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The FUD Factor: How to Persuade Customers to Buy

Ray Smilor, President, Beyster Institute for Entrepreneurial Employee Ownership

Ralph Waldo Emerson, the great 19th-century American writer, has led many an entrepreneur astray with his famous saying: "If you build a better mousetrap, the world will beat a path to your door." Therein lies many a disillusioned entrepreneur and failed company. Entrepreneurs who sit and wait for the customers to come to them wind up sitting and waiting while the world passes them by. The only entrepreneurs who succeed are those who beat a path to the world.

Smart entrepreneurs know something about human psychology and appreciate the hesitation that customers can feel when dealing with a new company or considering the purchase of an innovative product or service. Consequently, to help customers understand the benefits of their products or services, entrepreneurs must first learn and respect the customers' state of mind. If they do, they can take an approach to dealing with customers that is neither technical nor fancy. It just works!

Successful entrepreneurs utilize FUD to their advantage. FUD—F, U, D—stands for Fear, Uncertainty and Doubt. Most customers tend to have a high degree of FUD when considering whether to do business with a new or emerging company about which they may know little or nothing. The more innovative and costly the product or service, and the less well-known the entrepreneur or the company, the higher the degree of FUD in the customer's mind.

Reduce FUD

Consequently, entrepreneurs face two choices. The first is to reduce FUD in the minds of customers. They do this in a variety of ways.

  • Do customers' homework for them. Research the company's needs to understand customers' issues and challenges even better than they do. Gain insights on such topics as the company's competition, competitive advantage and purchase-decision process before you talk with its representatives.
  • Justify the cost of the product or service, to the customer. This may require preparing a cost-benefit analysis and justifying the substitution cost of replacing what they are currently using with your product or service.
  • Encourage project teams. Try to get employees in the company to participate with you in defining the problem to be solved, clarifying needs, and testing the product or service. This can be critical in helping customers gain a sense of ownership in adopting the produce or service.
  • Stress the benefits of the product or service rather than its features—that is, how it helps the customer, rather than what it does. Show how the product or service meets a customer need or solves a problem, instead of describing how the product or service operates.
  • Provide support. Reinforce a purchase decision by providing guarantees, warranties and training.
  • Demonstrate. Actually show the product or service, to remove any questions that it actually does what you say it will do. The ability to prove a product, visualize a value and illustrate intangibles is a powerful way to reduce FUD.

Increase FUD

The second choice is to increase FUD in the minds of customers, to persuade them to buy. That is, smart entrepreneurs alert customers to the negative consequences of not using their products or services. They do this in a number of ways.

  • Indicate that the customer will fall behind the competition. This requires understanding what competitors are doing, and showing that your product or service can actually enhance the customer's competitive position.
  • Show that the customer's operation will be less efficient. This requires insight on the customer's distribution, manufacturing, marketing and selling processes, and demonstrating how your product or service can streamline those processes.
  • Provide data showing that productivity will decline. This requires explaining how your product or service is actually a productivity tool for employees that maximizes their ability to get the work done.

Parable of the Stethoscope

A few years ago, I worked with a start-up company that developed an electronic stethoscope. The device had a remarkable ability to pick up the sounds of the internal workings of the body and provided superior technical improvement over the traditional, rubber acoustic stethoscope. By listening with this device, physicians could hear the incredible cacophony created by the different sounds of the various organs of the body.

The entrepreneur who held the patent on this device began to advertise it in the Journal of the American Medical Association (JAMA), a leading publication in the medical field. The ads emphasized the nature of the frequency wave in the new stethoscope compared with the more traditional kind and showed a picture of two waves—one going up (the entrepreneur's) and one going down (the traditional one). At the bottom was an order form. The entrepreneur did not get a single order! He was emphasizing a feature rather than a benefit of his innovation, and no one buys features.

I encouraged him to understand the knot in the stomach of physicians—what worries them and keeps them awake at night. One major concern is malpractice. So, the entrepreneur began to reduce FUD by stressing the benefits of his product: that it improved diagnosis, had been fully tested in medical schools and came with a money-back guarantee. He also increased FUD, by indicating that incorrect diagnosis led to malpractice suits. The result was that sales began to go up.

Fun, Usefulness and Delight

The modern variation of Emerson's phrase is, "If you build it, they will come." They never do!

Consequently, entrepreneurs in emerging companies must be attuned to the worries, issues and perceptions of customers and aware of the power of FUD in the customer's mind. By developing products and services that meet real needs and solve real problems, you can overcome the Fear, Uncertainty and Doubt that customers may have. By appreciating the very real concerns that customers feel, you can choose approaches to increase or decrease FUD and effectively persuade customers to see the Fun, Usefulness and Delight of your products and services.

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