purchase, because the purchasing department ususally doesn't have the power to
stop the purchase.

2\. Those 80-question checklists usually come out of the following, typical
corporate process:

* A team of people identifies a need for software

* The team meets to agree on everything they need

* The junior person on the team is tasked with evaluating 12 possible products to see which one is best

* That person makes up a spreadsheet and sends it to each of the vendors hoping that they will do his homework for him

* The vendors who have decent presales support or sales teams fill out the spreadsheets by marking everything as "Yes" or "Yes with a footnote" and get the deal.

This also explains the "multiple questions that can be answered from a
website" -- it's a sign of a person who has been put in charge of evaluating
multiple products, not a sign of a toxic customer.

3\. Multiple contacts through multiple channels are usually the sign of
multiple interested parties at the client site. You can't sell to big
companies without touching multiple people. One of a salesperson's most
important jobs is helping the customer themselves get organized and make a
purchase. A good salesperson helps the person who wants your software navigate
their own corporate purchasing politics.

Summary: while it's fine to turn away truly toxic customers, and you are
welcome to decide that you'd rather sell to the starving startup founders on
Y-combinator who would rather spend 2 hours scouring your website than deal
with a salesperson, the corporate customers turn out to be remarkably price-
insensitive, once they make a purchase they will keep paying you maintenance
for years long after the product is not even in use, and they're just as
likely to leave you alone as the small guys, but they do have "multiple
stakeholders" and if you want to sell to them you need a process that matches
their reality.

~~~
mechanical_fish
My impression of the original article is that it suffers from
overrationalization. The author knows, from empirical observation, that toxic
customers exist. And he feels -- possibly accurately, but possibly due to the
awesome power of hindsight -- that these customers should be detectable in
advance.

And that may be true. But if so, it's not a scientific process. The warning
signs do factor into it, but in the end it's a matter of gut feeling. (Perhaps
because it's not necessarily the case that a given customer is universally
_toxic_ , it's that they don't fit you, your company, or your product.)

But it's always embarrassing for an engineer to write a blog post like "how to
detect toxic customers by going back and forth in conversation, trying various
rhetorical strategies that you make up on the fly, and occasionally closing
your eyes and trying to use the Force". So instead the author tried to invent
a nice, rational checklist. It has the virtue of looking scientific. The only
downside is that it may not actually work very well. It's not what the author
is actually using, either. You can't do sales, especially corporate sales,
with an algorithm unless you're willing to leave money on the table, maybe a
lot of money.

~~~
notahacker
Gut feeling is the only real way of separating things out.

Asking huge numbers of questions can be a sign of a customer support nightmare
or a person/company/entity doing their homework. Following up can be a sign of
high expectations or them being keen to make a decision asap. Asking for a
discount is sometimes a buying signal. Conversely, whilst rudeness isn't a
good thing, some of the customers that will be a really bad fit are the ones
who are really making the effort to be polite and charming.

The one almost universal red flag would be constant inappropriate reference to
price. Asking for discounts is to be expected. Asking if there are cheaper,
slimmed-down alternatives, or freebies for volume purchases is reasonable.
Constantly referencing the price whilst raising unrelated issues or requests
is a sign that something's amiss. Whenever you hear something like "I'm
surprised to hear you haven't added xyz considering you're charging £xxx" or
"so before I starting paying £xxx, would you...?" it's a pretty good sign that
they're either rationalisig a decision to _not_ spend the money with you or
have an inflated sense of how far up your priority queue their spending pushes
you. Then again, you can suspend that rule for businesses that are likely to
pay enough to push themselves up your priority queue too..

------
patio11
I am convinced there exists a breed of customer who needs to feel a human is
in the loop to buy something. I mean, "Yes ma'am, it _does_ make bingo cards."
has made me three sales. They're not noticeably pathological customers.

(Those certainly exist, though. Charge more, and they'll mostly inflict
themselves on your competitors instead.)

~~~
steveklabnik
Poor people, they've been beaten into submission by bad software not to trust
even the simplest of applications...

:/

------
jacquesm
Hey, funny, I think I've had that customer too!

I ended up referring him and his company to my worst sworn enemy competitor,
haven't heard from him since.

~~~
ulf
careful about that, when he tells your competitor about the referal, then
continues to be a major pain in the ass. They might just wait for an even
bigger fool to refer back to you

~~~
TheSOB88
A fool which... he wouldn't take?

------
wccrawford
I totally agree with this. I'm a very customer-oriented person, but there are
a few customers that just aren't worth supporting. If you can reject them
gracefully, it's in your best interest to do so.

One of the problems with that is that even jerks have friends. If you reject
them, they'll tell those friends and you could lose even more customers.

In this case, when they were going to have to write a custom solution for this
customer, it was definitely the way to go.

As a side note, my father asks for 'discounts' all the time. He almost never
gets them, and doesn't act entitled when he doesn't, but it sometimes works.
So he keeps doing it. I really have to start doing it myself to see what I
get.

~~~
JacobAldridge
_even jerks have friends. If you reject them, they'll tell those friends and
you could lose even more customers._

My experience having done several client management studies with clients, is
that jerks have friends ... who are also jerks. (Generalising, of course, but
if you've got a solid enough business model you won't mind losing a few good
clients if it means not dealing with a larger number of toxic clients.)

Best case study I did was with a branding agency. We got a list of their
clients (about 100) and had the owner mark them each as Up, Down, or Neutral
in terms of energy. We then had the team explore where each of the 'Down'
clients (about 15) came from - half were from the Yellow Pages (again, using
my experience, more price-oriented than service or quality) ... and the other
half were referrals from the clients who came through the Yellow Pages!

~~~
Kisil
And did you find out how many of the up and neutral clients also came from the
yellow pages? That bit of information is useful only if it draws a
distinction, e.g. what if the agency only had one working form of advertising?

(Of course this almost goes without saying, and I don't doubt you thought of
it, but this is such a common logic error that I thought it shouldn't be left
hanging in a public forum.)

~~~
JacobAldridge
Yeah, sorry I didn't want to make my response longer than needed to be.

None of the Up or Neutral clients were Yellow Pages - most were referrals from
the same level (ie, Up / great clients had been referred mostly by other Up
clients, and similarly with Neutrals, plus some general networking). Which
does reinforce the 'you are who you hang with' conclusion I've drawn.

------
shay
/Warning Sign #1: Disrespectful or Abrupt/

I've found that people who email with no explanation or "sell" of their own
but just immediate, terse requests like "What are your rates?" or "I need a
copywriter. You available?" are typically NOT interested in finding the right
person for themselves or their product; instead, they're looking to just
outsource what they think they COULD do themselves, if only they had
time/energy/desire.

People who know they're considering (hopefully carefully) how to add value to
their product/life are the ones who will take the time to build trust from the
beginning, will be honest about expectations, and are more likely to give the
freedom and flexibility necessary to maintain a healthy working relationship
over time.

------
mark_l_watson
I pass on consulting work if I have any strong feelings that the customer and
I are not a good fit. Many years ago, I had a potential new customer spend a
_lot_ of time telling me about the problems he had with developers, mostly
that they wanted to walk from his projects. I ended up accepting work from him
anyway because he was a nice guy and interesting to talk with. It took me a
few months to finish promised tasks and extricate myself from his project,
becoming another "walker."

I have had experience of clearly being at fault also: twice I have let myself
be talked into projects in tech areas where my experience was really thin, and
within a short period of time, had to notify the two customers that I was not
a good fit to their needs. I was very apologetic both times and obviously did
not bill them, but they were out the time documenting the tasks for me.

~~~
rtp
If you are a people-pleaser (and this doesn't necessarily carry a negative
connotation), then it's a good tactic for any employer to play the victim card
by talking crap about previous "walkers" in order to instill loyalty. You
don't want to be a "walker", do you? ;)

Actually, I think you should pay extra precaution when dealing with
"trashtalking victims", because I think the risk of dealing with a toxic
customer is greater than losing a bit of revenue from someone who was
genuinely burned.

------
protomyth
I went through this process with a large company, and one of the interesting
things that was done was a check with Dunn and Bradstreet (www.dnb.com). It
seems they would not buy from someone without a D&B number and "sufficient"
history.

------
waterside81
The timing of this is uncanny, we were just having a discussion about this
internally. I've found that a great technique to dealing with difficult
customers is to show them that you don't mind them taking their business
elsewhere, as the OP mentions. It always amazes me at how quickly this disarms
people and completely changes their attitude and approach.

And another example of toxic customers: people paying with Groupons.

------
brewski
After poking around his site, I laughed a little after he described Emacs as a
"stripped down, no frills text editor".

[http://www.softwarebyrob.com/2005/09/05/better-developer-
don...](http://www.softwarebyrob.com/2005/09/05/better-developer-dont-use-a-
dull-knife/)

~~~
SwellJoe
If I didn't know better I'd think he was trolling. He goes on to compare emacs
to COBOL. I don't even like emacs (I use vim, of course), but it shows an
unbelievable level of ignorance of the current state of emacs to act as though
it's "ancient" and clearly inferior to the Visual Studio editor.

~~~
jff
It's pretty ancient. It's older than vi, and vi is from the 70s.

Yes, there's been some development, but using Emacs on TOPS-10 or ITS is an
awful lot like using it under Linux in 2010.

~~~
SwellJoe
"Yes, there's been some development, but using Emacs on TOPS-10 or ITS is an
awful lot like using it under Linux in 2010."

That's a _huge_ stretch, and kinda like saying that using Linux is an awful
lot like using SunOS 1.0. Sure, the basics of use are the same, and someone
who used an ancient emacs version could pickup using a modern version
reasonably easily, but syntax highlighting, auto-completion, X and GUI
support, windowing, multi-file editing, etc. have been added over the years
(and that's just stuff I know of, off the top of my head, and I don't even use
emacs). The emacs distribution has grown by several orders of magnitude in
size since those TOPS-10 and ITS implementations.

My point is that Emacs is every bit the editor that Visual Studio editor is,
and contains pretty much all the same features, and a lot that Visual Studio
will never have. And, more importantly, the most productive developers I've
ever known used either emacs or vim...I can't think of a single _great_
developer that uses Visual Studio (I'm sure they exist, but I've yet to meet
one). It's just idiotic to claim that emacs is an ineffective tool when the
evidence is so strong that it is extremely effective for millions of
developers.

~~~
jff
Well sure, it's definitely a fantastic development environment. I loved Emacs
well enough at one point, although eventually my hand started to ache from
constant M-x'ing and buffer switching and I gave it up. I'm just pointing out
that Emacs is quite old, and that someone used to the 40-year-old version
wouldn't really have much trouble using the most recent version, at least for
the basics.

------
hammock
The moral of this story is not to detect toxic customers.

The moral is that he almost lost a sale, were it not for the other guy
stepping in. The moral is that he should have asked to speak with someone else
at the company to continue the selling process.

This guy almost blew it.

------
icey
Here's a faster way of telling if you're dealing with a toxic (corporate)
customer: See how they react when you say "no" to something. This is them on
their best behavior too; if the reaction is nasty then you have your answer.

------
kenjackson
Don't you have forums for your product? If you're doing invoicing software
this would make sense. I've had that for multiple products and almost all of
these issues get hashed out in the forums, often by existing customers.

And in particular, if you're seeing people asking multiple questions that
could answered from the website then there's probably something wrong with the
site.

------
kls
_Warning Sign #2: Asks for a Discount (With No Reason)_

The funny part about this one, is I always ask for a discount for no real
reason. Even if I am only buying a single piece of software. Why, because it
lets me know up front if a vendor is going to be flexible with large volume
purchases and OEM arrangements.

Funny story, I was evaluating some screen capture software for OSX not too
long ago for a client of mine. I was building a web app for them and part of
the work flow for their content was screen capture. Anyway, I emailed a
company that had a reputable product and basically told them that I had no
need for the pro version, would not be using the pro version for any
commercial work but that I would like to use the pro version to teach my
daughter about video editing. I then asked if they would consider selling me
the pro version at the basic software packages rate. I framed the story in
this fashion for several reasons. I had just told the developer/owner that I
would be using it for non-commercial and educational purposes both of which
usually get some form of pricing plan that is below the commercial mark-up
lack of having a plan to deal with either tells me that they do not have a
competent pricing structure, and quite possibly that they lack a formal sales
organization and negotiating deals later on would be difficult due to lack of
attention to pricing structure for the various fringe purchasing needs.
Dealing with companies that do not have flexible pricing policies can be
difficult when you are dropping large purchases in which no one realistically
pays full price per seat.

Anyways, point is be careful of putting earmarks on customers, this small
developer lost a $75,000 purchase (what we set aside for a site license) for
seats on his product due to the fact that he showed that he was not flexible
in his pricing structure. Allowing me to purchase the pro version at the basic
version price would have cost him nothing and given the purpose it was
purchased under "non-commercial and educational" there was a need to reduce
price to be competitive. Instead, I got a dismissive response that the basic
version was good enough for my needs and that if I wanted the pro version I
would have to pay full price. Needless to say, his competitor was very happy
with the $75,000 purchase order.

I guess, long story short, bargain shoppers are not always bad, some people
negotiate over what seem to be inconsequential amounts because rather than
haggling over dollars they are finding out up front whether a relationship
with your company will be tenable.

~~~
samuel
Sorry I don't get it. May be its me, I'm not on Sales or purchasing.

You want to purchase a large quantity of licenses, and you want a discount for
them. So you ask for just one and use it as a proxy to know if the Company is
flexible in its pricing? Is this standard practice?

I must say that I was at a company where the purchasing guy was always asking
for discounts up front. He often tried to deceive the salesmen (for example he
asked for free ISDN-GSM gateways to a telecom guy who ignored its price and
thought they would cost like a phone). For him it was "just bussiness" and the
way it's played the game.

Were we a toxic customer? For the naivest of our providers, sure we were.

~~~
kls
_Sorry I don't get it._

My position was that a vendor that treats a small one off customer with
respect and generally tries to help is going to do the same for a large
purchaser. I don't expect more than that, but I do expect flexibility as this
particular pieces of software would for all intents and purposes be part of my
solution, it would reflect on my orginization. Having a non-flexible vendor
limits my ability to be flexible, a situation I have no interest in being in.
When large portions of money are involved people change, but that does not
mean they will stay changed. There is a likelihood that they will revert back
to their standard culture on support. By evaluating their support of the
smallest purchase and a fringe case, one gets an idea of what the support will
be like once the luster of money has worn off. Quite honestly if the developer
had politely declined my request, I may have still went ahead with the
purchase but when he took a dismissive tone, without critically analyzing the
request, it became apparent that he would not provide the level of tact and
attentiveness that I would need to make an OEM purchase and use the product in
my solution. Again, totally his prerogative and I hold nothing against him for
doing so, I expected nothing from him and did not feel that I was entitled to
a discount, but I have to defend my companies reputation and vendor selection
is a big part of doing so, that being said, I look for vendors that go the
extra mile, because I do the same with my clients, and by proxy their ability
to support their software in every facet reflects on my organization once it
becomes part of my organizations provided solution.

~~~
gte910h
Sorry, the actual costs for 10 licenses is far less than 10x the support cost
of 1 license. The support costs of 1 very penny pinchy person is often far in
excess of a normal license sale. Many people choose not to pay that support
cost intentionally.

It feels like you're asking for a discount, and having sour grapes when he
said no. Tone is _very hard to read in text_. From the walls of text and the
style of your post, I'm not sure you didn't start the cattiness in his mind.

~~~
kls
_I'm not sure you didn't start the cattiness in his mind._

If I did, it was not my intention. The summation of my email to him was pretty
much that I have a young daughter that I want to teach video production to.
That I think it would be best for her if I could teach her some of the
advanced features and I inquired if they had an educational discount program.
The last line asked if they did not would they consider selling me a basic
license and upgrade me to pro with the explicit agreement that it was to only
be used for educational purposes. I feel that I am pretty good at regulating
my tone and did not use words that would appear that I felt entitled to such
an arrangement. I was polite in my request.

While, my tactic is debatable, I don't think the content or how I approached
it was a factor. Further, I have said on multiple occasions that I did not
walk away with sour grapes about the exchange, he was totally within his
right, I was the one asking for a favor. That is not in dispute, and I was in
no way shape or form upset about his decline. The only thing I walk away with
was that I felt that I it was better that I had that exchange before a sum of
money was involved.

~~~
gte910h
Perhaps it's just hard to tell the "I outsmarted him" story when the people
you're telling it to relate more to the antagonist (the guy) than the
protagonist (you). It makes me want to ascribe more negative features to you
than I have any rational basis to really do so.

~~~
kls
Sure and I understand that, i ask that you don't see it as an "I outsmarted
him" post that was not my intention (which has got kind of lost). My intention
was to serve as a warning to how customers make decisions and that placing
earmarks on customers can be dangerous. I am by no means disconnected from the
realities of writing software, it is after all what I do for a living. Rather
than bragging about outsmarting someone (which I never felt I did) I merely
wanted to highlight the dangers of earmarking bargain shoppers as being
difficult customers. Contrary to how I may be perceived in these posts, I am a
developer first and for most and am very rational when it comes to dealing
with other development organizations to my knowledge no one has ever seen me
or my organization as a difficult customer. We may be critical of who we
establish business relationships with, but after a relationship has been
established they are generally amicable.

~~~
rhizome
I consider potential clients who bring their personal software needs into the
equation to be "difficult." Educational discounts mean and are used for a very
specific purpose and typically have tax implications for the vendor, and a dad
teaching his daughter is not part of it. Naturally, a retort would be that he
doesn't think enough of his daughter's education to pay whatever it takes to
get the tools to do so. You aren't a school and it's crazy to ask for an
"educational discount" from a businessperson who is otherwise perfectly
accomodating.

My general take from the approach you describe, paying attention to the
"smallest" detail of a deal (and/or bringing ever-smaller details into the
deal) is reaching for more and more tenuous reasons to neg the vendor. It's
analogous to reducing your tip at a restaurant because your water glass was
not promptly refilled, and then further when the silverware is not perfectly
parallel..

~~~
kls
_You aren't a school and it's crazy to ask for an "educational discount"_

That's the first that I have heard that it is crazy to negotiate. I have
always though it was crazy to not negotiate. That is what sales is a
negotiation. I understand that there is an amount of developers who do not
like to negotiate. But that does not negate that for a good deal of business
negotiation is business as usual.

 _Naturally, a retort would be that he doesn't think enough of his daughter's
education to pay whatever it takes to get the tools to do so._

It's not a retort I would use or allow to come from my organization. Doing so
could be seen a comment on ones character, an unnecessary one at that. I guess
I see the world different from other developers. I see these kind of requests
as the cost of doing business and they don't bother me. I also see the cost of
reputation being valuable to me.

~~~
rhizome
Well hold on now, "negotiation" is one thing, but I think it's disingenuous
(or perhaps hyperbole) to call what you're asking for "an educational
discount." I mean, I think I understand what you're doing, and of course
negotiation is natural, but if you're going to exaggerate your terms by saying
your personal software needs amount to institutional status, you risk being
perceived as a bad-faith negotiator.

We all see the world differently, it's just that communication and, dare i
say, negotiation depends on the participants operating with similar terms. In
your example you're trying to tip the balance of perfect information by
causing the provider to have to account for a question of how legitimate your
discount request it. Which it really isn't, because you aren't really that
kind of institution.

I hope I'm explaining myself well enough, it's just that it's not a good
negotiation if people are exaggerating their terms. Sure, "ask for twice what
you want so the compromise is closer to your target number," but this isn't a
foolproof strategy.

~~~
kls
Sure, point taken, I know that I did not represent a qualified educational
discount, and I never directly called it an educational discount to them. I
asked if they had a program and if they would consider applying it for my
case, and secondly if they did not have an educational program would they
consider upgrading me to the pro if I purchased the basic with an explicit
agreement that we would never use it for commercial work. that is why I asked
if he would consider it. I know that it was an out of the normal request, but
there are some companies that will sell an educational version for any non-
commercial use so it was not totally out of the norm. He was well within his
right to say no based on the fact that I did not represent you typical case.
In fact, the way I see it he is within his right to say no for whatever reason
he sees fit, he wrote the software after all.

You never know unless you ask. His response was closer to no go to hell though
(just to be clear, he did not tell me to go to hell) and that is what made me
chose the path I did.

I am not put off by negotiations, and very much enjoy it when a client
negotiates with me, so long as they don't become combative or disrespectful.
It gives me an opportunity to show them in detail how much value I am
providing for their money. I find that the client that negotiate with me and
then see the value seem to be my best customers. The second vendor did just
that, took time to show me their value and that is why I chose them. You learn
a lot of valuable information about people in negotiations and that was really
the point I was trying to drive home, that some times people don't negotiate
just to get the best price. Sometimes they see it as a path to insightful
information. It's the reason I always negotiate. If that makes me a toxic
customer, so be it, but I like to know the paying field before I commit to
anything in life.

As well just for the record on this one from your other post:

 _It's analogous to reducing your tip at a restaurant because your water glass
was not promptly refilled, and then further when the silverware is not
perfectly parallel.._

I have a friend, who does this and I get extremely mad when I am at dinner
with him and he does. He does it as a way of rationalizing reducing his tip,
he is very cheap and he is a multimillionaire. After several occasions I
refused to eat dinner with him, unless I paid and covered tip. He is
disconnected from the fact that not everyone has buckets of cash and that that
money is a lot more valuable to someone on waiter wages than his principals
should be to him. My friend is a good guy, his cheapness just gets the best of
him, some times. Anyways, the point I was getting at, is I would never
intentionally do that to someone.

