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

by Geoffrey A. Moore

First there is a market . . . Made up of innovators and early adopters, it is an early market, flush with enthusiasm and vision and, often as not, funded by a potful of customer dollars earmarked for accomplishing some grand strategic goal. Then there is no market . . . This is the chasm period, during which the early market is still trying to digest its ambitious projects, and the mainstream market waits to see if anything good will come of them. Then there is. If all goes well, and the product and your company pass through the chasm period intact, then a mainstream market does emerge, made up of the early and the late majority. With them comes the real opportunity for wealth and growth. To reap the rewards of the mainstream market, your marketing strategy must successfully respond to all three of these stages. In each case, the key to success is to focus in on the dominant “adoption type” in the current phase of the market, learn to appreciate that segment’s psychographics, and then adjust your marketing strategy and tactics accordingly.

market, which we will define, for the purposes of high tech, as: • a set of actual or potential customers • for a given set of products or services • who have a common set of needs or wants, and • who reference each other when making a buying decision.

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.

First, and most crucially, they want the truth, and without any tricks. Second, wherever possible, whenever they have a technical problem, they want access to the most technically knowledgeable person to answer it.

Technology enthusiasts:

By working with them under nondisclosure—a commitment to which they typically adhere scrupulously—you can get great feedback early in the design cycle and begin building a supporter who will influence buyers not only in his own company but elsewhere in the marketplace as well. Finally, they want everything cheap.

To reach technology enthusiasts, you need to place your message in one of their various haunts—on the Web, of course. Direct response advertising works well with this group, as they are the segment most likely to send for literature, or a free demo, a webinar, or whatever else of substance you offer.

technology enthusiasts are easy to do business with, provided you 1) have the latest and greatest technology, and 2) don’t need to make much money.

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.

The core of the dream is a business goal, not a technology goal, and it involves taking a quantum leap forward in how business is conducted in their industry or by their customers. It also involves a high degree of personal recognition and reward. Understand their dream, and you will understand how to market to them.

Visionaries are not looking for an improvement; they are looking for a fundamental breakthrough. Technology is important only insomuch as it promises to deliver on this dream.

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.

Finally, beyond fueling the industry with dollars, visionaries are also effective at alerting the business community to pertinent technology advances.

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 winning strategy is built around the entrepreneur being able to “productize” the deliverables from each phase of the visionary project.

The goal should be to package each of the phases such that each phase: 1. is accomplishable by mere mortals working in earth time 2. provides the vendor with a marketable product 3. provides the customer with a concrete return on investment that can be celebrated as a major step forward.

The most important principle stemming from all this is the emphasis on management of expectations.

visionaries represent an opportunity early in a product’s life cycle to generate a burst of revenue and gain exceptional visibility.

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.

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.

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.

A second problem: The company sells the visionary before it has the product.

Caught in this situation, the entrepreneurial company has only one adequate response, a truly unhappy one: shut down its marketing efforts, admit its mistakes to its investors, and focus all its energies into turning its pilot projects into something useful, first in terms of a deliverable to the customer, and ultimately in terms of a marketable product.

Problem number three: Marketing falls prey to the crack between the technology enthusiast and the visionary by failing to discover, or at least failing to articulate, the compelling application that provides the order-of-magnitude leap in benefits.

The corrective response here begins with reevaluating what we have. If it is not, in fact, a breakthrough product, then it is never going to create an early market.

Alternatively, if we truly have a breakthrough product but we are stalled in getting the early market moving, then we have to step down from the lofty theoretical plateau on which we have established that this product can be part of any number of exciting applications and get very practical about focusing on one application, making sure that it is indeed a compelling one for at least one visionary who is already familiar with us, and then committing to that visionary, in return for his or her support, to removing every obstacle to getting that application adopted.

Throughout the history of high tech, the early majority, or pragmatists, have represented the bulk of the market volume for any technology product.

the goal of pragmatists is to make a percentage improvement—incremental, measurable, predictable progress.

Business demands for increased productivity push them toward the front of the adoption life cycle, but natural prudence and budget restrictions keep them cautious.

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.

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.

Because pragmatists are in it for the long haul, and because they control the bulk of the dollars in the marketplace, the rewards for building relationships of trust with them are very much worth the effort.

Pragmatists won’t buy from you until you are established, yet you can’t get established until they buy from you.

On the other hand, once a start-up has earned its spurs with the pragmatist buyers within a given vertical market, they tend to be very loyal to it, and even go out of their way to help it succeed.

If high-tech marketers do not take responsibility for seeing that the whole product solution is being delivered, then they are giving the skeptic an opening to block the sale.

What skeptics are struggling to point out is that new systems, for the most part, don’t deliver on the promises that were made at the time of their purchase. This is not to say they do not end up delivering value, but rather that the value they actually deliver is not often anticipated at the time of purchase.

the service that skeptics provide to high-tech marketers is to point continually to the discrepancies between the sales claims and the delivered product.

making the marketing and communications transition between any two adoption segments is normally excruciatingly awkward because you must adopt new strategies just at the time you have become most comfortable with the old ones. The biggest problem during this transition period is the lack of a customer base that can be referenced at the time of making the transition into a new segment.

Visionaries lack respect for the value of colleagues’ experiences.

Indeed, it is their ability to see things first that they want to leverage into a competitive advantage. That advantage can only come about if no one else has discovered it. They do not expect, therefore, to be buying a well-tested product with an extensive list of industry references. Indeed, if such a reference base exists, it will almost certainly turn them off, indicating that for this technology, at any rate, they are already too late.

Pragmatists, on the other hand, deeply value the experience of their colleagues in other companies. When they buy, they expect extensive references, and they want a good number to come from companies in their own industry segment.

Visionaries fail to acknowledge the importance of existing product infrastructure. Visionaries are building systems from the ground up. They are incarnating their vision. They do not expect to find components for these systems lying around. They do not expect standards to have been established—indeed, they are planning to set new standards. They do not expect support groups to be in place, procedures to have been established, or third parties to be available to share in the workload and the responsibility.

First we will look at how to select the point of attack, the place to cross, the beachhead, the head bowling pin. Then we will look at what kind of offer it will take to secure that initial target market, and how we as a fledgling enterprise with limited resources can go about fielding such an offer. Then we will look at the landscape, identifying the forces that seek to throw us off the beach and back into the chasm, and how we can position ourselves for success. And finally we will look at the selling systems themselves, pricing and distribution, to help us pick the right approach to the market during this particularly vulnerable time. The critical attitude to maintain in all four of these challenges is that chasm crossing represents a unique time in your enterprise’s history. It is a far cry both from your past, where selling to visionaries was the key to success, and your future, which will be focused on either niche or mass-market expansion programs.

There is a gap between the marketing promise made to the customer—the compelling value proposition—and the ability of the shipped product to fulfill that promise. For that gap to be overcome, the product must be augmented by a variety of services and ancillary products to become the whole product.

The single most important difference between early markets and mainstream markets is that the former are willing to take responsibility for piecing together the whole product (in return for getting a jump on their competition), whereas the latter are not.

Pragmatists will hold off committing their support until they see a strong candidate for leadership emerge. Then they will back that candidate forcefully in an effort to squeeze out the other alternatives, thereby bringing about the necessary standardization to ensure good whole product development in their marketplace. A good generic product is a great asset in this battle, but it is neither a necessary nor a sufficient cause of victory.

Surround your disruptive core product, the thing that got you to the dance, with a whole product that solves for the target customer’s problem end to end.

Now let’s turn to the other scenario for crossing the chasm, the one where (good news) there is no enemy fortifying the shore against invasion because (bad news) people have yet to discover there is anything there to defend. Here the vendor must create a market out of whole cloth. Under these conditions, the pragmatist buyers who are the key to the mainstream market do not reject the new product so much as simply watch for signs of its adoption. They don’t say no, in other words; they just don’t say yes.

What does work for product managers, on the other hand, are tactical “whole product” alliances. These alliances have one and only one purpose: Accelerate the formation of whole product infrastructure within a specific target market segment in support of a segment-specific compelling reason to buy. The basic commitment is to codeliver a whole product and market it cooperatively. This benefits the whole product manager by ensuring customer satisfaction. It also benefits the whole product partners by expanding their marketplace without them having to do any of the marketing. As long as each side lives up to its part of the bargain, there is good reason to expect success.

whole product definition followed by a strong program of tactical alliances to speed the development of the whole product infrastructure is the essence of assembling an invasion force for crossing the chasm.

Recap: Tips on Whole Product Management 1. Use the doughnut diagram to define—and then to communicate—the whole product. Shade in all the areas for which you intend your company to take primary responsibility. The remaining areas must be filled either by the customer or by partners or allies. 2. Review the whole product to ensure it has been reduced to its minimal set. This is the KISS philosophy (Keep It Simple, Stupid). It is hard enough to manage a whole product without burdening it with unnecessary bells and whistles. 3. Review the whole product from each participant’s point of view. Make sure each vendor wins, and that no vendor gets an unfair share of the pie. Inequities here, particularly when they favor you, will instantly defeat the whole product effort—companies are naturally suspicious of each other anyway, and given any encouragement, will interpret your entire scheme as a rip-off. 4. Develop the whole product relationships slowly, working from existing instances of cooperation toward a more formalized program. Do not try to institutionalize cooperation in advance of credible examples that everyone can benefit from it—not the least of whom should be the customers. Also, do not recruit directly competing partners to serve the same need in the same segment—this will only discourage them from making a full commitment to your program. 5. With large partners, try to work from the bottom up; with small ones, from the top down. The goal in either case is to ...