KEEP SEARCHING FOR THE EARLY ADOPTERS
I, amongst many of my colleagues, have always encouraged startups to generate market traction and go through sales cycles and not just focus on pitching to investors.
However, many interactions with budding entrepreneurs, there seems to be a major misunderstanding of how market behaviour work for a technology startup and how challenging it can be for any startup to penetrate early markets due to the lack of early adopters. Entrepreneurs tend to reflect this common mistake in their pitch deck to investors that their markets is everything and everyone with no proper segment identification.
Hence, the below bullet points is a list of marketing strategies startups need to know:
1 – Understand and be able to explain the social behaviour of buyers under theTechnology Adoption Life Cycle and realise that your initial target market will come from those that have the characteristics of “Innovators” and “Early Adopters”. These are not many and represent 2.5% and 13.5% of your total market as per the below illustration.
Innovators are the technology enthusiast. These are people who are fundamentally committed to new technology and love to try and buy new tech products once they are launched. The Early Adopters are visionaries; they are true revolutionaries in business and government to exploit new technology capabilities. Early Adopters have no quarrels in breaking away from the pack, follow their own dictates and above all take risks in procuring new technologies. Innovators and Early Adopters are not that many in the MENA region – the social behaviour and culture is tend to be risk averse.
2 – Targeting your early market requires developing go-to-market strategies that would profile and segment your innovators and early adopter users. These clients will be your beta site as well to further develop your whole product in function and form once you are able to communicate to them your value propositionstatement and sell them yourminimum viable product (MVP). Never let perfect ruin good in shipping your MVP. Do it now. Do anything. Don’t wait. Always search for the innovators and early adopters to buy it.
3 – Next. Reaching the Early Majority segment of clients under the Technology Adoption Life Cycle means selling to those clients who are generally characterised as pragmatist. Their social behaviour is analytic; they stay with the herd; consult with colleagues on production function and performance before buying; like to manage risks and are motivated by solving present problems. While the visionaries (early adopters) will accept buying 80% of your offered minimum viable product, the pragmatist (early majority) buyer wants to see the remaining 20% delivered and will not buy your MVP otherwise. This is why the “whole” product experience has to be completed based on the product requirement made by every single market segment.
A simple example in mind about the definition of a whole product is buying a PC for the purpose of using it for gaming. The experience of a PC won’t be “whole” and complete not unless the PC box itself comes with a wide monitor, all required cables, additional hardware (e.g. gaming mouse) and software needed (e.g. PC games), ability to access the Internet to play games online, training and support where needed, etc. Basically, a whole PC product is a PC box product augmented by everything that is needed for you to have a compelling reason to buy e.g. be able to play games online and offline.
4 – You can benchmark the following criteria to select your niche market segments: look for well funded economic sectors who are accessible to your salesforce; choose clients in that specific sector have a compelling reason to buy your product (understand their pain); your startup’s ability to deliver a whole product experience to them (not necessarily alone, but rather in partnership with others); that there is no existing fierce competition in that niche segment; and whether the go-to-market plan execution can be leveraged to attack another relevant niche segment. Yes, this becomes a warring exercise and you need to enlist the support of the economic buyer that appreciates a great Return on Investment statement. Word of mouth will start moving in the marketplace, spreading the message that you are the market leader in that segment. To further increase your sales, a “whole” product for every new niche market segment needs to be developed. You can also leverage your existing segment to market totally new products. The latter strategy is usually done during bad economic times.
In principal, this is the theory by Geoffrey A. Moore to transition your sales from early market to mainstream markets by crossing the chasm. The goal is to win a foothold in the mainstream market as quickly as possible with a whole product serving every niche market segment. Based on word of mouth and references developed in the early market, pragmatist in the early majority segment would trust buying from you.
5 – In your early days of marketing and selling, rely on direct marketing and direct sales as your plan to “evangelize” about your product to the clients and take them through the cycle of being aware about your product, understand it, then appreciate it and and with finesse closing a deal by making buyers commit to a purchasing decision. Remember, client familiarity with you will also breeds business. Direct marketing and selling for startups is recommended. If you want publicity advertise. If you want more publicity, do more advertising. Marketing is not a department. As a startup, it is your business. You need to know, more than anyone else, about the customers, their profiles and where your product fits, their pain and gain, the barriers that keeps them not buying into the product and who influences their buying patterns.
Top marketing related reasons for why startups fail include: lack of market focus, understanding and segmentation of markets; marketing of incomplete product to mainstream markets with no differentiation factor and no high barrier of entry against competitors; or using pricing alone as market transformation; misuse of advertising as the sole sales plan; channel mismanagement and of course notsaying thank you to your clients, often.
Have you ever applied these marketing strategies before? Has it worked for you in the MENA region? Have you found your early adopters yet? Did you ever completed a whole product for any one segment? Do you think the above applies to business-to-business marketing only or does it apply to business-to-consumer as well. Would love to hear back from you.