Crossing the Chasm as an executable strategy – using the book in reality

Most of us in the start-up world have read ‘Crossing the Chasm’. In the absence of a Go To Market strategy developed by an expert - it can be used as a guide for an early stage company. 

I summarised here how to do so – to save you reading the book (!) I’ve turned it into a Strategy Roadmap.

“If you leave your customer’s success to chance – you are giving up control over your own destiny.”

First revenue will be with “early adopters” – technology enthusiasts (Visionaries) – who need a lot of consulting and extra design on the product. They will require pilot projects – extra development work etc.,  - however they prove the value proposition of the product. 

Even for visionaries, the company needs to spell out clearly the order of magnitude jump in benefits – (I.E., prove beyond doubt it is a break-through product) - >10X improvement. Make the value proposition real and attractive.

Following visionary sales - the “early majority” – “the Pragmatists” – need to see a “Whole Product” (the core product plus any additional services/ support/ add-ons) from a provider they perceive as the market leader in the specific niche. This is why a company focuses ALL its resources on one niche – to be seen as the leader and attract the early majority.

Whole Product Concept – not just the core generic product but all the services/ support/ add-ons/ credibility needed for a pragmatist buyer to believe it is a market leading product. Pragmatists don’t want a test product or a new product – they want to have confidence in a Whole Product that they believe has longevity. Solve your target customer’s problem end to end.

Things such as:

• Additional software
• System integration
• Installation and debugging
• Change management
• Training and support
• Standards and procedures
• Additional hardware & software

Crossing the Chasm Approach:

1. Segment the market into Target niches – as small as possible but large enough to be a credible niche to prove oneself (Be a big fish in a small pond) – Company needs to be able to win 50% of the business in the targeted niche. Sub segment as many times as you need to get the right size niche.
2. Focus on one niche at a time – concentrate an overwhelming force on a highly focussed target. Overabundance of support in a confined market niche. Word of mouth spreads within this niche to allow you to own it.
3. Dominate target niche – become market leader.
4. Move to the next market niche 
5. Go to the mainstream market

Pragmatists need to be able to reference each other (calls/ trade magazines etc) – (I.E., a self-referencing market set)

Hence pragmatists like to buy from a salesperson from a previous relationship. Develop an alliance with an already accepted vendor. Pragmatists like to see price competition. They will pay a modest premium for top quality or service. Need patience to market to them…..Need to make yourself into the obvious supplier of choice. One of the keys is strong word of mouth reputation amongst buyers. Need 4-5 customers in one segment. Need to become the market leader in the niche.

How to pick the niche? Don’t focus on Target Customers – focus on Use Cases or characterise a market by what problems/benefits you are solving/giving.

1: Use case   -  characterisation:

• Economic buyer – payer
• End user
• Technical buyer (installer)

2: Examine different use cases BEFORE the application of the new product:

1. Situation – what is the moment of frustration for a buyer currently?
2. What is the user trying to accomplish (desired outcome)
3. Attempted approach (without the new product)
4. What goes wrong? How and why? (interfering factors)
5. Economic consequences (what is the impact of failing?)

3: Then with the new product:

1. With the new product how does the end user go about the task? (New approach)
2. What is it about the new approach that enables the end user to become unstuck?(enabling factors)
3. What are the costs avoided or the benefits gained?(economic factors)

Factors to measure each potential niche market (Scoring to make a decision):

1. Target customer/niche readily accessible to the sales channel we intend to use? Well enough funded to pay the price of the whole product?
2. Compelling reason to buy – is there a COMPELLING economic reason to buy in this niche?
3. Whole Product? (what is it that this niche needs and can we supply it with our Partners and Allies?)
4. Partners and Allies – Do we have the relationships to fulfil the “whole product”? Whole product alliances…
5. Distribution – do we have a sales channel in place that can call on the target customer?
6. Pricing – is the pricing consistent with the target customer’s budget?
7. Positioning  - Is the company credible as a provider of the product to the chosen niche?
8. Does this target facilitate entry into adjacent niches? (bowling pin effect)

Create the competition – for a pragmatist buyer to buy – they need to be able to compare the product to other products they know about – hard buy in a vacuum without comparison ability. Hence in the niche you choose there must be as:

1. Market alternative:  The vendor(product) the target customer has been buying from for years. 
2. Product alternative: Another product/vendor being disruptive as a competing technology leader but whom we can win against in our chosen target segment due to our focus.

Product positioning – how to make the product easy to buy (as opposed to trying to sell):

• Vendor with seen staying power - longevity
• Easy to compare
• Easy to see the value proposition
• Technically accurate description of the disruptive innovation – 
• the claim  - value proposition THE MAIN ONE (Isotera may have too many itsy bitsy value props – not one major one…)
• the evidence of this claim

Typically you sell to one of these 5 groups:

1. Enterprise execs making big ticket purchasing decisions
2. End users (low cost decisions)
3. Department heads – medium cost purchase decisions
4. Engineers making design decisions
5. Small business owner operators.

So there you have it – follow the above and you are in business and will have VCs all over you …..simple right?! :)

By John Rowland, Managing Partner