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I presume this came up because it was auto-tweeted from swombat.com (this got retweeted today: http://swombat.com/2010/12/9/how-to-detect-a-toxic-customer http:

by swombat 14y ago

I presume this came up because it was auto-tweeted from swombat.com (this got retweeted today: http://swombat.com/2010/12/9/how-to-detect-a-toxic-customer http://swombat.com/2010/12/9/how-to-detect-a-toxic-customer ). If so, it's worth pointing to Joel Spolsky's response to this: http://news.ycombinator.com/item?id=1987223 http://news.ycombinator.com/item?id=1987223 Definitely worth a read alongside this article.

danielweber 14y ago
It's not true that large companies will form the bulk of your revenue. It all depends on what you are doing. If you are making something that every company in the world needs one of, than you will sell a lot more to the 501 through 5000th biggest companies in the country than to the top 500. (You might be able to charge those big companies a 50% or even 100% premium on various add-ons, but it won't come close to matching the other revenue.)
- deleted 14y ago
  [deleted]
- jlarocco 14y ago
  But that's not how software works most of the time. With most software licensing schemes large companies are, for lack of a better phrase, gold mines. They have more money, more users, more computers, more servers, require more support, and require higher up time. All of which you can charge them for if you license your software appropriately. Not to mention it's usually easier to jump through hoops for one or two huge customers than it is for a hundred small customers.
larrys 14y ago
Thanks for posting that. This statement by spolsky, from my many years experience, is correct and needs to be emphasized: "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." The problem with some of the advice given on HN is that it is right and wrong depending on the circumstances. Many of the people reading that advice don't have years and years of real world experience and may take that advice out of context to their detriment. (Note I say "many" which doesn't mean "most" or "all").
- npsimons 14y ago
  the corporate customers turn out to be remarkably price-insensitive, I haven't read all of Spolsky's response yet, but I find this comment interesting in light of the fact that the original article specifically calls out customers who ask for a discount with no justification. Okay, I can see that some places need to check all 80 boxes on their IT purchase approval sheet (I work for one of them), but if they are asking for that, AND being impatient, AND being rude, AND asking for a discount? You don't have be an accountant to see that you will be losing money on that sale. Circumstances indeed will inform choices better than rote rules, but that cuts both ways; if you suddenly jack your prices, many customers will assume you're trying to bilk them and go somewhere else.
  - plorkyeran 14y ago
    In a lot of cases the person making the purchase won't actually care about the price, but will want to appear to care; they'd rather get 25% off $10k than 0% off $5k.
  - rasmuswissmann 14y ago
    Spolsky's argument is that the sale will typically go through without a discount and thus it is not a real problem. "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."
jusben1369 14y ago
Thanks for posting. Joel does outline the dynamics of an enterprise or larger sales prospect or customer. But he's also highlighting the dynamics of a toxic prospect so it's not that far from the original author's point. If you're dealing directly with procurement, if you're filling out 80 questions and returning via email, if it's a 10 person team drawing it up and giving it to Junior to go chase down...............you're not going to win the business and it's going to suck out time and worse, you may get emotionally attached because it is a larger opportunity so the team will get deflated. This author is correct either way in pushing back on these requests. If your offering is truly of interest to them they will engage in the manner you want. (which is what happened here when they kicked the original guy to the curb and someone more reasonable took over)
scott_s 14y ago
And please also read the counter-counter-points in that thread, in particular, one by the original author: http://news.ycombinator.com/item?id=1988330 http://news.ycombinator.com/item?id=1988330 And http://news.ycombinator.com/item?id=1990229 http://news.ycombinator.com/item?id=1990229
- chris_wot 14y ago
  There are some great comments fom the last time this was on HN: http://news.ycombinator.com/item?id=1987146 http://news.ycombinator.com/item?id=1987146

by swombat 14y ago

danielweber 14y ago

It's not true that large companies will form the bulk of your revenue. It all depends on what you are doing. If you are making something that every company in the world needs one of, than you will sell a lot more to the 501 through 5000th biggest companies in the country than to the top 500. (You might be able to charge those big companies a 50% or even 100% premium on various add-ons, but it won't come close to matching the other revenue.)

deleted 14y ago
[deleted]
jlarocco 14y ago
But that's not how software works most of the time. With most software licensing schemes large companies are, for lack of a better phrase, gold mines. They have more money, more users, more computers, more servers, require more support, and require higher up time. All of which you can charge them for if you license your software appropriately. Not to mention it's usually easier to jump through hoops for one or two huge customers than it is for a hundred small customers.

larrys 14y ago

Thanks for posting that. This statement by spolsky, from my many years experience, is correct and needs to be emphasized: "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." The problem with some of the advice given on HN is that it is right and wrong depending on the circumstances. Many of the people reading that advice don't have years and years of real world experience and may take that advice out of context to their detriment. (Note I say "many" which doesn't mean "most" or "all").

npsimons 14y ago
the corporate customers turn out to be remarkably price-insensitive, I haven't read all of Spolsky's response yet, but I find this comment interesting in light of the fact that the original article specifically calls out customers who ask for a discount with no justification. Okay, I can see that some places need to check all 80 boxes on their IT purchase approval sheet (I work for one of them), but if they are asking for that, AND being impatient, AND being rude, AND asking for a discount? You don't have be an accountant to see that you will be losing money on that sale. Circumstances indeed will inform choices better than rote rules, but that cuts both ways; if you suddenly jack your prices, many customers will assume you're trying to bilk them and go somewhere else.
- plorkyeran 14y ago
  In a lot of cases the person making the purchase won't actually care about the price, but will want to appear to care; they'd rather get 25% off $10k than 0% off $5k.
- rasmuswissmann 14y ago
  Spolsky's argument is that the sale will typically go through without a discount and thus it is not a real problem. "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."

jusben1369 14y ago

Thanks for posting. Joel does outline the dynamics of an enterprise or larger sales prospect or customer. But he's also highlighting the dynamics of a toxic prospect so it's not that far from the original author's point. If you're dealing directly with procurement, if you're filling out 80 questions and returning via email, if it's a 10 person team drawing it up and giving it to Junior to go chase down...............you're not going to win the business and it's going to suck out time and worse, you may get emotionally attached because it is a larger opportunity so the team will get deflated. This author is correct either way in pushing back on these requests. If your offering is truly of interest to them they will engage in the manner you want. (which is what happened here when they kicked the original guy to the curb and someone more reasonable took over)

scott_s 14y ago

And please also read the counter-counter-points in that thread, in particular, one by the original author: http://news.ycombinator.com/item?id=1988330 http://news.ycombinator.com/item?id=1988330 And http://news.ycombinator.com/item?id=1990229 http://news.ycombinator.com/item?id=1990229

chris_wot 14y ago
There are some great comments fom the last time this was on HN: http://news.ycombinator.com/item?id=1987146 http://news.ycombinator.com/item?id=1987146