Crossing the Chasm: Marketing and Selling Disruptive Products to Mainstream Customers

by Geoffrey A. Moore

Each group represents a unique psychographic profile—a combination of psychology and demographics that makes its marketing responses different from those of the other groups. Understanding each profile and its relationship to its neighbors provides a critical foundation for high-tech marketing overall.

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.

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.

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.

the key to getting beyond the enthusiasts and winning over a visionary is to show that the new technology enables some strategic leap forward, something never before possible, which has an intrinsic value and appeal to the nontechnologist.

This benefit is typically symbolized by a single, compelling flagship application, something that showcases the power and value of the new product.

What the early adopter is buying, as we shall see in greater detail in Chapter 2, is some kind of change agent. By being the first to implement this change in their industry, the early adopters expect to get a jump on the competition, whether from lower product costs, faster time to market, more complete customer service, or some other comparable business advantage.

By contrast, the early majority want to buy a productivity improvement for existing operations. They are looking to minimize the discontinuity with the old ways. They want evolution, not revolution. They want technology to enhance, not overthrow, the established ways of doing business. And above all, they do not want to debug somebody else’s product.

Because of these incompatibilities, early adopters do not make good references for the early majority. And because of the early majority’s concern not to disrupt their organizations, good references are critical to their buying decisions. So what we have here is a catch-22. The only suitable reference for an early majority customer, it turns out, is another member of the early majority, but no upstanding member of the early majority will buy without first having consulted with several suitable references.

If two people buy the same product for the same reason but have no way they could reference each other, they are not part of the same market.

That is, if I sell an oscilloscope for monitoring heartbeats to a doctor in Boston and the identical product for the same purpose to a doctor in Zaire, and these two doctors have no reasonable basis for communicating with each other, then I am dealing in two different markets. Similarly, if I sell an oscilloscope to a doctor in Boston and then go next door and sell the same product to an engineer working on a sonar device, I am also dealing in two different markets.

The way around this problem for many marketing professionals is to break up the category into isolable “market segments.”

Marketing professionals insist on market segmentation because they know that no meaningful marketing program can be implemented across a set of customers who do not reference each other.

Visionaries are that rare breed of people who have the insight to match up an emerging technology to a strategic opportunity, the temperament to translate that insight into a high-visibility, high-risk project, and the charisma to get the rest of their organization to buy into that project.

Visionaries are not looking for an improvement; they are looking for a fundamental breakthrough.

The key point is that, in contrast with the technology enthusiast, a visionary focuses on value not from a system’s technology per se but rather from the strategic leap forward such technology can enable.

Visionaries drive the high-tech industry because they see the potential for an “order-of-magnitude” return on investment and willingly take high risks to pursue that goal.

As a buying group, visionaries are easy to sell but very hard to please. This is because they are buying a dream that, to some degree, will always be a dream.

First, visionaries like a project orientation. They want to start out with a pilot project, which makes sense because they are “going where no man has gone before,” and you are going there with them.

The other key quality of visionaries is that they are in a hurry. They see the future in terms of windows of opportunity, and they see those windows closing. As a result, they tend to exert deadline pressures—the carrot of a big payment or the stick of a penalty clause—to drive the project faster.

To get an early market started requires an entrepreneurial company with a breakthrough technology product that enables a new and compelling application, a technology enthusiast who can evaluate and appreciate the superiority of the product over current alternatives, and a well-heeled visionary who can foresee an order-of-magnitude improvement from implementing the new application. When the market is unfolding as it should, the entrepreneurial company seeds the technology enthusiast community with early copies of its product while at the same time sharing its vision with the visionary executives. It then invites the visionary executives to check with the technology enthusiast of their choice to verify that the vision is indeed achievable. Out of these conversations comes a series of negotiations in which, for what seems like a very large amount of money at the time, but which will later be recognized as just the tip of the iceberg, the technology enthusiasts get to buy more toys than they have ever dreamed of, the entrepreneurial company commits itself to product modifications and system integration services it never intended to, and the visionary has what on paper looks to be an achievable project, but which is in fact a highly improbable dream.

First problem: The company simply has no expertise in bringing a product to market. It raises insufficient capital for the effort, hires inexperienced sales and marketing people, tries to sell the product through an inappropriate channel of distribution, promotes in the wrong places and in the wrong ways, and in general fouls things up. Remedying this kind of situation is not as hard as it may seem, provided the participants in the company are still communicating and cooperating with each other, and everyone is willing to scale back their expectations several notches. The basis for reform is the principle that winning at marketing more often than not means being the biggest fish in the pond. If we are very small, then we must search out a very small pond, a target market segment that fits our size. To qualify as a “real pond,” as we also noted before, its members must be aware of themselves as a group, that is, it must constitute a self-referencing market segment, so that when we establish a leadership position with some of its members, they will get the word out—quickly and economically—to the rest. Of course, no single pond of a size we can dominate in the short term is large enough to provide a sustaining market for the long term. Sooner or later, we have to expand into adjacent ponds. Or, to shift the metaphor, we need to reframe our tactics in the context of a “bowling pin” strategy, where one targets a given segment not just because one can “knock it over” but becaus...

A second problem: The company sells the visionary before it has the product. This is a version of the famous vaporware problem, based on preannouncing and premarketing a product that still has significant development hurdles to overcome. At best, the entrepreneurial company secures a few pilot projects, but as schedules continue to slip, the visionary’s position in the organization weakens, and support for the project is eventually withdrawn, despite a lot of customized work, with no usable customer reference gained.

people who do not assert a position in life so much as derive one from what life provides.

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 pragmatists are hard to win over, they are loyal once won, often enforcing a company standard that requires the purchase of your product, and only your product, for a given requirement. This focus on standardization is, well, pragmatic, in that it simplifies internal service demands.

It is crucial, therefore, for every long-term strategic marketing plan to understand the pragmatist buyers and to focus on winning their trust.

When pragmatists buy, 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. In other words, they are planning on living with this decision personally for a long time to come.

Pragmatists tend to be “vertically” oriented, meaning that they communicate more with others like themselves within their own industry than do technology enthusiasts and early adopters, who are more likely to communicate “horizontally” across industry boundaries in search of kindred spirits.

As a rule, however, the path into the pragmatist community is smoother if a smaller entrepreneurial vendor can develop an alliance with one of the already accepted vendors or if it can establish a value-added-reseller (VAR) sales base.

VARs, if they truly specialize in the pragmatist’s particular industry, and if they have a reputation for delivering quality work on time and within budget, represent an extremely attractive type of solution to a pragmatist.

Overall, to market to pragmatists, you must be patient. You need to be conversant with the issues that dominate their particular business. 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 the newsletters and blogs they read. You need to be installed in other companies in their industry. You need to have developed applications for your product 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. In short, you need to make yourself over into the obvious supplier of choice.

Conservatives like to buy preassembled packages, with everything bundled, at a heavily discounted price. The last thing they want to hear is that the software they just bought doesn’t support the home network they have installed. They want high-tech products to be like refrigerators—you open the door, the light comes on automatically, your food stays cold, and you don’t have to think about it. The products they understand best are those dedicated to a single function—music, video, email, games. The notion that a single device could do all four of these functions does not excite them—instead, it is something they find vaguely nauseating.

The conservative marketplace provides a great opportunity, in this regard, to take low-cost, trailing-edge technology components and repackage them into single-function systems for specific business needs. The quality of the package should be quite high because there is nothing in it that has not already been thoroughly debugged. The price should be quite low because all the R&D has long since been amortized, and every bit of the manufacturing learning curve has been taken advantage of. It is, in short, not just a pure marketing ploy but a true solution for a new class of customer.

The key is to focus on convenience rather than performance, user experience rather than feature sets.

Visionaries lack respect for the value of colleagues’ experiences. Visionaries are the first people in their industry segment to see the potential of the new technology. Fundamentally, they see themselves as smarter than their opposite numbers in competitive companies—and quite often they are.

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.

Pragmatists, on the other hand, don’t put a lot of stake in futuristic things. They see themselves more in present-day terms, as the people devoted to making the wheels of their industry turn. Therefore, they tend to invest their convention time in industry-specific forums discussing industry-specific issues.

Or the company may be saying “state-of-the-art” when the pragmatist wants to hear “industry standard.”

market of visionaries become increasingly saturated (with big-ticket products this can be after as few as three to five contracts), and with the mainstream market of pragmatists nowhere near the comfort level they need in order to buy, there is simply an insufficient marketplace of available dollars to sustain the firm. Having flirted with going cash-flow positive (especially during the months following one of the early market big orders), the trend is now reversed, and the enterprise is accelerating into increasingly negative cash flow. Worse still, mainstream competitors, who up to this time had paid no attention to the fledgling entry into their market, now have caught sight of a new target, experienced one or two major losses, and set their sales forces in motion to counterattack.

This is a classic chasm symptom, as the entrepreneurial enterprise leaves behind the latent enthusiasm of the early market. It is usually interpreted as a letdown in the sales force or a cooling off in demand when, in fact, it is simply the consequence of trying to expand too rapidly and too broadly into too loosely bounded a market.

Trying to cross the chasm without taking a niche market approach is like trying to light a fire without kindling.

To put it simply, the consequences of being sales-driven during the chasm period are fatal.

software programs at the application layer are “naturally vertical” because they directly interface with end users, and end users organize themselves by geography, industry, and profession. This makes them readily adaptable to the beachhead focus needed to cross the chasm.

You need to understand that informed intuition, rather than analytical reason, is the most trustworthy decision-making tool to use.

The key is to understand how intuition—specifically, informed intuition—actually works. Unlike numerical analysis, it does not rely on processing a statistically significant sample of data in order to achieve a given level of confidence. Rather, it involves conclusions based on isolating a few high-quality images—really, data fragments—that it takes to be archetypes of a broader and more complex reality.

target customer characterization.

The place where most crossing-the-chasm marketing segmentation efforts get into trouble is at the beginning, when they focus on a target market or target segment instead of on a target customer.

TARGET CUSTOMER: Is there a single, identifiable economic buyer for this offer, readily accessible to the sales channel we intend to use, and sufficiently well funded to pay the price for the whole product?

COMPELLING REASON TO BUY: Are the economic consequences sufficient to make any reasonable economic buyer anxious to fix the problem called out in the scenario? If pragmatists can live with the problem for another year, they will.