How to improve your retention rates by spotting bad-fit customers

Bad fit customers are customers that receive little to no value from your product. They can be a PITA for your SaaS business. They're basically the opposite of your ideal customers. They increase your churn rate, damage your reputation, and increase your support costs. Spotting them will not only reduce your churn but also make growth easier.

There are two cost-effective ways to spot bad-fit customers:

Define an Ideal Customer Profile (ICP). Outline the traits of an ideal customer of your business, those who get the most out of your product. Who are they? What do they have in common? Once you've outlined their traits, the next step is to qualify every new prospect based on your ICP. Your goal is to ensure that every prospect you onboard matches the criteria outlined in your Ideal Customer Profile (ICP) such that you only onboard the right type of customers.

Use exit surveys. Exit surveys can also help understand the impact of bad-fit customers on your churn. When a customer cancels, it is important to know why they canceled and whether they were getting any value from your product.

Bad-fit customers can be a blessing in disguise as they'll help you focus on the right prospects which in turn will help you retain more customers and increase customer happiness overall.