Why Digital Health Startups Fail - Part 3: Ignoring the Customer

This is the final part of a three part series on Health Startups and why they fail, all inspired by a recent Sifted article on the desperate state of DTC health startups and scaleups. In part one 'The Tech Fetish' I wrote about how the obsession with tech rather than customers contributed to the failure of many health techs. In part two 'Myopic Marketing' I wrote about their narrow marketing focus and lack of imagination.

"You have to start with the customer experience and work backwards to the technology." - Steve Jobs

In the first post in this series I wrote about the obsession with technology that dominated the Healthtech space, especially in its early years. This was often pursued at the cost of creating a genuinely excellent customer experience. In this post I want to expand on this neglect of the customer and more thoroughly addressing their problems and needs.

One of the biggest concepts driving health innovation was 'unbundling'. Essentially focusing very narrowly on a specific health issue and simplifying and streamlining the service. The logic being that this will enable a quicker, better customer experience.

But this neglected a fundamental fact of human health - it's almost always multifaceted. If we look at erectile dysfunction as an example, it can have a range of underlying causes based on physiology, diet, exercise and mental wellbeing. It can also be linked to other health issues such as poor or deteriorating cardiovascular health. Trying to address Erectile dysfunction in a 30 year old with anxiety and depression will look quite different to supporting a 75 year old with an heart and circulatory health issues.

In this case the goal of the patient (customer) might actually go deeper than erectile dysfunction. But these narrow health platforms aren't designed to adequately support broader health goals.

Fair enough you might say, but is this actually a fair criticism? Even national health services are generally focused around assessing singular issues. Beyond that, how would it actually be possible for a health tech to find its customer base without focusing on a specific topic? Also, there are limits to how broad an app/web based solution might be able to extend. As opposed to a comprehensive health service in a clinical facility.

Those are fair points. I would not expect health tech and startups to be able to make much impact without focusing on a particular health topic. But even in that case, the narrowly focused services that currently dominate the scene could be adapted to offer a more comprehensive solution. For example, a typical at home diagnostics offering, e.g. at home blood testing, could also ensure it provides adequate follow up. With ability for a patient to speak with the type of experts that might be able to support them with a transition to better health, e.g. nutritionists, fitness and lifestyle coaches and even mental health practitioners.

This doesn't just create a more robust customer offering, it also opens the door to more profits and higher customer lifetime values. After all we have the term 'share of throat' in the beverages industry to quantify the percentage of beverages a customer would include in their total drink consumption. Why not a 'share of health' % that business can use to optimise the share of health issues they support their customers with?

One could argue that inevitably this would push focused health techs beyond the scope of their focus. But in my personal view as a long term observe of the health space, and even if you reflect on the sifted article that inspired these posts, this kind of consolidation of services has already happened and will likely only expand. It didn't take very long for erectile dysfunction merchants to expand to hair loss etc. Although I would look at that more as offering breadth than depth.

Ultimately there are commercial, customer experience as well as ethical considerations here. Your business may be successful pushing pills/jabs for a certain period of time, but a more holistic competitor would be able to undercut you. It might be easy to spin up an at home blood test for low testosterone, but do you have the capacity to retain those customers for the long term with the right range of support and expertise? When we consider other tech solutions like the iPhone, a strong key to the appeal was the ecosystem that came with them. I feel that most health techs are still suck in the very superficial stage of their customer experience. With a lot more money on the table for those that have the maturity to take a genuine 360 view of their customer, then craft an experience to support them as fully as possible.