Why Do People Camp Out For New iPhones?
Why is it that every time a new iPhone comes out, people camp outside storefronts for days so they can be the first to get their hands on it? Alternately, why is it that some people refuse to adopt the latest and greatest cell phone, preferring to stick to the basics?
What is “Diffusion of Innovation”?
Diffusion of Innovation is the idea that a people adopt new ideas, new technology, and new products at different rates. Specifically, people that constitute any given market can be divided into five different groups:
The Five Groups of the Diffusion of Innovation Model & Their Percent Composition of a Market
- Innovators (2.5%)
- Early Adopters (13.5%)
- Early Majority (34%)
- Late Majority (34%)
- Laggards (16%)
What Role Does “Diffusion of Innovation” Play in Marketing & Sales?
What Not to Do | My Story of Ignorant Optimism
All too often, sales and marketing leaders look at the entirety of their target market as potential customers. Frankly, I’ve been there myself several times as I have surveyed my market from an overly optimistic viewpoint when releasing a new technology solution. If my market contained 1,000 potential customers, I saw them all as viable opportunities from a marketing and sales standpoint. However, as I implemented our strategic directives to market and sell our latest technological innovation, I found that the vast majority of customers were not ready to take the plunge. The responses from the target market varied in the following ways:
Market Responses to New Technology Innovation, in Order from Most to Least Common
- No response at all
- Yes, we have the problem, but we’re not ready to pursue a solution.
- Yes, we have the problem, and we’d like to see your solution. Then the sales process would go cold as the prospect asked for other customers that have successfully used the new technology solution, and we could not produce appropriate “social proof” because the solution was just released.
- Yes, we have the problem, and we’d like to see the solution. The result of the engagement was that the prospect was excited but too hesitant to pull the trigger.
- Yes, we have a big problem, and we’d like to see the solution. The result of this engagement was working with a prospect who was driven by multiple factors to purchase the new technology despite the general newness of the technology and lack of social proof.
I have gone through dozens of new technology market roll outs and, looking back on things, have seen the Diffusion of Innovation theory play out in real life over and over again. Once I finally got hip to the idea of Diffusion of Innovation, courtesy of Geoffrey Moore’s brilliant book that any innovation leader should read, Crossing the Chasm, I started to realize that everybody in my target market is not a viable prospect.
How to Apply Diffusion of Innovation to Marketing and Sales
Marketing and sales leaders need to understand that at no time is the entirety of the market your target. Rather, you need to consider the lifecycle stage of your idea, technology, and/or service and match that with the appropriate group in the Diffusion of Innovation theory. For example:
Completely New Solution
If you are bringing a completely new solution to a market, you need to understand that only the “Innovator” group will ultimately purchase your solution. Therefore, you need to create marketing campaigns and associated content directed at people with this “innovator” mindset. Everything about what you do from a marketing and sales perspective needs to be directed at people who would stand out in the rain for days to be the first to get their hands on a new piece of technology. These people see themselves as cutting edge and want to be seen by their peers as technology leaders. They will embrace a new and unproven solution, often at high costs, despite the risk of bumps and hurdles. Keep in mind that this “Innovator” group statistically makes up a mere 2.5% of any given market. To put this into perspective: if your market contains 1,000 potential customers, only 25 of them are poised to buy your latest product.
Changing Your Marketing and Sales Message as Market Adoption Grows
As the market adopts your solution over time, your messaging should specifically target the mentalities of those that occupy the remaining groups in the Diffusion of Innovation model. Social proof in the way of press releases, case studies, references, and customer testimonials will become increasingly important. Furthermore, as you progress to the Late Majority and Laggard groups, you may consider changing your message to “everyone else is doing it” as a trigger to call them to action.
Summary | Market and Sell to Those Who Will Buy Your Solution
Understanding the entirety of the market at any given point in time helps tremendously when it comes to developing marketing and sales strategies that work. Consider two things:
- The different mentalities of the people who occupy the various stages of the Diffusion of Innovation model; and
- Where the product and/or service is in relation to market adoption
These two considerations will help you target the right prospects with the appropriate marketing and sales strategies. While it’s very tempting to look at a market of 1,000 companies all as prospects when you’re in charge of rolling out a new solution, you are setting yourself up for frustration and failure. If you’re selling a completely new solution, it is imperative that you appreciate the reality of your situation in that the Innovator group makes up only 2.5% of the market, meaning you only have 25 companies out of 1,000 that are poised to buy your new solution. This view may be discouraging to some, but it is the reality. The good news is that once you embrace this reality, you can get laser-focused on finding those 25 companies with the “Innovator” mindset and not waste your time with 975 companies that probably won’t buy your solution.