Why Your Startup Isn’t Getting the Right Customers
“I was sure our product would be perfect for them,” the founder fumed as she dropped into the chair on the other side of my desk. She was building software to help automate hospital billing services — a notoriously complex industry — and she was coming from a meeting where she’d pitched her software to the billing management team at the enormous hospital system associated with my university. To her, this seemed like a “dream customer,” and she couldn’t understand why they weren’t interested.
“So the meeting didn’t go well?” I joked.
She rolled her eyes, clearly not in the mood for my usual sarcasm. “It went terribly,” she moaned. “It felt like they were basically trying to push me out the door as quickly as they could. They had no interest in what I was pitching.”
“Why was that?” I asked.
Shew threw open her arms. “How the heck am I supposed to know? They didn’t tell me anything.”
“It’s not their job to tell you,” I reminded her. “But it’s your job to figure it out. Since they didn’t react to your pitch the way you expected, what does that tell you?”
“That I’m a failure,” she huffed.
“Well, I suppose you did fail,” I replied. “But that doesn’t make you a failure. It’s only a failure if you can’t learn something. In this case, you actually have some valuable new data.”
“But they didn’t tell me anything,” she said. “They weren’t remotely interested.”
“That, right there!” I exclaimed, “That’s important data. You met with a company you thought was your dream customer and they had no interest in what you were selling. Shouldn’t that tell you something?”
“I guess,” she said. “I mean… I guess it tells me I was wrong about who my dream customer should be.”
“And you don’t think that’s important data?” I asked.
“Yeah… I guess so,” she sighed.
“I know so,” I said, feeling like I was trying to drag out an important lesson from my four-year-old daughter rather than a 20-something. “So what’s the next question you should be asking yourself?”
She thought for a few moments, then shook her head in frustration. “I have no idea. Why was I such an idiot?”
“That’s a good place to start,” I said. She raised her eyebrows, so I quickly explained further: “Not that I’m calling you an idiot. But you clearly misunderstood something about this particular customer’s business. That’s a big deal. In order to figure out how to target the right customers, you need to figure out what you’ve misunderstood.”
“And how do I do that?” she asked.
“Empathy,” I answered. “It’s one of the most important skills for an entrepreneur to develop. You have to be able to put yourself in the shoes of your prospective customers and attempt to see the world from their perspective.”
The entrepreneurial superpower
Every single one of us — yes, including all of you reading this — spends each moment of every day trapped inside of our own heads. As a result, we can’t help but see the world from our own perspectives.
Of course, you already know this. But have you ever considered what kinds of challenges it creates for entrepreneurs? After all, the job of entrepreneurs is to help solve other people’s problems, and it’s hard to do that when we’re stuck in our own heads and seeing the world from our own perspectives.
To combat this challenge, entrepreneurs have to practice developing empathy.
I’m guessing you’re familiar with the term, but, for the sake of clarity, I’ll go ahead and define it: Empathy is the emotional ability to understand and appreciate what others are experiencing and feeling from their perspectives
Empathy is, by the way, different from sympathy, which is about sharing the feelings of others. To put it bluntly, being empathetic doesn’t mean you have to care or agree with what your potential customers are feeling, you just have to understand it, which is why it’s valuable for entrepreneurs.
To be clear, I’m not suggesting entrepreneurs shouldn’t also be sympathetic. I’m just noting that sympathy is a separate issue. Consider, as an example, the entrepreneur whose story I’ve included at the beginning of this article. As she struggled to understand why her dream customer — the hospital’s billing management team — wasn’t interested in buying her product, she didn’t need to share their feelings. That wouldn’t help her. But she did need to spend time trying to see the world from the perspective of the people she was speaking with rather than her own in order to understand how they’d perceive her sales pitch. That’s empathy, and it’s an entrepreneur’s superpower.
The importance of empathy
In my entrepreneurship classes, to help students consider the value of empathy in their work, I’ll often give what appears to be a straightforward assignment. I challenge my students to develop potential strategies for improving parking on campus.
I assign this project because I know how much campus parking frustrates them. It’s far away. It’s expensive. It’s limited. And the parking enforcement team loves issuing costly parking tickets.
Similarly, having attended, taught at, and visited multiple universities around the world, I don’t feel like I’m going out on a limb when I suggest that parking on college campuses is universally terrible. Nobody likes it. And I suppose that’s why it’s a problem my students embrace. When I give them the assignment, they immediately think about how much they dislike parking, and then they think, “Wouldn’t it be great if we solved it!”
In their haste to address a problem they care about, the students never stop to consider the issue from the perspective of the colleges themselves. This is a huge mistake because the colleges would be the customers for their most likely “solutions.” In other words, they don’t use empathy.
As soon as we pause to consider parking from the perspective of colleges, the nature of the problem completely changes. Poor parking isn’t a problem for colleges and universities. Poor parking is a benefit. Or, to use the parlance of startups, it’s a feature, not a bug.
Here are just a few of the benefits to colleges and universities that are a byproduct of what students, visitors, and staff think of as inconvenient parking:
- By placing parking lots far away from the main buildings, college campuses are more walkable, quieter, prettier, and safer for pedestrians.
- Inconvenient parking makes it more likely that people will choose to eat at on-campus eateries (i.e. where the school makes money).
- Inconvenient parking makes it less likely for students to regularly leave and come back to campus during the day, which limits traffic congestion in the surrounding town, lowers the risk of accidents, and decreases university liability.
- People coming onto campus might be more likely to park illegally if they have trouble finding convenient parking, and this increases opportunities to issue parking citations that create additional revenue.
As you can see, from the perspective of the colleges themselves, parking isn’t a problem. If anything, parking that frustrates students and visitors actually increases revenues and makes campuses and the surrounding areas safer. That’s a win, right? Or rather, it’s a win if you’re the college.
In addition, when you think about campus parking from the perspective of colleges and universities, we need to remember that students don’t choose what schools they attend based on parking. In other words, what value would improving the parking situation bring to the core business model of the university? Nothing, right? It would cost colleges money without creating any clear benefit.
Because of all the reasons stated above — and surely plenty more I’m overlooking — every time my students try to “solve parking,” they get nowhere. That’s when I ask the question: “Who is your customer and what’s their perspective on the problem?”
This forces students to realize they were so caught up in thinking about their own personal opinions of campus parking that they never considered their customer’s perspective. Not only do colleges lack a clear incentive for making parking more convenient, from the perspective of campus administrators, improving parking might actually mean making parking less convenient. Yes, that seems crazy from the perspective of people using campus parking, but, with a bit of empathy for the actual customer, we quickly realize that, overall, inconvenient parking serves the best interests of colleges and universities even if it frustrates their students. Without empathy, we wouldn’t be able to see that, which is why empathy is such a valuable skill for entrepreneurs.
How to cultivate empathy
“I know empathy matters,” the entrepreneur in my office replied when I’d told her she needed to start thinking from her customers’ perspective. “But I don’t understand how I’m supposed to see the world like them. Am I just supposed to use my imagination? And how will I know if I’m right?”
She asked some reasonable questions. Sure, empathy is useful in theory. But, in practice, we can’t actually inhabit other people’s minds, nor can we know when we’ve understood someone else’s perspective correctly.
“In a way, you’re right,” I answered. “On some level, empathy is really just about using our imaginations. But how is that any different from what you were already doing? When you envisioned this customer as your ‘dream customer,’ weren’t you also using your imagination?”
“I guess so,” she said. “That’s a good point.”
“And how did you decide what they’d want?” I asked.
She shrugged. “I don’t know. I guess I just kind of thought about what I would want if I were them.”
She was almost there. I needed to push her a little further. “And what do we call the things that motivate people?” I asked.
She thought for a while. “Incentives?” she guessed.
“Yes,” I confirmed. “And what does that tell you about how to find empathy? What does that tell you about what motivates people?”
“Incentives!” she exclaimed. “People are motivated by incentives. And-oh-my-gosh… my product doesn’t align at all with their personal incentives.”
“How so?” I asked.
“Well, my product automates hospital billing,” she said. “Which is great for the hospital overall. But I was talking to the people at the hospital who currently manage all the billing manually. What’s their incentive to buy something that does their job?”
“Exactly,” I said. “You were selling to the wrong people. You were basically trying to sell to the people that your company would be replacing. And why the heck would they want to buy that?”
“They wouldn’t!” she said. “Which means I wasn’t necessarily wrong about who my dream customer is. It’s more like I was trying to sell my dream customer in the wrong way.”
This happens to entrepreneurs a lot. It’s not that their dream customers couldn’t get value from their products. It’s that they pitch their products without considering how their dream customers think about the problem their product solves.
So if you ever find yourself in this position — struggling to convince your “dream customer” that they’d benefit from what you’ve built — stop and ask yourself to consider the problem from the potential customer’s perspective. With a bit of empathy, I’m guessing you’ll realize the problem looks completely different when you consider it from the perspective of the people who actually have it.