A few years ago, a startup called Juicero raised more than $100 million in funding to revolutionize how people consume fresh juices. The company developed a sophisticated web-connected juicing machine initially priced at $699. Customers purchased proprietary fruit and vegetable packets, inserted them into the machine and watched as fresh juice was produced.
The technology was impressive, the engineering was innovative and investors were enthusiastic. There was just one problem: Customers didn’t need Juicero.
A Bloomberg reporter famously demonstrated that the juice packets could be squeezed by hand, producing virtually the same result. The expensive Juicero technology wasn’t solving a meaningful customer problem. Shortly after the product was launched, the company collapsed.
Juicero is often remembered as a technology failure. It wasn’t. It was a failure in understanding the customer. The company became enamored of what they were selling rather than focusing on what customers were buying. This distinction matters because customers rarely buy products or services. They buy outcomes. Business leaders overlook this fundamental principle at their own peril.
Customers buy outcomes, not features
Peter Drucker posited that the purpose of a business is to create a customer. Embedded within this simple statement is a profound leadership challenge: Do we truly understand what our customers value? The question sounds straightforward. The answer often isn’t.
Organizations frequently focus internally. Teams spend months discussing product features, operational efficiencies, strategic plans, AI and technology, organizational structures and marketing campaigns. Meanwhile, customer expectations continue to evolve. It doesn’t take long for a gap to emerge between what the organization believes is important and what customers actually value.
That gap can be expensive.
I’ve observed this dynamic in entrepreneurial companies, financial institutions, nonprofits, and large organizations alike. Entrepreneurs often become emotionally attached to their products. Bank executives become focused on “being like tech companies,” rates, fees and products, while customers are seeking advice, trust, and financial confidence. Nonprofits laser in on fundraising to “grow,” while those they serve just want the root issue to diminish. The pattern is remarkably consistent. Leaders become experts in what they provide and lose sight of why customers buy.
The community bank lesson
Consider the community banking industry. Most community banks cannot compete with the largest national institutions on scale, branch density, technology spending or marketing budgets. Yet many continue to thrive. Why? Because their customers are often purchasing something entirely different than a checking account or loan product. They seek access to subject matter experts. They are buying responsiveness and trusted advice from someone who understands their business, family or community.
A manufacturing company seeking financing for new equipment may value a banker who understands the business far more than a marginal difference in interest rates. A family-owned business may value a long-term relationship more than a slightly higher deposit yield. Successful community banks understand that they are not merely selling financial products; they are delivering confidence, expertise and relationships. That’s an entirely different value proposition.
The entrepreneur’s trap
Entrepreneurs face a similar challenge. Founders naturally become passionate about their solutions. They invest great time and energy in developing products, refining services and perfecting delivery systems. Unfortunately, passion can sometimes cloud perspective.
Many entrepreneurs begin with a solution and then search for a problem. Successful entrepreneurs work in the opposite direction. They begin with a customer problem or need, then build a solution. This distinction separates many successful ventures from failed ones.
When entrepreneurs deeply understand customer frustrations, unmet needs and desired outcomes, they can adapt to changing markets. When they become attached to specific products or features, they often struggle when customer expectations evolve. The marketplace rewards relevance, not attachment.
Leadership’s most important listening skill
One of the most dangerous phrases in business is, “We already know what our customers want.” Customer needs evolve. Competitors introduce alternatives. Economic conditions change. Technology reshapes expectations. The organizations that remain relevant are those that continuously listen. The best leaders create systems that keep the voice of the customer close to decision-making. They don’t rely solely on surveys or reports. They engage customers directly. They ask questions. They challenge assumptions. Most importantly, they distinguish between what customers say they want and what customers actually value.
Practical applications
Leaders who want to strengthen customer relevance should consider three actions:
1. Conduct a customer value audit
Ask your leadership team a simple question: “What are our customers actually buying from us?” Compare responses. If answers vary significantly, there may be a disconnect between leadership assumptions and customer reality.
2. Talk to customers directly
Schedule conversations with customers every quarter. Ask what challenges they face, what outcomes they value most, and what alternatives they will consider before choosing your organization. The objective is not validation, it is discovery.
3. Evaluate decisions through a customer lens
Before approving major initiatives, ask: “How does this improve outcomes for our target customers?” If the answer isn’t clear, reconsider the initiative.
Questions for leaders
- What outcome are customers truly purchasing when they buy from us?
- Have customer expectations changed during the past 12 months?
- Are we investing more time discussing our products than understanding our customers?
- When was the last time leaders spoke directly with customers?
The collapse of Juicero wasn’t caused by poor technology. It was caused by a misunderstanding of customer value. Organizations rarely fail because they stop believing in their products. More often, they fail because they stop understanding their customers.
The leaders who create lasting organizations recognize a simple truth: customers don’t buy what you sell. They buy what your product, service or organization enables them to accomplish. Understanding this difference may be the most important competitive advantage a business can develop.
Opinions expressed by SmartBrief contributors are their own.
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