Crossing the Chasm, 3rd Edition: Marketing and Selling Disruptive Products to Mainstream Customers
Innovators pursue new technology products aggressively. They sometimes seek them out even before a formal marketing program has been launched. This is because technology is a central interest in their life, regardless of what function it is performing. At root they are intrigued with any fundamental advance and often make a technology purchase simply for the pleasure of exploring the new device’s properties. There are not very many innovators in any given market segment, but winning them over at the outset of a marketing campaign is important nonetheless, because their endorsement reassures the other players in the marketplace that the product could in fact work. (View Highlight)
Early adopters , like innovators, buy into new product concepts very early in their life cycle, but unlike innovators, they are not technologists. Rather they are people who find it easy to imagine, understand, and appreciate the benefits of a new technology, and to relate these potential benefits to their other concerns. Whenever they find a strong match, early adopters are willing to base their buying decisions upon it. Because early adopters do not rely on well-established references in making these buying decisions, preferring instead to rely on their own intuition and vision, they are core to opening up any high-tech market segment. (View Highlight)
The early majority share some of the early adopter’s ability to relate to technology, but ultimately they are driven by a strong sense of practicality. They know that many of these newfangled inventions end up as passing fads, so they are content to wait and see how other people are making out before they buy in themselves. They want to see well-established references before investing substantially. Because there are so many people in this segment—roughly one-third of the whole adoption life cycle—winning their business is fundamental to any substantial profits and growth. (View Highlight)
The late majority shares all the concerns of the early majority, plus one major additional one: Whereas people in the early majority are comfortable with their ability to handle a technology product, should they finally decide to purchase it, members of the late majority are not. As a result, they wait until something has become an established standard, and even then they want to see lots of support and tend to buy, therefore, from large, well-established companies. Like the early majority, this group comprises about one-third of the total buying population in any given segment. Courting its favor is highly profitable indeed, for while profit margins decrease as the products mature, so do the selling costs, and virtually all the R&D costs have been amortized. (View Highlight)
Finally there are the laggards. These people simply don’t want anything to do with new technology, for any of a variety of reasons, some personal and some economic. The only time they ever buy a technological product is when it is buried deep inside another product—the way, say, that a microprocessor is designed into the braking system of a new car—such that they don’t even know it is there. From a market development perspective laggards are generally regarded as not worth pursuing on any other basis. (View Highlight)
It is important to maintain momentum in order to create a bandwagon effect that makes it natural for the next group to want to buy (View Highlight)
As expensive a lesson as the Segway was for its investors, it pales by comparison with the reputed 25 million. Chasms can result in very painful falls indeed. (View Highlight)
In sum, when promoters of high-tech products try to make the transition from a market base made up of visionary early adopters to penetrate the next adoption segment, the pragmatist early majority, they are effectively operating without a reference base and without a support base within a market that is highly reference oriented and highly support oriented.
First there is a market … Made up of innovators and early adopters, it is an early market, flush with enthusiasm and vision and, often as not, funded by a potful of customer dollars earmarked for accomplishing some grand strategic goal.
In business, technology enthusiasts are the gatekeepers for any new technology. They are the ones who have the interest to learn about it and the ones everyone else deems competent to do the early evaluation. As such, they are the first key to any high-tech marketing effort. (View Highlight)
Notes. While Microsoft won out in the end, each one of these companies was able to ride a pragmatist wave within a specific market to boost its sales a quantum leap upward. It is crucial, therefore, for every long-term strategic marketing plan to understand the pragmatist buyers and to focus on winning their trust. (View Highlight)
Throughout the history of high tech, the early majority, or pragmatists, have represented the bulk of the market volume for any technology product. You can succeed with the visionaries, and you can thereby get a reputation for being a high flyer with a hot product, but that is not ultimately where the dollars are. Instead, those funds are in the hands of more prudent souls, who do not want to be pioneers (“Pioneers are people with arrows in their backs”), who never volunteer to be an early test site (“Let somebody else debug your product”), and who have learned the hard way that the “leading edge” of technology is all too often the “bleeding edge.” (View Highlight)
To look more closely into these values, if the goal of visionaries is to take a quantum leap forward, the goal of pragmatists is to make a percentage improvement—incremental, measurable, predictable progress. If they are installing a new product, they want to know how other people have fared with it. (View Highlight)
Visionaries take a greater interest in technology than in their industry. Visionaries are defining the future. You meet them at technology conferences and other futurist forums where people gather to forecast trends and seek out new market opportunities. They are easy to strike up a conversation with, and they understand and appreciate what high-tech companies and high-tech products are trying to do. They want to talk ideas with bright people. They are bored with the mundane details of their own industries. They like to talk and think high tech.
Indeed, a truly predatory type of investor—sometimes referred to as a vulture capitalist— looks to use the chasm period of struggle and failure as a means to discredit the current management, thereby driving down the equity value in the company, so that in the next round of funding, he or she has an opportunity to secure dominant control of the company, install a new management team, and, worst case, become the owner of a major technology asset, dirt cheap. This is an incredibly destructive exercise during which not only the baby and the bathwater but all human values and winning opportunities are thrown out the window. Nonetheless, it happens. (View Highlight)
That’s it. That’s the strategy. Replicate D-Day, and win entry to the mainstream. Cross the chasm by targeting a very specific niche market where you can dominate from the outset, drive your competitors out of that market niche, and then use it as a base for broader operations. Concentrate an overwhelmingly superior force on a highly focused target. It worked in 1944 for the Allies, and it has worked since for any number of high-tech companies. (View Highlight)
Instead, the claim is made that, although niche strategy is generally best, we do not have time—or we cannot afford—to implement it now. This is a ruse, of course, the true answer being much simpler: We do not have, nor are we willing to adopt, any discipline that would ever require us to stop pursuing any sale at any time for any reason. We are, in other words, not a market- driven company; we are a sales-driven company.
Salespeople loved it—which was a first, believe me. And because they loved it, they told other salespeople about it, and adoption grew virally, not because some CIO had declared this was the new package, but because individual teams could sign up on their own without their CIO’s help, or in some cases, without even his or her approval. Finally, because software-as-a-service is sold as a subscription, it was very much in Salesforce’s interests to keep customers using the product, and since they ran the product themselves, they could see who was and who wasn’t using it, and focus their support efforts accordingly. (View Highlight)
The first use case adopted for VMware came from techies who wanted to be able to run both the Windows and the Linux operating systems on the same PC. This is something like wanting to run an automobile both on gasoline and compressed natural gas—unless you are a technology specialist, it is not likely you would be interested at all. But if you do write code, and at the same time are part of a larger organization, then you are quite likely to need your PC both for standard business applications (which typically run under Windows) and the technical applications you are developing (which typically run under some variant of Linux). In that case, being able to do all your work on one machine is a boon. So when VMware launched its first product for ninety-nine dollars, downloadable over the Internet, targeted at the PC aftermarket, it captured a strong position among technology enthusiasts. (View Highlight)
So building relationships with business press editors, initially around a whole product story, is a key tactic in crossing the chasm. In addition to the business press, the other communications channel for getting out a whole product message is what could be loosely termed “vertical media”—that is, media specifically dedicated to a particular industry or a particular profession. Industry trade shows and conferences, meetings of professional associations, and publications dedicated to a specific market segment all tend to attract pragmatists and conservatives, people who put a high value on maintaining relationships within their group. These associations are relatively open to participation from supporting vendors, provided that the vendors are not too obtrusive with their sales messages. (View Highlight)