Learning to say no to the wrong customers

Customer acquisition is one of the cornerstones of a successful start-up. But as Vend founder Vaughan Rowsell discovered, not every customer is the right fit for your business.

Launched in New Zealand in 2010, Vend provides cloud-based, point-of-sale software to enable retailers to process sales, track inventory and manage customers.

In addition to partnering with PayPal, Vend integrates with Xero and Shopify.

Small retailers are a huge part of Vend’s business. Customers include laneway café and bike shop The Little Mule, educational toyshop Crayons, and Sydney Skydivers.

Rowsell says his best mistake was learning to say no to customers who weren’t right for Vend.

“As a new company, when you’re first starting out you are on a bit of a customer discovery [journey], trying to figure out who you want as customers and kind of really feeling your way through the marketplace,” Rowsell says.

“It’s like walking through a room with lots of sharp objects. [We needed to] figure out who are the right customers and who are the wrong customers.

“We had some large brands and chain stores come to us and said, ‘Hey, we want to use your product. Can you make it work the way we want it to?’

“It was really tempting… There could have been 100 new stores using our software but we thought it might put some [unnecessary] demand on us and the product.”

Rowsell says it wasn’t only large companies putting pressure on Vend.

“Sometimes it could be a small, long-term loyal customer who’s been using your service but they just want a new feature or they want you to change something,” he says.

“Sometimes you can make the change and it makes the product better for them but it can make it worse for a lot of other customers, so it’s a constant battle.”

The business did relent on several occasions, bowing to customers’ requests. But it soon realised this was not a wise move.

“We only really learn from our mistakes. Once bitten, twice shy,” Rowsell says.

“[We now deal with those situations] with a great level of tact. Nobody likes being told, no, you’re not going to do something for them.

“We’re always very clear as to why we’re not going to do a feature or make a change to the product. Nine times out of 10, they can see your way as well.

“If you’re firm like that early on, even referring them to a competitor, [you’re less likely to] turn them into someone who gets disillusioned with the product because it doesn’t fit.”

Vend also makes a point of involving its existing customers as much as possible.

“One of the things we do with the product is we like to involve all our users, contributing new ideas and features,” Rowsell says.

“One thing that works really well is we have public forums where all our users can talk to each other and we even have voting.

“If a feature request has one vote and is only useful to one customer, [we’re less likely to consider it]. If it has hundreds of votes, that seems like a sensible feature to add to the product.”

Vend recently opened its first Australian office in Melbourne, having already opened offices in New Zealand and the United States.

“It’s going to be a sales, marketing and support office for the Australian market,” Rowsell says.

“We’re growing our Australian team to be 10 or so people over the next six months, and possibly 30 people by this time next year.

“There are 38 of us now… We’re planning on being 100 or so people by this time next year.

“Over the next 12 months, we would like to at least triple our user base, if not quadruple it. We’ve been growing pretty fast. In two years we’ve gone from zero to 30,000 [customers].”