Sep 09
14
Selling to the Right Customers -1
Well, the world doesn’t work that way. Fortune 500 companies are large, bureaucratic organizations. They have numerous rules and qualification criteria, and they are generally hesitant to try new technologies and products. Selling to those companies is a long and tedious process, lasting a year or more. Startups would be better off selling to the “emerging Fortune 500;” that is, the 500 companies most likely to grow and be successful in the next decade. These companies have to make purchase decisions more quickly, they are more likely to try new and innovative products, and they probably will come back for repeat purchases as they grow.
Finding the emerging Fortune 500 is not necessarily easy. Tomorrow’s winners are not always readily apparent. It’s not purely statistical; it’s more qualitative. You can’t just tear a chart out of Fortune magazine. But identifying these companies can pay off. ASK Computer in Los Altos, California, has put this type of strategy to work. ASK sells software to manufacturing companies. Rather than target the Fortune 500, it first went down the street and sold to other high-technology companies in Silicon Valley. Its customer list includes many of the fastest-growing companies in the country. Because these companies do not drag their feet on purchase decisions, ASK was able to quickly grow to a $100 million company.
Another, closely related, approach to segmenting the market involves the “adaptation sequence.” Social-science researchers have noted that people fit into four categories according to how quickly they adopt new products and beliefs. Some people lead the way. They are the Innovators. Next come the Early Adopters, then the Majority. Finally, there are the Laggards, who are the slowest to adopt new ideas. According to one book on the subject, about 2.5 percent of the public are Innovators, 13.5 percent are Early Adopters, and 16 percent are Laggards.
These groupings can be used to classify companies as well. Companies have attitudes just as people do, and these attitudes can be used in positioning new products. Only one change: I like to think of companies “adapting” to new technologies, rather than “adopting” them. So I call the process the “adaptation” sequence.
Innovators are fascinated with technology and are willing to educate themselves about new products. Laggards, at the other extreme, are much less knowledgeable about new technologies and will not purchase a new type of computer unless there is an absolute need. They respond to competitive pressures. Selling to these different groups requires very different strategies. There is a great temptation to target Laggards in your marketing strategy. First of all, there are generally many more Laggards in the marketplace than Innovators and Early Adapters. What is more, Laggards are typically large corporations that could lend immediate credibility to your business.
