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This Is What To Do When Your Startup’s Customers Get Mad At You

This founder learned that to “do what’s best for the customer” is too simple a formula to work in every situation.

This Is What To Do When Your Startup’s Customers Get Mad At You
[Photo: Flickr user U.S. Geological Survey]

There’s a simple reason why human relationships are inherently unstable: People all want different things. That doesn’t mean we’re doomed though. In stable relationships, people want many of the same things and just compromise on the rest. Taken together, how different your wants are and your willingness to compromise make for a pretty good indicator of how the relationship will go.

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That’s a principle no entrepreneur can afford to forget—particularly when customers get upset about something. Here’s why.

Everything You Haven’t Thought Of

Relationships between businesses and their customers are just another form of human interaction, except rather than being governed by unspoken norms, there are things called contracts and terms of service. As startup founders, we try to write those up in a way that covers every imaginable scenario, but because we’re dealing with people, we inevitably fail to cover everything—as I was recently reminded.

My company UserMuse lets experienced tech professionals post their hourly rates for providing expert feedback to companies developing business software. The goal is to connect product managers and user researchers with the right people to give them high-quality product feedback, and we charge a flat fee for every introduction we make. We recently partnered with a few consulting firms that specialize in user research, which was (and is) an exciting opportunity for us because they need lots of people.

We had just finished our first project for a big firm, and I was on a high thinking about all the future business we could get from this new partnership. Then I got an email from one of the users we’d placed on the project, which snapped me right out of it:

“My hourly rate was $65, not $49 . . .”

Oh, shit. I didn’t have to read the rest to guess what happened. We told our users that the consulting firm would pay their respective hourly rates. But the feedback sessions ran only 45 minutes, so they prorated all of the users’ payments, which meant paying them each 75% of what they’d expected to be getting.

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Reasonable? Totally. But the firm hadn’t warned me, and I hadn’t anticipated a snafu like this, so our users were unpleasantly surprised. They weren’t happy—in their very first experience with UserMuse, no less.


Related: This Is Why Your Startup Will Fail


Why People Get Upset

I knew I needed to tread carefully; how startups respond in these early interactions with customers couldn’t be more crucial. After my animal-brain rage subsided, I reasoned we had three options:

  1. Apologize to our users, explain the situation, and hope they understand.
  2. Lean on our new partner to pay our users what they and we expected.
  3. Pay our users the remainder of their respective hourly rates out of our own pocket.

In situations like these, you tend to realize pretty quickly that the old adage to just “do what’s best for the customer” is too simplistic. Our users understandably wanted more money—but technically they wanted it for 15 minutes of services they hadn’t provided. Our partner had no motive, logically or otherwise, to pay them more. And we’d lose a good chunk of our profit on the project if we paid out the difference. None of our options seemed that great.

The answer I landed on came back to a piece of advice I remembered hearing from a former boss of mine: “You end up in court when you violate the spirit rather than the letter of an agreement.”

Technically, all of our users had been paid properly for the value they’d delivered. And technically it was our partner who short-changed them and mismanaged expectations, not us. But it was our relationships that were at stake with our users, not to mention with this new partner with which we still hoped to do a lot more business.

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So within 20 minutes of receiving that email, we paid them all out ourselves, via PayPal.


Related: How Most Startups Totally Ruin Their First Interactions With Customers


Be Pragmatic, Not Dogmatic

I want to point out that it we didn’t do it because it was the “right” thing to do. We simply thought it was the best option. The loss of profit on the project was less threatening than a bunch of people having a bad service experience with the company. We hoped instead that they’d now share this great experience with their own networks.

When you’re dealing with people, you can’t be 100% prepared for every possible scenario. People and organizations are endlessly creative when it comes to finding edge cases that aren’t covered by your terms of service. And while extensive terms of use and user agreements are vital business protections from a legal standpoint, they have no bearing on how your customers and partners might feel about your business. Those feelings matter.

When you’re in a position where you have to choose between your customers’ interests and your own, you need to be pragmatic as opposed to dogmatic. It’s not enough to ask what people are owed; you have to ask what they think they’re owed and whether it’s reasonable.

If it’s not, then it’s up to you to weigh the costs and benefits of keeping the peace versus sticking to your guns. Like a relationship, in other words.

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Christian Bonilla is the founder of UserMuse, which curates market research panels for enterprise software companies. He posts frequently on UserMuse’s blog. Follow Christian on Twitter at @smartlikehow.

About the author

Christian Bonilla is the founder of UserMuse, which curates market research panels for enterprise software companies. He posts frequently on UserMuse's blog.

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