The real cost of a poor-fit customer
I’ve been that customer. Maybe you have, too?
I wasn’t the difficult customer, nor the churned customer. I was the aspirational fit. The one who had every intention of using the tool, but was too small, too early, and too unready for it.
I’d convinced myself that we were ready. A good seller would have told me “not yet” and pointed me in a different direction. But I came in on the last day of the quarter, signed for a discount, and helped someone hit quota.
That’s the story from one side of the desk.
I’ve been on the other side too. And when I read this line from a Winning by Design paper on revenue governance – “customer success is absorbing onboarding load that was never priced in” – I didn’t need to think hard about what it was pointing at. I’ve watched an onboarding that should’ve taken two weeks stretch to six months. I’ve sat in those Monday morning meetings where the same customer comes up before anyone’s had coffee, and you can hear the room collectively exhale before anyone says anything.
The cost nobody itemizes
The obvious stuff is obvious: support hours, churn, CAC payback that never comes. If you’re honest about the fully loaded cost of onboarding and servicing a poor-fit customer over the life of a contract, you’re often losing money. The number gets big fast. Most people stop the math before they get there because getting to that number is uncomfortable.
What gets ignored is the stuff that’s harder to put a dollar sign on.
Morale. This one’s quiet. When your team starts every Monday feeling down about the same customer <sigh>again</sigh> before the week has started… you feel it. It’s one of those indicators that a good product analytics tool will never catch. It’s in the group chat or sideline convos.
Opportunity cost. The more time you spend on one customer who shouldn’t be in the business, the less time you have to find and serve the ones who should. It’s math. Every hour fighting to make a bad fit work out is an hour not spent on a customer where you actually win. It’s a wet blanket on your best revenue motions.
Attention distortion field. This one’s less talked about. You’re not just losing time, you’re losing signal. When your team’s energy and conversation is soaked up by an outlier, it skews what you think the real problems are. You can start solving for the edge case. You can start to think the product needs to go a direction it doesn’t. It’s dangerous.
Why doesn’t this get discussed?
It does get discussed – sort of. The sales-to-CS handoff problem is well-known. The MQL quality fight between marketing and sales is a rite of passage in almost every B2B company. It’s almost fun. Everyone knows the tension exists at the handoff points.
But it doesn’t get discussed very openly. I think there are two real reasons:
The first is structural. The WbD paper makes this point well: without governance to hold the whole system together, you end up with siloed teams each optimizing for their own metrics. Sales closes. CS onboards. Nobody owns the full cost. When a problem is spread across enough people’s lane boundaries, nobody has the full picture, and nobody wants to be the one who calls it out. It becomes institutionalized. Naming it feels like putting your neck out.
The second is that it’s just plain hard to measure. What is the fully loaded cost of a six-month onboarding versus a two-week one? To answer that, you’re deep into activity-based costing models – which are expensive, time-consuming, and even more opportunity cost in their own right. So we skip it. We do the easy math and hope the incomplete version tells us enough.
It often doesn’t.
Your ICP isn’t a fixed artefact
Every company has an ideal customer profile. But that profile changes as you grow.
What looks like a poor-fit customer today may have been exactly the right customer two years ago. Early stage, growth stage, scale stage: these aren’t just different phases of the same business. They often need different customer profiles to feed them.
The transition between stages can be messy. You carry forward the ICP from an earlier era. They live in your pipeline, in your prospecting muscle memory, in the type of buyer your brand still attracts Often even after you’ve grown past that segment.
You end up with poor-fit customers not because anyone made a bad call, but because the company changed and the motion didn’t keep up. That’s not bad acting. That’s just what happens when you’re building. It’s a good problem to have and solve.
Understanding which kind of poor fit you’re dealing with changes what you do about it.
When it’s worth it anyway
Poor-fit customers aren’t always a mistake.
Early on, when you’re still learning what an ideal customer even looks like – when cash matters, when a logo on the website has real strategic value – taking a deal that doesn’t fit perfectly is often a good call. You’re not failing to govern. You’re gathering evidence. Edison’s “ten thousand ways that won’t work” and all that.
The risk is the zero-sum thinking that comes after: if I go too narrow, I’ll run out of market. I’ve felt that pull.
The more useful frame is abundance. If we can get honest about why the poor-fit deals cost what they cost, even just back-of-napkin, the math usually pushes you back toward selectivity pretty fast.
If you’re running a business, you’ve had customers that weren’t a good fit. Things can end mutually and without drama. But sitting with why it wasn’t a fit – even in a 30-minute debrief – is how we avoid repeating it.
The question I’m sitting with
I don’t have a clean framework to work from.
I keep coming back to this: if every team in a recurring revenue business is absorbing a piece of the cost of a poor-fit customer but nobody ever adds it up, the cost stays invisible. And invisible costs don’t change behavior.
You don’t need a full-on governance system to fix this (but it would help). You do need one honest conversation with your team about one customer – the one everyone sighs about on Monday – and an attempt, even rough, to put a real number on what they’ve actually cost you.
Consider what that number looks like at your company. I’ll be here writing it out on this napkin…
Peter