Below is my review of Crossing the Chasm by Geoffrey Moore.
This was by far the most helpful and insightful book I’ve read to date on startups, entrepreneurship, and positioning.
Crossing the Chasm was referred to me by a friend who used it in his startup to develop a marketing roadmap for his beachhead segment.
Moore divides the technology adoption lifecycle into distinct customer segments based on each group representing a unique psychographic profile-a combination of psychology and demographics that makes its marketing responses different from those of the other groups. The five segments are innovators, early adopters, early majority, late majority, and laggards.
innovators - buy technology because they love technology and many times will just make a purchase to tinker with a product or device’s properties
early adopters - like innovators, buy into new product concepts very early in their life cycle, but unlike innovators, they are not technologists. Rather they are people who find it easy to imagine, understand, and appreciate the benefits of a new technology, and to relate these potential benefits to their other concerns. Because early adopters do not rely on well-established references in making these buying decisions, preferring instead to rely on their own intuition and vision, they are key to opening up any high-tech market segment.
early majority - The early majority share some of the early adopter’s ability to relate to technology, but ultimately they are driven by a strong sense of practicality. They know that many of these newfangled inventions end up as passing fads, so they are content to wait and see how other people are making out before they buy in themselves. They want to see well-established references before investing substantially. Because there are so many people in this segment— roughly one-third of the whole adoption life cycle-winning their business is key to any substantial profits and growth.
Late majority - shares all the concerns of the early majority, plus one major additional one: Whereas people in the early majority are comfortable with their ability to handle a technology product, should they finally decide to purchase it, members of the late majority are not. As a result, they wait until something has become an established standard, and even then they want to see lots of support and tend to buy, therefore, from large, well-established companies. Like the early majority, this group comprises about one-third of the total buying population in any given segment. Courting its favor is highly profitable indeed, for while profit margins decrease as the products mature, so do the selling costs, and virtually all the R& D costs have been amortized.
Laggards - These people simply don’t want anything to do with new technology, for any of a variety of reasons, some personal and some economic. The only time they ever buy a technological product is when it is buried so deep inside another product— the way, say, that a microprocessor is designed into the braking system of a new car— that they don’t even know it is.
Moore advocates that successful tech companies market their products to each segment one at a time, taking into account the needs and eccentricities of each profile and using that segment as a reference base to swing to the next segment seamlessly. However the challenge occurs when companies try to transition from early adopters to the early majority..there is a crack in this part of the adoption curve and getting past it is “crossing the chasm”.
What is the crack? The crack is an incompatibility in the needs or desires of the early adopters or the early majority pragmatists. Early adopters are looking for change agents that will give them a jump start on the competition, a break through technology or product that capitalizes on shifting user behavior that will give them an advantage for as long as they can sustain it. Early majority pragmatists are looking for evolution not revolution. They are weary of disrupting the status quo and want the products they adopt to be continuous innovations (i.e. they play nice with existing systems). They want a productivity improvement not a change agent.
Because of these incompatibilities, early adopters do not make good references for the early majority. And because of the early majority’s concern not to disrupt their organizations, good references are critical to their buying decisions. So what we have here is a catch-22. The only suitable reference for an early majority customer, it turns out, is another member of the early majority, but no upstanding member of the early majority will buy without first having consulted with several suitable references.
This is where it gets fun!
How do you develop a referenceable segment in the mainstream market?
Moore uses the analogy of a d-day invasion for crossing the chasm. Cross the chasm by targeting a very specific niche market where you can dominate from the outset, force your competitors out of that market niche, and then use it as a base for broader operations. Concentrate an overwhelmingly superior force on a highly focused target. It worked in 1944 for the Allies, and it has worked since for any number of high-tech companies.
Define the war. Start small. Don’t get distracted. If you can’t take Normandy you definitely can’t take Paris. More than anything else, you need a pragmatist customer base that can be referenced. So the only approach to take, it seems, is a “big fish, small pond” approach.
Defining a beachhead successfully leads to the bowling pin effect of niche marketing, there are several examples that Moore uses to illustrate how companies successfully used the strategy on their way to market dominance. Chris Dixon talks about it in the blog post I linked above.
This piece could get very long so I’ll wind it down here..I did my best at summarizing the salient points and the most impactful learnings for me personally.
This is a bit of a dense read but I can’t recommend it enough for anyone serious about startups. My only regret is that I hadn’t read it sooner.
If you’ve read Crossing the Chasm or the sequel “Inside the Tornado”…lets discuss!!