What are the categories of customers that buy new ideas and innovations?

“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, 1909 – 2005.

Generally speaking, the pinnacle of commercial success will be achieved when your innovation is purchased by the majority of customers in your market.  Since selling to the majority should be your ultimate goal, understanding the perspective of the majority of the possible users of the product should form the centrepiece of your efforts to connect with your market.

However, regardless of the innovation or industry or market, historically it has proven very difficult to start selling immediately to this majority.  Yet they are a group of customers you must secure because of their overall sales volume and value potential, but it is unlikely that you will be able to service their needs from a standing start.  It is generally accepted that when selling new ideas and innovations you will have to work up to this market majority through other, earlier customer groups.  Table 2 describes these customer groups as categories of innovation adopters.

Table 2 – Five Categories of Innovation Adopters1

Category Description Characteristics
1.  Innovators Technology enthusiasts who appreciate technology for its own sake and are motivated change agents among their peers.
  • Interest in new ideas leads them out of narrow circles of peers into broader circles of innovators
  • Tolerate initial glitches and problems that accompany innovation coming to market
  • 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
  • The early competitive gains enjoyed by the adoption of the innovation mean they are 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 (another pragmatist) to determine whether to purchase
  • Make the bulk of all technology infrastructure purchases
  • Don’t value technology for its own sake, but rather are looking for productivity enhancements
  • Want to reduce risk in new innovation adoption, following three principles:
  • Move as a crowd – Rapid increase in adoption causes a landslide of demand;
  • Collective selection of the firm leading adopters to the new paradigm – this determines the market leader; and
  • Swift transition – Adopters want rapid transition to the new paradigm, 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 only buy if the alternatives are proven to be worse and the cost-benefit is guaranteed.

By now you will have realised that not all of your potential customers are alike. The characteristics of customers from one group to the next are quite different.  The differences in characteristics between the groups represent gaps that link them.  Your approach to selling your new idea or innovation to each one, therefore, warrants different strategies and methods too.  This is particularly the case for the gap between the early market (innovators and early adopters) and the mainstream market (early and late majority, and the laggards).

This particular gap emerges simply due to the difference in customer volumes either side of the gap.  An innovation that follows the customer adoption journey Table 2 describes will have saturated the early market because the innovators and early adopters are by their nature small in number.

Since the characteristics between them and the next groups are fundamentally different, if marketing strategies and methods haven’t changed, by the time the innovation is ready to move to the mainstream market there isn’t anyone ready to sell to!  This gap is so pronounced it is regarded as a deep chasm, leading to the failure of many new ideas and innovations from which many have never recovered.  See Figure 1.

Figure 1 – Gap between Early Market and Mainstream Market Innovation Adopters2

connect-with-market_clip_image004

So it is extremely critical that you conclude that not all of your potential customers in these groups of innovation adopters are the same.  Of course, if you prefer your innovation to be purchased just by the technology enthusiasts and visionaries, 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 it is essential that you don’t let the new idea descend into this chasm.

The key to avoiding this potential failure is to recognise that you can respond to the differences between both groups by adjusting your marketing strategies and methods as you approach them.  Table 3 describes some of the marketing considerations and risks between groups you might like to consider as you frame marketing strategies to sell to customers in each group of innovation adopters.  Be sure to refer to Table 2 to familiarise yourself with the characteristics of each category to put these strategies in context.

Table 3 – Marketing Strategies for Customers in Early and Mainstream Market Innovation Adopters

Category Summary Marketing considerations
The Early Market 1.  Innovators - Technology enthusiasts who appreciate technology for its own sake and are motivated change agents among their peers.

2.  Early Adopters - Visionaries looking to adapt and use new technology to achieve revolutionary change to gain competitive advantages
  • Customer interest is squarely focused on the innovation or the product itself
  • Customised products, expert sales force and technical support
  • Engineering or R&D play a crucial role in translating customer demands into product enhancements or modifications
  • Reward customers’ vision and brilliance you embrace in changing 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 requires 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 without adequate testing too early can be detrimental to the reputation of your business
  • 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 transit 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 the future of business as it attempts moves to the next phase
The Mainstream Market 3.  Early Majority - Pragmatists looking for evolutionary change to gain productivity improvements

4.  Late Majority - Conservatives very risk-averse and  technology-shy

5.  Laggards - Sceptics seeking to maintain the status quo
  • Whole product approach to solve a complete problem
  • 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 reference customers in discrete industry groups or affiliations to communicate with their mainstream brethren in that same sector
  • Welcome competition because it legitimises the need for the innovation, but differentiate yours so the solution exceeds the standard, which reduces perceived risk in customers
  • If your innovation meets a need and your marketing effective, prepare for an avalanche of demand by planning to adopt your internal and external system/s of supply and distribution to adequately respond

By now you will have learnt that your new idea or innovation will have different categories of customers. You know more about how they think and know more about how to approach them, but do you know where they are?

We know that to optimise the success of your innovation you need to aspire to sell to the mainstream market, and we know that there are steps and strategies along a path required around developing a whole product or service approach to cross the chasm and sell to the largest group of adopters.

However, this is a very time-consuming and expensive exercise and no doubt funds are scarce so you will need to be careful about how you approach your customers in these categories of adopters.  You won’t want to go after all your potential customers in a scatter-gun approach because that will spread your resources too thin and therefore risk your reputation, which will be a recipe for disaster in the early stages of marketing your innovation.

The best way to effectively connect with your market is to select the group/s of customers that share similar needs, buyer behaviour and characteristics, and will be responsive to your new idea or innovation. You will then target your marketing efforts to these customers in the first instance because they should represent the customer with the best propensity to adopt, as well as link you to the next customer set/s in the same category, which will then enable you to climb into the next category of adoption.

To achieve this you need to segment your target market into meaningful and accessible groups of customers.

1 Moore, G., Crossing the Chasm, Marketing and Selling Technology Products to Mainstream Customers, Harper Collins, New York, 1991.
2 Moore, G., ibid.

Links to subsections of this topic

What motivates customer’s to buy new ideas and innovations?
What are the categories of customers that buy new ideas and innovations?
Learning