By: Geoffrey Moore

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When it comes to new technologies, there are different kinds of consumers.

Typically they are put into 5 different categories based on their propensity to adopt that new technology. It starts with innovators who like to be on the cutting edge, and ending with laggards who never show up to the party.

Traditionally, companies in the B2B space have assumed that there is a simple progression from one stage to the next, and that all you need to do to make the jump between stages is refer to your success in the prior stage.

However, Geoffrey Moore found that there's an enormous gap between the second and the third stage. It's a chasm that most companies never cross because they don't understand it.

Join us for the next 12 minutes as we explore the different customer types, how to market to them, and most importantly, how to make the leap across the chasm.

The Types of Customers and What You Need to Know About Them

There are 5 distinct categories of customers to think about as you are launching a technology product.

Innovators: Technology Enthusiasts

Innovators are the first people to adopt new technology, and they appreciate technology for technology's sake.

They want to know what your technology does, without any fancy marketing tricks. They also want to have access to the technology folks on your team if they run into a problem, and they want everything to be cheap.

Early Adopters: The Visionaries

The next stage are the Early Adopters, and these are the people who have the ability to match a new technology with a strategic opportunity, and the ability to get their organization bought into their vision.

They are not on the lookout for improvements in technology, but a breakthrough that can give them the outsized returns they are looking for. They want to hit a homerun, and for that they are willing to put up with the bugs and glitches that come with an early stage technology company.

They typically want to stay very close to the development of your product, and are in a hurry to get things done. Both of which can cause problems for a new company trying to find their way in the market.

Early Majority: The Pragmatists

This segment is the bulk of the market for any technology product, which is why they are so important.

They are more risk averse than the Early Adopters, and don't want to disrupt their organization with a risky technology buying decision. Instead, they are looking for an improvement to their existing operations.

They care about the reputation of the company they are dealing with, the quality of the product, and the reliability of your service. In the absence of clear differentiation in the market, they will look for the lowest price.

In contrast to the Early Adopters, they are not willing to put up with bugs in your technology.

Late Majority

This group share most of the concerns of the Early Majority, with one additional problem - they are not comfortable with new technology. And so they typically wait until a technology has become the established standard and also tend to buy from big, established companies.

Laggards

Laggards typically don't want anything to do with new technology, and for that reason are viewed as not worth pursuing.

However, you should be aware of these types of people because if they exist at your prospects company, they might actively try and block the rest of the company from purchasing.

The Traditional Approach and Why It Doesn't Work

The traditional approach is to focus first on the Innovators, grow that market, then move on to the Early Majority, and so on. When you move from one group to the next, you use the previous group as a reference point for the group you are currently pursuing.

As an example, you'd use testimonials from Innovators to target the Early Adopters, and then testimonials from the Early Adopters to target the Early Majority, and so on.

However, there are two problems with this approach.

The Crack Between Innovators and Early Adopters

Innovators usually don't need the benefits of your product spelled out to them, so they will adopt it on the basis of what it does.

Early Adopters on the other hand usually need the benefits of the technology clearly spelled out to them so they can connect it to a strategic opportunity they've been pursuing.

Or to put it more plainly, you can sell to Innovators by just showing them what the technology does. To sell to Early Adopters, you need to tell them why they should care that it does what it does.

So if you sell to the Early Adopters in the same way you sell to the Innovators, you risk having them not understand the benefits, and losing the sale.

The Chasm Between Early Adopters and The Early Majority

The crack between the Innovators and Early Adopters is nothing compared to the chasm between Early Adopters and the Early Majority.

As Moore points out, the chasm is hard to see in most cases because it's hard to tell the difference between an Early Adopter and Early Majority buyer - the prospect list and how much they'll buy look remarkably similar.

Here are some characteristics that you can look for to determine who you are dealing with.

Early Adopters tend to:

• lack respect for the value of their colleague's experiences, and see themselves as smarter than their counterparts at competitive companies;
• would rather build a technology system from the ground up than build on existing infrastructure;
• take greater interest in technology than in their industry

Those in the Early Majority tend to:

• spend time in industry specific forums discussing industry specific issues;
• see the Early Adopters as people who claim all the budget for their pet projects.

Most companies get stuck when they don't understand who they are selling to, and get in the most trouble when they try to sell to the Early Majority by treating them like the Early Adopters.

Now that we've covered the distinctions between the market segments and why the traditional way won't work, let's move to the solution proposed by the author.

The D-Day Analogy

Moore give us an analogy from the Allied invasion of Normandy on D-Day.

• The long-term goal of the Allied forces was to take control of a mainstream market (Europe);
• It was currently being controlled by an entrenched competitor (the Axis powers);
• In order to defeat them, we must assemble an invasion force of other products (the Allies);
• The immediate goal is to transition from an early market base (England);
• To a strategic target market segment in the mainstream (the beaches at Normandy);
• Between us and the goal is the chasm (The English Channel);
• We must cross the chasm as fast as we can and focus exclusively on the point of attack (D-Day);
• We'll force our competitor out of our targeted niche markets (securing the beachhead);
• Then take over additional market segments (districts of France);
• Then finally, head toward overall market domination (the liberation of Europe).

There are four distinct phases you need to work through in order to launch a strategy like this: you need to (a) target your attack, (b) assemble an invasion force, (c) define the battle, and (d) launch the invasion.

We'll cover those phases separately in the coming sections.

Target The Attack

The first thing we are going to do is target a very specific niche where we can dominate from the very beginning of the plan.

Why? Because as a startup or new company you are unlikely to have the resources to take on the incumbent in the Early Majority directly.

The challenge in this case is that you won't have any hard and fast data on which niche you should start with, so you'll need to use what Moore calls "informed intuition."

You'll build out personas of your potential target customers, and run them through scenarios to see which niche looks the most promising.

Target-Customer Characterisation: Scenarios

When creating target-customer characterisations for your potential targets, you should use as much relevant demographic and psychographic information as you can.

Here's how you build them out:

Header information: for business markets this would include industry, geography, department, and job title. For consumer markets it would include age, sex, economic status, and social group.

A Day In the Life (Before): describe a situation where the user gets stuck. You should include (a) the situation, (b) the desired outcome, (c) their current approach, (d) interfering factors, and (e) the economic consequences of it going wrong.

A Day in the Life (After): Now take the same situation and replay it with your new technology in its place. You should include (a) the new approach, (b) the engaging factors (why is the user unstuck with your solution) and (c) what are the economic rewards.

Market Development Strategy Checklist

Now we take each target-customer characterisation and process them through the Market Development Strategy Checklist to narrow down the target markets we'll pursue.

The first thing we'll do here is run them through four "show-stopper" issues for crossing the chasm:

• Target customer: is there a single identifiable economic buyer for our offering, readily accessible to the sales channel we'll use, and can afford the product?
• Compelling reason to buy: is there enough of an economic incentive for the target to fix the problem you identified in the scenario?
• Whole product: can we (with the help of partners) launch a complete solution to the target customer's compelling reason to buy in the next three months so that we can be in the market by the end of the next quarter and dominate the market within twelve months after?
• Competition: has the problem already been addressed by another company?

After ranking each scenario on a scale from 1-5 on each of the issues, look at any low scores. If any scenario gets a low score on any of those issues, it's a show stopper, and it gets eliminated from consideration.

Then we move on to the "nice to have" category and run each scenario through the following:

• Partners and Allies: do we have relationships with other companies we need in order to fulfil the whole product;
• Distribution: do we have a sales channel in place to reach the target customers?
• Pricing: is the price of the product consistent with the budget and value gained by the target customer?
• Positioning: are we viewed as a credible provider of products and services in that niche?

After scoring them again on a scale from 1-5 on the nice to haves, it's time to make a decision. Remember that what's most important isn't that you pick the optimal beachhead, it's that you are able to win the one you picked.

Assemble an Invasion Force

This next step requires us to create a "whole product" that provides a solution to the customer's problems in their entirety. This is because Early Adopters are happy to stitch together different pieces to solve their problem, but an Early Majority user will likely not.

There are four categories of "product" that you need to keep in mind as you work through this step:

• Generic product: this is the product you deliver out of the box and what is covered in your contract with the buyer;
• Expected product: this is what the customer thought she was buying when she bought the generic product;
• Augmented product: this is the product fleshed out to provide the maximum chance of achieving the buying objective;
• Potential product: this is the product's room for growth.

At this point our focus is on the minimum commitment to the whole product required to cross the chasm, which will likely require you to solve the customer's needs.

In order to do that, you'll likely need to form alliances or partnerships with other companies that can help you round out your solution.

Define The Battle

One of the biggest challenges in winning over the Early Majority is that they want to be able to choose among a set of vendors with similar value propositions. They want competition for their dollars.

However, if you've done your work in creating a new and compelling value proposition, you might not have any competition.

So, your task in this step is to define the battle ground so that you have the best chance of winning.

In order to do that we have do two things.

First, we need to lead with market-centric attributes instead of product-centric attributes.

Here are some examples to make this point clear.

Product-centric attributes: fastest product, easiest to use, elegant architecture, product price, unique functionality.

Market-centric attributes: largest installed base, most third party suppliers, de facto standard, cost of ownership, quality of support.

Second, the product-centric attributes need to be clearly positioned against your competition. We don't have enough time to review everything the book says about positioning here, but you can refer to our summary on the seminal book Positioning to get a clear picture.

For now, here's what the end result of your positioning should sound like:

For (target customers - the beachhead segment only), who are dissatisfied with (the current market alternative), our product is a (new product category), that provides (key problem-solving capability), unlike (the product alternative), we have assembled (key whole product features for your specific application).

Launch the invasion

Like Moore says, "the number one objective when crossing the chasm is to secure a channel into the mainstream market with which the pragmatist customer will be comfortable."

The last two things we need to cover in order to make that a reality is distribution and pricing.

The long term distribution channel you pick will ultimately be a function of price of the product, and you should choose the most efficient channel for your offer. However, the channel you pick in the short-term should be one from which Early Majority customers are comfortable buying from. In a B2B environment, usually this means a direct sales force.

The price of your product sends a message to Early Adopters, and the price they'll be looking for is that of market leadership. Thus, your price should be a function of the pricing of the comparison set your customers are likely to choose from.

Conclusion

There's a lot to think about when launching a new technology product. The most important thing to think about is a strategy to go from the Early Adopters to the Early Majority, which requires you to think differently than almost everybody else in the market.