- July 25, 2019
- Posted by: Warren Schirtzinger
- Category: Business planning, Innovation, Startups
When doing go-to-market planning, is it critical to recognize the tendency of buyers to reference each other when making buying decisions.
Many business plans are based on a traditional Innovation-Diffusion Life Cycle, a smooth bell curve of high tech customers, progressing from Innovators, Early Adopters, Early Majority, Late Majority, and finally Laggards. In turn, this model becomes the foundation for a high-tech marketing model which says the way to develop a market is to work the curve from left to right, progressively winning each group of users, using each “captured” group as a reference for the next.
Between each phase of the cycle there are dead zones, representing a disassociation between any two groups. The difficulty any group will have in accepting a new product is: if it is presented the same way as it was to the group to its immediate left. An adoption dead zone exists between Early Adopters and the “mainstream” Early Majority. Many high-tech ventures fail trying to make the necessary transition because it hasn’t been included in their go-to-market planning.
While technology development is critical, high-tech leaders usually win by building the right product to uniquely address a recognized pain in the market at the right time, and executing on this product and market strategy on a timely basis.
How do you go from an idea or technology to building the right product for the right market to broad market adoption to building a successful company?
The answer when doing go-to-market planning is by understanding the needs and motivations of each group in the innovation-adoption lifecycle.
Characteristics of Early Adopters
Early Adopters are business people who have the ability to match an emerging technology with a strategic opportunity. They are instinctively attracted to new innovations that provide a breakthrough or leap in capability. Their core dream is a business goal, not a technology goal, and it involves taking a quantum leap forward in how business is conducted in their industry or by their customers.
Early adopters can drive entire industries because they see the potential for an order-of-magnitude return on investment and they are willingly to take significant risks to pursue that goal. They will work with vendors who have little or no funding. As a group, early adopters are easy to sell but very hard to please because they are buying a dream. They want to start out with a pilot project, which is then followed by additional projects, conducted in phases.
Characteristics of the Mainstream
You can succeed and build an impressive reputation by simply selling to innovators and early adopters, but that is not ultimately where the big money is. Instead, that money is in the hands of more pragmatic people who do not want to be pioneers. The Early Majority consists of people who are fundamentally pragmatic. They care about the company they are buying from, the quality of the product they are buying, the infrastructure of supporting products and system interfaces, and the reliability of the service they are going to get.
People in the mainstream tend to be vertically oriented, meaning that they communicate more with others like themselves within their own industry than do innovators and early adopters. It is very difficult to break into a new industry selling to the early majority. References and relationships are very important. The mainstream, above all, wants to reduce risk, so they won’t buy from you until you are established, yet you can’t get established until they buy from you.
On the other hand, once a startup has earned a trustworthy reputation with mainstream buyers within a given vertical market, they tend to be very loyal to it, and even go out of their way to help it succeed. When this happens, your cost of sales will go way down, and the leverage on incremental R&D to support any given customer will go way up. That’s one of the reasons the mainstream makes such a great market. But members of the early majority also like to see competition. They want to buy from proven market leaders because they know third parties will design supporting products around a market-leading products.
Go-To-Market Planning for the Mainstream
To market to the mainstream, you must be able to address their primary concern, which is “what happens if something goes wrong?” You need to be conversant with the issues that dominate their particular vertical industry. You need to show up at the industry-specific conferences and trade shows they attend. You need to be mentioned in articles that run in publications they read. You need to be installed in other companies in their industry. You need to have developed applications that are specific to their industry. You need to have partnerships and alliances with the other vendors who serve their industry. You need to have earned a reputation for quality and service. And above all, the mainstream isn’t interested in talking to early adopters about their buying decisions, or about anything.
This is what creates the high-tech marketing dead zone. And here are the fundamental characteristics of early adopters that alienate the mainstream:
- Lack of respect for colleagues’ experiences
- Taking greater interest in technology than in their industry
- Failing to recognize the importance of existing product infrastructure
- Overall disruptiveness
To cross the high-tech adoption dead zone, a company must focus on a vertical market category, win over a small niche market and use it as a launching pad to adjacent markets. Emerging high-tech innovations have to develop away from the pressures of demanding, competitive markets—in niche markets—where the value proposition offered by even early-stage technologies and business models is so great that customers are willing to overlook their shortcomings.
Above all, stay application focused. Applications that represent discontinuous innovations are more appealing to end users than to the incumbents that operate the current infrastructure. If the application fixes a broken process, or eliminates serious pain, end users can insist on its deployment. To accelerate the adoption of platforms, vendors must present them as an application. They must tie them directly to an application in order to gain the end-user sponsorship necessary to secure a foothold.