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

by Geoffrey A. Moore

First, let us understand that this is a failure of will, not of understanding.

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,

the true answer being much simpler:

We are, in other words, not a market- driven company; we are a sales-driven company.

Goal, be a market driven company, focus on niche then grow

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

to create a pragmatist customer base that is referenceable, people who can, in turn, gain us access to other mainstream prospects.

the complete set of products and services needed to achieve their desired result,

Therefore, to secure these much-needed references, which is our prime goal in crossing the chasm, we must commit ourselves to providing, or at least guaranteeing the provision of, the whole product.

whole product commitments must be made not only sparingly but also strategically—that is, made with a view toward leveraging them over multiple sales.

One of the keys in breaking into a new market is to establish a strong word-of-mouth reputation among buyers.

third compelling reason to be niche focused when crossing the chasm, which has to do with the need to achieve market leadership.

Pragmatist customers want to buy from market leaders.

Their motive is simple: Whole products grow up around the market-leading products a...

if we want market leadership early on—and we do, since we know pragmatists tend to buy from market leaders, and our number-one marketing goal is to achieve a pragmatist installed base that can be referenced—the only right strategy is to take a “big fish, small pond” approach.

Just as the objective of D-Day was to take Normandy beaches but the goal was to liberate Western Europe, so in our marketing strategy we want to establish a longer-term vision to guide our immediate tactical choices.

select strategic target market segments to begin with. That is, target a segment that, by virtue of its other connections, creates an entry point into one or more adjacent segments.

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.

infrastructure offerings have just the opposite dynamic. They are “naturally horizontal,” because they interface with machines and other programs where the value, in part, is providing a stable, standard interface.

We are here

So, because of the dynamics of technology adoption, and not because of any niche properties in the product itself, vendors of disruptive infrastructure must also take a vertical market approach to crossing the chasm even though it seems unnatural.

three straight years of flat revenues in the $2 million range. This is a classic performance for a company whose market is in the chasm.

the first key to getting out was to select a beachhead market segment,

they surveyed their client experience to date and targeted a very thin market niche:

What criteria were used to select this market segment?

Now there are only about forty of these in the whole world, and the largest is a few dozen people or so,

Not by biggest market...

when you are picking a chasm-crossing target it is not about the number of people involved, it is about the amount of pain they are causing.

it was costing the drug companies big bucks—basically one million dollars per day!

The commitment did not come from the IT organization,

Instead, it came from the top brass, who, seeing in Documentum a chance to reengineer the entire process to a very different new end, overruled the in-house folks and demanded that they support the new paradigm.

Knowing who has influence and who are gate keepers is critical

It is normally the departmental function who leads (they have the problem), the executive function who prioritizes (the problem is causing enterprise-wide grief), and the technical function that follows (they have to make the new stuff work while still maintaining all the old stuff).

In the end, it turned out that financial services was the biggest customer segment for the company—but importantly, it was not the right target segment for crossing the chasm because its needs, while more pervasive, were not as urgent as those of the pharmaceutical industry.

The first is knocking over the head pin, taking the beachhead, crossing the chasm

The more serious the problem, the faster the target niche will pull you out of the chasm.

The second key is to have lined up other market segments into which you can leverage your initial niche solution.

The bowling pin model allows you both to focus on the immediate market, keeping the burn rate down and the market development effort targeted, while still keeping in view the larger win.

Instead they focused their segmentation along the following lines:

They targeted salespeople and their managers only—not customer service, not marketing. • They targeted mid-market companies, big enough to need systems to compete with market leaders in their category, small enough to be unable to afford the IT investment required. • They focused on the United States only, in part to stay close to the customer, in part because the United States has always been the early-adopting country in enterprise software. • They focused on technology-savvy industries, beginning with high tech itself, then moving into telco, pharmaceuticals, and financial services.

A key lesson to learn here is that you want to target a beachhead segment that is: • Big enough to matter • Small enough to win, and a • Good fit with your crown jewels.

captured a strong position among technology enthusiasts.

next two applications were more or less extensions of this same idea, creating a broader footprint for the same software, appealing still primarily to technologists.

Qdir will likely follow suite. First, taking on small projects with enthusiasts and visionaries as the tech develops and opportunities come up

To cross the chasm you need a use case that poses equally challenging problems for the status quo solutions on a recurring basis.

The key lesson for us here is that, despite the magnitude of this dream and its relevance to VPs of operations and CIOs everywhere, it was the lowly systems administrator with the niche market problem of simulating production environments for software testing who was the hero of our chasm-crossing venture.

Again, what matters is size of the problem, not the size of (niche/beachhead) market

The fundamental principle for crossing the chasm is to target a specific niche market as your point of attack and focus all your resources on achieving the dominant leadership position in that segment as quickly as possible.

First you divide up the universe of possible customers

evaluate each segment for its attractiveness.

the “finalists,” then you develop estimates of such factors as the market niches’ size, their accessibility to distribution, and the degree to whi...

pick one and go a...

it is extremely rare that people come to the Chasm Group with a market segmentation strategy already in hand, and when they do have one, it is usually not one they are very confident about.

That is our goal with icorps and other discovery programs, to have a validated (less risky) market plan for crossing the chasm that we're confident about

they suffer from a built-in hesitancy and lack of confidence related to the paralyzing effects of having to make a high-risk, low-data decision.

Thesis of chapter. Making high risk, low data decisions are paralyzing

In short, you are on your own.

the biggest mistake one can make in this state is to turn to numeric information as a source of refuge or reassurance.

The only proper response to this situation is to acknowledge the lack of data as a condition of the process.