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Categories of customers

'The aim of marketing is to know and understand the customer so well, the product or service fits him and sells itself.'

Peter F. Drucker, Management Consultant, 1997.

The pinnacle of commercial success is when your innovation is bought by most of the customers in your market. So understanding their perspective should drive your marketing efforts. Although you may not be able to service their needs immediately, their overall sales potential make them a valuable target. When marketing new products or services, you may need to start with early adopters and work up to the market majority.

Categories of innovation adopters

The 5 categories of innovation adopters (Moore 2014) are:

1. Innovators

  • Technology enthusiasts who appreciate technology for its own sake and are motivated change agents among their peers
  • Interested in new ideas, which leads them out of narrow circles of peers into broader circles of innovators
  • Tolerate initial glitches and problems that accompany innovation
  • Willing to develop makeshift solutions

2. Early adopters

  • Visionaries looking to adapt and use new technology to achieve revolutionary change to gain competitive advantages
  • Attracted by high-risk, high-reward projects
  • Not price sensitive
  • Demand personalised solutions, quick response, highly-qualified sales and support

3. Early majority

  • Pragmatists looking for evolutionary change to gain productivity improvements
  • Averse to disruptions in operations, want proven applications, reliable service and results
  • Seek reference from trusted sources (other pragmatists) to determine whether to purchase
  • Make the bulk of all technology infrastructure purchases
  • Don't value technology for its own sake, but rather look for productivity enhancements
  • Want to reduce risk in new innovation adoption, following 3 principles
    • Move as a crowd - rapid increase in adoption causes a landslide of demand
    • Look to the market leaders – how are the leading firms helping customers change?
    • Make a swift transition - adopters want rapid and easy transition, which is why this stage occurs quickly

4. Late majority

  • Conservatives, very risk-averse and technology-shy
  • Very price sensitive
  • Demand preassembled, bulletproof, turn-key solutions
  • Motivated to adopt new innovations to maintain parity with their competition or with the majority
  • Often rely on a single, trusted source to help them interpret the innovation and its application

5. Laggards

  • Sceptics seeking to maintain the status quo
  • Reluctant to believe that new innovations can improve productivity
  • Likely to block new innovation purchases
  • Will buy only if the alternatives are proven to be worse and the cost-benefit is guaranteed

Not all of your potential customers are alike - the characteristics of customers from one group to the next are quite different. You should tailor your strategies and methods to each group.

Innovators and early adopters are small in number, so an innovation which follows the customer adoption journey described above may have saturated the early market. A different approach is needed for the larger mainstream market (early and late majority, and the laggards).

Characteristics of innovators and early adopters are fundamentally different to the next groups. Marketing strategies and methods should change by the time the innovation is ready to move to the mainstream market or there won't be any ready customers. This gap is regarded as a deep chasm, which many new ideas and innovations fail to bridge.

Gap between early market and mainstream market innovation adopters:

Traditional Innovation Diffusion pattern

Not all potential customers in these groups of innovation adopters are the same. If you prefer your innovation to be purchased just by the innovators and early adopters, then don't worry; however, if, like most people with new ideas and innovations, you want your new idea to be adopted by as many buyers as possible, don't let the new idea descend into this chasm.

Respond to the differences between both groups by adjusting your marketing strategies and methods.

Marketing strategies for early and mainstream buyers

Marketing strategies for customers in early and mainstream market innovation adopters include:

The early market

Innovators and early adopters

  • Customer interest squarely focused on the innovation or the product itself
  • Customised products, expert sales force and technical support
  • Engineering or research and development play a crucial role in translating customer demands into product enhancements or modifications
  • Reward customers' vision and brilliance to embrace the innovation
  • Flexibility and adaptability
  • Willingness to service customer feedback promptly and adequately
  • Accessible to groups of customers to enable ongoing dialogue
  • Acknowledging the contribution of your customer that improves your innovation's performance and adoption

The chasm

Transition risks

  • Customisation for early market buyers can pull a new venture in multiple directions at steep cost.
  • They are a costly group of customers to support, but sales to these groups represent early cash-flows to a new business, so you require a balanced approach and ongoing monitoring of expenses.
  • The high demand for customisation and need for cash flows requires releasing products as early as you can to satisfy demand.
  • Releasing products too early without adequate testing can harm your business reputation.
  • Cash flows will begin to decline as you saturate these small, early customer groups.
  • Relationships with funders and investors need to be strong as you transition from one phase to the next.
  • Reputation risk from significant failures in the early market phase will dent attempts to move to the mainstream.
  • Lack of leadership, vision and commitment as you face adversity during this phase will impact on the future of your business as you move to the next phase.

The mainstream market

Early majority, late majority and laggards

  • Develop (or partner with others) to provide the whole solution.
  • Customer service is essential.
  • Simplify product offerings and make them user-friendly.
  • Use identifiable early market customers in industry groups or affiliations to communicate with mainstream customers in the same sector.
  • Welcome competition because it legitimises the need for the innovation, but differentiate your product or service by exceeding the standard, which reduces perceived risk in customers.
  • If your innovation meets a need and your marketing is effective, prepare for an avalanche of demand by planning your supply and distribution systems.

To optimise the success of your innovation, you need to sell to the mainstream market. There are steps and strategies required around developing a whole product or service approach to cross the chasm and sell to the largest group of adopters.

This is time-consuming and expensive. Funds are scarce so you will need to be careful about how you approach your customers in these categories of adopters. Don't go after all your potential customers using a scattergun approach. That spreads your resources too thin and risks your reputation; a recipe for disaster in the early stages of marketing your innovation.

The best way to effectively connect with your market is to select group(s) of customers that share similar needs, buyer behaviour and characteristics, and will be responsive to your new idea or innovation. Then target your marketing efforts to these customers. They should represent the customer most likely to adopt, as well as link you to the next customer set in the same category. This will then enable you to move into the next category of adopters.

References

Moore, GA, 2014, Crossing the chasm. HarperBusiness, [n.p.].