Where are you in the Market Development Life Cycle?

OK, I confess, I have been dining out on Crossing the Chasm and Inside the Tornado for the better part of three decades, but every so often a new wrinkle does emerge, one I think worth sharing. Here’s the latest.

Each of the four stages in the life cycle is readily detected by a simple litmus-test question: What is the state of mind that is motivating your current cohort of prospects to become customers?

Here are the mental states by market development stage:

In the Early Market

This is a market made up of technology enthusiasts and visionaries who are adopting ahead of their peers in order to get a competitive advantage or head off some problem looming on the horizon. Their state of mind can be summarized as We believe what you believe. 

The Early Market responds best to evangelists and thought leaders who can set a compelling vision for where next-generation technologies are headed and what impact they can be expected to have. Most people will be content just to listen and learn, but a few will be motivated to step up to the plate. These will be your candidates for creating lighthouse accounts, doing things that writers and bloggers love to tell about.

Needless to say, customers sharing your mindset makes this market segment lots of fun to work with as customers will voluntarily pitch in to help build solutions that are not yet ready for prime time. At the same time, their enthusiasm can be misleading if it causes you to assume that the market as a whole will be as enthusiastic. Most first-time customers are far more skeptical.

Crossing the Chasm

The first customer cohorts that emerge on the Mainstream Market side of the chasm are adopting because they are saddled with a painful problem that they cannot solve with their current set of tools. We call these people pragmatists in pain. They do not believe what you believe. Instead their state of mind is We need what you have.

This only works, of course, if you really have what they need. That is why the key to crossing the chasm is to focus on a use case that is really problematic for customers today and then putting a strong focus on developing the whole product that solves the core problem at hand. No longer do you talk about the technology first. Now it is the customer problem that takes center stage, followed by a domain-specific solution that is communicated in their language, not yours.

Working in niche markets with high-value use cases can be exceptionally rewarding as the return on investment for customers is so high they can afford to pay premium prices, and still rave about your products. Such niches, however, represent a small fraction of the total available market, where most prospects may well be looking for productivity improvements of the type you offer, but at a more competitive price.

Inside the Tornado

When not under duress, most pragmatist customers adopt when they see their peers adopting. They don’t want to go too early, but they also don’t want to get left behind. So, they are always checking in to see what others are doing. Their mental state is We want what they have. 

This is the bandwagon mentality that drives hyper-growth in the category and leads to a gorilla game with winner-take-most market share outcomes. It is simply the reassurance of going with the herd. Here pipeline-focused marketing should be the number one priority, the goal being to land as many new customers as you can during the hyper-growth period of adoption.

For companies who are not the gorilla in the overall category, rather than just picking up whatever scraps are left to others, best strategy is usually to retrench in a niche market where you can be number one—effectively causing at least a small group of peers who will herd around your offerings. 

On Main Street

Conservative customers postpone adoption as long as they reasonably can, seeking to get the most out of their existing infrastructure while others assimilate the new stuff. Eventually when the new becomes the market standard, they have to capitulate. At that point their mindset is We need what they have. 

Note that these customers do not want your product. Instead they see themselves as buying under duress. You want to make this as painless as possible for them, with simple pricing, easy installation, and highly defaulted product options. They really don’t want to be bothered.

At the end of the day, conservatives buy whatever the pragmatists bought, but typically at a lower price and with no bells and whistles. They are skeptical even then, but once they have chosen a vendor, they tend to be quite loyal, if for no other reason than to avoid having to go through another cycle of adoption.

So what?

The point of this framework, as indeed of all things associated with the Market Development Life Cycle, is that marketing strategy must evolve with the market, meaning just about the time you get really comfortable with a given approach, you have to leave it behind. Needless to say, this is not a natural act, and so it is important to do a reality check every so often to see if the mental state you think is driving your market is still in fact current.

That’s what I think. What do you think?

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Geoffrey Moore | Zone to Win | Geoffrey Moore Twitter | Geoffrey Moore YouTube