WHY MOST STARTUPS FAIL AT MARKETING
(The secret may surprise you! It has to do with the Diffusion of Innovation Theory.)
In this article, we will explore how the Diffusion of Innovation Theory by Everett Rogers serves as a compelling analogy to elucidate the multifaceted stages of digital marketing, shedding light on the adoption patterns of marketing strategies and technologies and offering marketers a roadmap to navigate the ever-evolving digital landscape.
Summary of Diffusion of Innovation Theory
The Diffusion of Innovation Theory, developed by Everett Rogers in 1962, is a framework that explains how, why, and at what rate new ideas and technology spread through cultures. The theory categorizes adopters of innovations into five groups: Innovators, Early Adopters, Early Majority, Late Majority, and Laggards, based on their adoption time and characteristics such as risk tolerance, social connections, and openness to new experiences. Innovators are the first to adopt a willingness to take risks, while Laggards are the last, showing aversion to change and skepticism toward new ideas. The theory emphasizes the role of communication channels, social systems, and time in the adoption process, providing insights into the spread of innovations in various domains, including technology, healthcare, and education.
Mapping Rogers’s Categories to Modified Titles for Marketing
- Innovators in Rogers’s theory can be likened to Visionary Early Users or Seed Users in marketing. These individuals are typically ahead of the curve, willing to experiment with new ideas and technologies, and are usually situated at -3 standard deviations (SD) from the mean in a normal distribution.
- Early Adopters align with Opinion Leaders and Influencers in the marketing realm. They are situated at -2 SD and play a crucial role in shaping trends and influencing the adoption decisions of the larger population.
- Early Majority corresponds to Early Mainstream Users in marketing, representing 34% of the population, and are at -1 SD. They are more deliberate in their adoption choices, usually adopting innovations after seeing them validated by the earlier groups.
- Late Majority can be mapped to Later Mainstream Users in marketing, representing individuals around the sample mean. They are typically skeptical and would adopt innovations only after seeing most of the population adopt them.
- Finally, Laggards in Rogers’s theory are akin to Bottom Feeders in marketing, situated at +1 SD. They are the last to adopt innovations, usually when they have become outdated, and represent 16% of the population.
Quick Reminder about Standard Deviation and its Relation to the Mean
Standard Deviation (SD) is a statistical measure that quantifies the variation or dispersion in a set of values. A low standard deviation indicates that the values are close to the mean, while a high standard deviation indicates that the values are spread out over a wider range. In a normal distribution, about 68% of the values lie within one standard deviation of the mean, 95% within two standard deviations, and 99.7% within three standard deviations. In the Diffusion of Innovation Theory context and its marketing analogy, the standard deviation helps understand the spread and adoption of innovations across different user categories relative to the average or mean adoption rate.
Now, let’s take a closer look at each category
Visionary Early Users: aka Seed Users (-3 SD)
Visionary Early Users: aka Seed Users
Visionary Early Users, or Seed Users, have a specific problem they want to solve or have a penchant for discovering unique and novel products within their areas of interest. They are not only aware of their needs or desires but are also actively on the lookout for innovative solutions or exciting new products.
- Problem Solvers:
- They are actively searching for solutions and have a timetable for finding them.
- The problem is significant enough that they have created interim solutions to alleviate it.
- Innovation Seekers:
- They proactively explore and click on innovative ads and follow blogs and newsletters that align with their interests.
- They are drawn to new and different products, often being the first to try them out.
These users will invest money in products that address their needs or pique their interest. They prefer products that are not overly polished or mainstream in design and have a high tolerance for mediocre user experience (UX) and design, valuing substance over style.
Opinion Leaders and Influencers (-2 SD)
Opinion Leaders and Influencers thrive on being the first to share new and credible products. They are open to trying solutions they weren’t necessarily seeking and are quick to adopt and abandon, providing a narrow window for engagement. They value products that capture their imagination and are turned off by poor design, clunky user experience, and overused design clichés.
- They are crucial in bridging the gap between visionary users and the early mainstream, leveraging their influence to endorse products and shape trends.
- This stage is critical in a product’s adoption narrative, requiring strategic use of UX and lean marketing to captivate and convert early mainstream users.
Early Mainstream Users (34% -1 SD)
Early Mainstream Users are the first to be significantly influenced by branding. They respond well to the endorsements of opinion leaders and influencers. They seek products that solve their problems and are recognized and accepted by others.
- They prefer well-defined paths and solutions that are established and recognizable.
- Branding is pivotal in their adoption process, influencing their perception and acceptance of a product.
Later Mainstream Users (the sample mean)
Later, Mainstream Users
Later Mainstream Users find comfort in following the crowd and are heavily influenced by branding, especially when it aligns with their self-identity. They prioritize popular and widely accepted products, focusing more on price differentiation than the earlier groups.
- They seek safety in numbers, preferring mainstream and widely adopted products.
- Their purchasing decisions are often influenced by how well the product aligns with their identity and values.
Bottom Feeders (16% +1 SD)
Bottom Feeders primarily focus on price differentiation and are less influenced by branding. They are content with knock-offs and help sustain commoditized markets. Typically older and more resistant to change, they are less inclined to try new things and prefer products that are affordable and accessible.
- They value affordability over brand recognition and are less concerned with the novelty or uniqueness of a product.
- Their resistance to change and preference for familiar and cost-effective solutions make them the last to adopt innovations.
Each category represents a distinct segment of users with unique characteristics, preferences, and behaviors.
Understanding these categories enables marketers to tailor their strategies, design, and messaging to effectively reach and engage different user segments, facilitating the successful diffusion of innovations in the market.
B2B Marketing Strategy Using Diffusion of Innovation Theory
Visionary Early Users:
- Strategy: Target industry experts and early adopters with personalized demos and in-depth whitepapers.
- Example: A SaaS company could offer exclusive beta access to its new software to industry thought leaders and collect feedback to refine the product.
- Tactics: Use LinkedIn to identify and reach out to industry experts and offer webinars and one-on-one demos.
Opinion Leaders and Influencers:
- Strategy: Leverage testimonials and endorsements from early users to build credibility.
- Example: A B2B eCommerce platform could showcase testimonials from reputable businesses and influencers in marketing materials and on the website.
- Tactics: Develop case studies and influencer partnerships to showcase the product’s value and reliability.
Early Mainstream Users:
- Strategy: Optimize branding and messaging to appeal to a broader audience and highlight the solution’s acceptance and success.
- Example: A CRM software company could emphasize its user-friendly interface and high-profile clientele to attract more mainstream businesses.
- Tactics: Utilize content marketing, SEO, and targeted advertising to increase visibility and brand recognition.
Later Mainstream Users:
- Strategy: Emphasize product reliability, widespread adoption, and competitive pricing.
- Example: A cloud storage provider could offer competitive pricing bundles and highlight its extensive user base and reliability in marketing campaigns.
- Tactics: Employ email marketing and retargeting campaigns to reach a broader audience and emphasize value propositions.
Bottom Feeders:
- Strategy: Offer cost-effective solutions and emphasize value for money.
- Example: An office supplies wholesaler could offer budget-friendly options and bulk discounts to attract price-sensitive businesses.
- Tactics: Use discount promotions and value-focused advertising to attract price-conscious customers.
B2C Marketing Strategy Using Diffusion of Innovation Theory
Visionary Early Users:
- Strategy: Offer exclusive early access or limited-edition products to attract enthusiasts and early adopters.
- Example: A tech startup could release a limited edition of its new gadget to tech enthusiasts and collect feedback for improvement.
- Tactics: Social media teasers and influencer partnerships create buzz and anticipation.
Opinion Leaders and Influencers:
Opinion Leaders and Influencers
- Strategy: Collaborate with influencers and opinion leaders to enhance product credibility and appeal.
- Example: A fashion brand could partner with style influencers to showcase its new collection and drive early adoption.
- Tactics: Leverage influencer marketing and user-generated content to build brand credibility and appeal.
Early Mainstream Users:
- Strategy: Optimize brand image and messaging to appeal to a broader consumer base and emphasize product popularity and acceptance.
- Example: A skincare brand could highlight its best-selling products and positive reviews in advertising campaigns to attract a wider audience.
- Tactics: Utilize mainstream media advertising, social media campaigns, and influencer collaborations to enhance brand image and reach.
Later Mainstream Users:
- Strategy: Highlight product popularity, user satisfaction, and competitive pricing to attract the mass market.
- Example: A food delivery app could offer special discounts and prominently feature user testimonials and ratings to attract more users.
- Tactics: Use referral programs, loyalty rewards, and mass media advertising to emphasize product value and popularity.
Bottom Feeders:
Later Mainstream Users
- Strategy: To attract price-sensitive consumers, offer value packs, discounts, and budget-friendly options.
- Example: A grocery store could offer value packs and deals on staple items to attract budget-conscious shoppers.
- Tactics: Employ price promotions, discounts, and value-focused advertising to attract and retain price-sensitive consumers.
By understanding and applying the Diffusion of Innovation Theory principles, B2B and B2C marketers and startup founders can develop more effective and targeted marketing strategies, ensuring a smoother and more successful product adoption process across different user segments.
The Biggest Mistake…
Many startups and companies make the critical mistake of not recognizing where they are on the adoption curve when planning their marketing strategies. They might see competitors implementing certain strategies and achieving success and hastily adopt similar approaches without considering the differences in their positions on the adoption curve.
For instance, a startup in the early stages of the adoption curve might see a competitor, who is further along the curve, focusing on mass marketing and brand visibility, and decide to do the same. However, this can lead to inefficient allocation of resources as their immediate need might be to focus on early adopters and opinion leaders to build credibility and validate their product or service.
This imitation of visible strategies from competitors further up the curve can lead to misaligned marketing efforts…
Don’t imitate, innovate
This imitation of visible strategies from competitors further up the curve can lead to misaligned marketing efforts, as the needs, motivations, and behaviors of the target audience at different stages of the adoption curve vary significantly. What works for companies with products in the later stages of mainstream adoption, where the focus might be on brand reinforcement and price competition, will not work for companies with products in the early stages, where the focus should be on awareness, education, and building credibility.
Moreover, the activities at the bottom of the curve are often invisible, leading to a lack of understanding of the struggles and strategies of those still trying to gain traction. This lack of visibility can result in unrealistic expectations and misguided strategies, hindering the company’s ability to move up the adoption curve effectively.
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