New Products Distribution is a Number’s Game (And This Number is 2.5%)

By on March 13th, 2015

A common mistake among startups is to try too hard to close a sale. It’s so easy to get stuck with a prospect who could literally change the course of your company, but is taking forever to reply to your emails. For a long time, I tried to refine my messaging, change the tone, send more follow-ups, anything to raise interest. Sometimes it worked, but as a startup, those long sales cycles were killing my growth: there had to be a better way. Then it dawned on me: it’s not me, it’s them. No matter my language, branding or first impression, I couldn’t take them past the fact that my product was new, unproven, unknown — and they certainly weren’t willing to take the risk to be the first to try: they weren’t the innovators in my market.

Target innovators

Innovation spreads in a predictable pattern. According to Everett Rogers’s analysis, it breaks down to this: any innovation is first adopted by a small fraction of its total market: the innovators. Rogers estimates that they account for 2.5% of the market. From them, the innovation spreads to early adopters, who don’t want to take the full risk of trying something new, but like to take advice from innovators. Early adopters are 13.5% of the market, and the early majority (the next 34%) is watching them to make a decision. And so on, until the laggards (the last 16%) are finally using it too.

innovators

If you’re selling something even remotely innovative, you’ll notice the same pattern in your sales. Some companies just like trying new things that could help their business, and don’t mind the associated risk. Others are just waiting for the first wave of users to vet your product.

 

It’s not as clear as that in their mind though, so they will probably reply to your e-mails or even take a meeting or two. If you’re reaching out to companies randomly, statistically only one in 40 is an innovator, and might be interested in giving a try to your solution. The other 39 companies are almost always a waste of time. Fortunately, innovators share common traits: they know each other; they read the same news; they go to the same events; they hang out on the same forums; they have common memes; etc. Your job is to identify these traits, find these networks, and double down on them.

 

Silicon Valley is a very good example of this distribution. In Silicon Valley, most people are innovators. Innovation is probably part of their job, so it’s easier to get them to try your product than it is anywhere else in the world, so it makes perfect sense for startups to be there. And when big companies want to know what they’re casino online missing out on, they look at what’s happening in Silicon Valley, and the cycle goes on.

 

2.5% can feel like an awfully small number. It isn’t. A TAM (Total Addressable Market) of 1 million customers is not uncommon, and 2.5% of 1M (users, companies, schools, hospitals, etc.) is still 25k potential first clients, which is more than enough to prove traction — and certainly enough to keep you busy for a long time.

Reach out to all innovators before turning to the rest of the market

As your product takes form and users start to get value out of it, it’s easy to see how “every company in the world” could benefit from it as well. You can’t help but think that every small business owner should become a customer, and you’re seriously considering buying billboards all over the country or TV ads on national networks.

Don’t.

If you haven’t reached out to all the innovators in your market, it’s better to keep focusing on the same acquisition channels. Say you had an article on TechCrunch: congratulations. You might think that you can tick this off your marketing list and move on, but alas, even if innovators do read TechCrunch, it is very unlikely that all of them saw your article when it got published.

 

The 2.5% of innovators are not actively looking for your product, they’re just willing to use it without a peer’s recommendation. This realization was crucial in our decision to allocate our marketing efforts at Front. In the last 18 months, we’ve been featured 3 times in TechCrunch, 4 times on Product Hunt, twice in The Next Web, have had 6 publications in VB, Pando, LifeHacker & GigaOM (crying) combined. What’s amazing is that every time we have a new one, it performs better than the one before! Clearly we haven’t reached the 2.5% innovators of our market, and until we do, the other 97.5% will have to wait. That’s what they do anyway 😉

Get our very best content delivered to your inbox - it’s free!
+ Get access to a list of our favorite resources. No gimmicks, and 1-click unsubscribe.

Leave a Reply

Your email address will not be published. Required fields are marked *