Achieving Breakout Growth by Successfully “Crossing the Chasm”

The following is the third and final installment of Breakout Growth from our friends at Harvest Business Advisors.  Many, many thanks again to Harvest for allowing us to reprint the series, and we encourage you to download the full white paper.

When Geoffrey Moore introduced Crossing The Chasm in 1991, it quickly became required reading for any executive in the high-tech industry.  While it focuses primarily on introductions of new products and services in the high-tech industry, I believe the principles discussed in the book have application for any company that launches a significantly new product or service.

In the book Moore describes a flattening or even a decline in sales early in the product life cycle he termed “The Chasm.” as shown in the illustration.

“The Chasm” is defined as “a pause of indeterminate length in market development, when the early market interest has waned and when there is no preordained or natural customer among the mainstream market for the discontinuous innovation, owing to its immaturity and lack of widespread deployment.”

Many promising young companies fail during this chasm period.  Many new innovative products from established companies fail during the chasm period.  So what is going on during this period and why do some companies successfully succeed in crossing “The Chasm” and achieve breakout growth?

In a nutshell, “The Chasm” represents a period where there is a meaningful disconnect between the perception of the product or service being offered and the existing problem that mainstream customers will pay to have solved.  The product or service being offering includes many things: the actual product, the marketing message, the channel of distribution and the other 5 “P’s of Marketing”.  All components of marketing mix must be materially right before significant sales to mainstream customers will occur and breakout growth can be achieved.

Many times companies don’t realize that sales to “innovators” and “early adopters” in the above illustration are relatively easy compared to mainstream customers.  These early customers are looking for a solution to their problem.  They search you out.  They find you at trade shows; they “google” you; they scour your website looking for nuggets that will solve their problem.  They are willing to accept a less than complete solution and make it work for them.  They like hearing about the innovative technology you have introduced with your product.  They are willing to help you fix the shortcomings of your product, if necessary.

Sales to mainstream customers, on the other hand, is much more difficult.  These customers aren’t looking for you.  You have to find them and have the right marketing message to quickly get them interested in your product.  You have to understand their problem and figure out to position your solution to solve their problem in a way that they immediately grasp and accept.  They are skeptical and will be turned off if your solution is not ready for prime time.  They are not interested in the technical aspects of your solution that your engineers think are cool.  They only “google” you and visit your website during the due diligence process.  The sales cycle is generally much longer and failure can occur at any step in the process.

So, what is the secret?  Don’t become overconfident based on the early success of the product.  Recognize in the beginning that it will be difficult to cross “The Chasm” and translate early sales wins into a formula for reaching mainstream customers.   Study your early successes and carefully analyze why the early adopters are buying your product and what problem you are solving for them.  Make sure you have the product right.  Don’t let your product design engineers move on to the next product until the bugs and feature deficiencies are worked out of the new product.  Keep testing the marketing message with customers until you get it right.   Don’t be lulled to sleep by the early customers who love the technical features of your product; future mainstream customers won’t care.

The best way to evaluate your early successes is to assemble a small team from sales, marketing and product development to work together and spend meaningful time truly listening to your early customers understanding their problems and learning how to craft the product and marketing message.  Understand the personas of both the champion of your product and the economic buyer.  Fix any product deficiencies immediately.  Consider adding an outside consultant to the team who can independently evaluate the responses from customers without the biases of your internal team.

Most likely, you are not going to get it right the first try.  Listen to many customers and hone your message multiple times until you get it right.  Learning to get it right is an iterative process that requires continual trial and error as illustrated below.

It’s not easy.  The objective is to determine the “secret sauce” of the right product, sales approach and marketing messaging that will resonate with customers, shorten the sales cycle and keep “The Chasm” narrow and shallow. You will know that you are getting it right as sales begin to ramp and the selling cycle shortens as customers understand and favorably respond to your messaging.  That’s when you are on your way to achieving breakout growth!