The customer determines at the end of the day who is
successful and for what reason.
—Jerry Harvey, inventor, entrepreneur
Everyone talks about how entrepreneurship affords you freedom and independence to do what you want. No longer do you have to suffer the rigid and long hours of corporate America. Nor do you have a demanding and an insensitive boss breathing down your neck every minute. In many ways, these things are true. In fact, I am guilty of touting these benefits of entrepreneurship to spur interest in others to start a business. However, entrepreneurs gloss over reality by focusing on such half-truths.
What is reality? The reality is that even if you are an entrepreneur you have a boss: the customer. The idea that entrepreneurs are free of accountability is misguided and delusional. Ultimately, every business is accountable for meeting the needs of the customer. I learned this from the very first job I had as a computer programmer for IBM.
As a developer at IBM, I witnessed firsthand how some businesses can presumptuously ignore customer needs and dictate what users want. While working on a popular groupware product, I observed constant battles between product managers who dealt with customers and computer programmers who rarely, if ever, interacted with customers. On the one hand, product managers would translate feedback from users into product upgrades or changes to appease buyers. On the other hand, the developers would focus on creating challenging features that had no real benefits to the customers. The features may have been neat, but didn’t add much value to the customers’ businesses. In meeting after meeting, the same issues would arise and hot heads would clash. Often the developers would win, to the detriment of the ultimate users and IBM itself. The company needed to understand and focus on the reason the product and company existed. Neglecting the customer is a fatal mistake.
Although IBM, a blue-chip company, isn’t representative of the average company, it does serve as a great example of how smaller companies and equally presumptuous entrepreneurs ignore their customers’ input and feedback. Entrepreneurs, especially those who have experienced a degree of success, feel ordained to determine what is best for their customers, more than its customers are entitled to determine what is best for them. This attitude often manifests itself in the form of poor customer service or a slump in sales, often leading to a company going out of business.
Entrepreneurs in the business-to-business space must be especially careful to listen to their customers. As indicated in my IBM example, companies are less tolerant of features that don’t add value to their organization. Perhaps this is why you see some major companies still using a non-Windows-based POS (Point of Sales) system. Their cash registers may look old to us, but they work and are cost-effective for them. As for companies in the business-to-consumer space, consumers are more forgiving and accepting of features that don’t add value in a traditional business sense. For them, the value could be having the latest and greatest thing, or simply having a great experience with the product or service.
Major banks in the business-to-consumer space have recently had to deal with the backlash of customers who were unhappy with new fees for basic checking services. After a public relations nightmare, several banks finally budged and eliminated the monthly fee, Wells Fargo and Bank of America among them. By the time the banks reversed their new policy, thousands of customers had moved their accounts to credit unions. The major banks would lose more customers if they actually implemented the charges. Miffed customers and consumer activists created a Bank Transfer Day, a movement that garnered over fifty-eight thousand Facebook likes. The major retail banks learned the hard way that you must listen to your customers. Nowadays, with social media, you cannot act as if your customers do not exist. A few other companies that have notoriously ignored customer needs include Verizon Wireless for its new monthly data charge, BlackBerry for its geriatric products that haven’t kept up with the times, and Circuit City for its terrible customer service.
Exceptions to this rule are few. Rarely can a company dictate to its customers what they need. Most exceptions come from technology companies like Apple, which have created and dominate new product categories. However, technology companies must be able to respond quickly to customer issues and suggestions, iterating as often as possible until they get the right formula. They may have more flexibility than other types of companies, but they, too, answer to the boss.
Just because you are an entrepreneur doesn’t mean that you can’t get fired. In fact, entrepreneurs get fired every day by dissatisfied customers. Ensure that you listen closely to your customers and respond to their changing needs in a quick fashion. If you introduce something new, be sure that you are prepared for the possibility that your suggestion could backfire.