On the road to transforming startups and products into businesses, there are a number of roadblocks. One of them regularly leads to failure or at least to growth being slowed down and retention suffering: Adoption of technology and software products.
I have helped numerous startups with brand and go-to-market strategies over the past decade and have led several dozen product launches. Among them are tech startups like Hyperloop and Reflekt that have developed new exciting technologies.
The adoption challenge is higher in new technologies like AR, AI, IoT, or new categories than in existing markets. While there is a wealth of frameworks and data for eCommerce or marketing software, there is a lack of a blueprint for new technologies: value is questioned, ROI cannot be quantified, advantages compared to existing solutions are not clear.
In this article, I describe how the adoption challenge can be explained and what strategies work for a successful go-to-market. And let me put it into simple words. As a rock star (well, in my first life) and musician, I know that it’s not enough to compose a great song and perform it perfectly. The individual elements have to mesh and the audience has clear expectations. If they are not met, the song is ruined–just like the tech or software solution is a slow seller.
Go-To-Market Strategy to form a Business
Go-to-market topics are currently dominating the marketing world. From product-led to marketing-led to sales-led, plus a portion of account-based marketing. Not much new, but easier to categorize. While founders, marketing and product managers think about how to build products that “sell themselves”, they face the challenge that adoption in the GTM process is a headache.
I have experienced this myself several times with AR and VR and learned to recognize the typical pitfalls. We experimented with different models and sent a typical enterprise product (remote support) on the product-led journey. We were the first in the enterprise AR world to have pricing transparently on the website. But it wasn’t and isn’t a no-brainer.
In the go-to-market process, we define three things: offering, selling and delivering. This already shows that marketing alone cannot manage the GTM but needs sales and customer success. In GTM, we define who we sell to, what we offer, how customers learn about it, and how we ensure that users experience the value quickly in order to scale.
When the Adoption Challenge hits your GTM Plan
Well, a GTM plan is not made for all eternity but is a dynamic process. If long sales cycles and stalled negotiations and especially increasing churn show up, this is a sign of problems in the adoption of the technology or products. Typical signals are:
- POCs do not enter the license phase
- Low conversion from trial/demo to paid/license
- Increasing churn on renewals
- No scaling of the user base
- Low number of active users
- Customers find it difficult to sell the added value internally
The reasons for this are usually complex and include one of the following aspects:
- Investment cannot be communicated to management as value added
- There is no urgency to deploy the solution.
- Opportunity costs cannot be quantified (how much more revenue, how much less cost by using the new solution)
- Competitive advantage through new solution is not recognized
- Financial added value in comparison to the existing solution cannot be presented.
- Users do not change their habits and stay with the existing tool
- Management pushes the solution over without the support of the users.
- Users fail to get the user experience from early technologies
- Startups forget the “Chasm” and do not move from early adopters to pragmatic buyers with product, marketing and sales
3 x 5 Matrix of Tech Adoption
The adoption of (new) technology and software solutions typically happens in three phases and has five characteristics that occur during the GTM process. In the first phase, companies test the solution and guide it along their own requirements. Whether it is a trial or POC phase, this is where users first encounter the product and it is quickly determined if there is a chance for adoption. In phase 2, more users are given access to the solution and further application possibilities are tested. Issues such as integration, interfaces and standards are then added in the third phase. The impact on adoption is greatest in the first phase while it does not play the same role in the third phase.
- Lack of Urgency
- Fear of Change
- Undefined Value
- No Habit formation/change
- Friction in User Experience
The first three factors are important from the buyer/management point of view, the last two are determined by the users. This covers the most important target groups for adoption.
5 factors impacting adoption and slowing down the GTM process and how startups can tackle
#1: Lack of Urgency
The lack of urgency on the part of decision-makers can quickly become a blocker, especially when it comes to new technologies. Budgets are not released and are used for more urgent projects. In sales practice, this can lead to endless negotiations without results and block important (and limited) resources in the process.
Urgency can be divided into two categories: natural urgency and manufactured urgency. The most recent example of natural urgency is the Covid pandemic, where digitization, in particular, has made progress in a few weeks that was not possible in years before. In my article “Urgency Will Change Today’s AR Vision into Tomorrow’s AR Reality,” I wrote about the two urgencies using remote support solutions as an example.
Common manufactured urgency measures like limiting supply or price as applied in the consumer market do not work in the B2B enterprise. Let me be clear: manufactured urgency has low chances of success and can quickly backfire. The leverage is rather in the unexploited gains, in uncovered reasons. Buyers are often not aware of the impact of new technologies and consider them to be of low urgency. This can be addressed with explanations and comparisons to existing solutions, pointing to unused cost reductions, lost revenue and most importantly competitive disadvantages.
Sample questions to identify uncovered reasons that we use:
- Is your business growing faster than the industry average?
- What are your biggest challenges to grow your business faster?
- Many companies in your industry are not aware of [problem/solution]. What do you know about it?
- We have seen companies in your industry replacing [existing tool] with [your solution] to increase workforce productivity and ease of use. How do your users work?
HubSpot’s sales strategist David Weinhaus provides a comprehensive question catalog to identify urgency and sales starting points.
Another effective lever is the user, which is why strategies such as product-led are successful. The more users realize that the new solution enables them to [task] more productively, the greater the pressure on decision-makers and buyers. For instance, we use very early user acceptance tests to be able to apply user feedback. This approach works particularly well for workplace tools to push from the user side.
#2: Fear of Change
We are all human beings! And change is not in our nature. Learning new tools, changing processes, giving up what is supposedly tried and tested. To initiate change, you need value, rewards and habit change. The inertia in digitization in some industries has shown how much effort is needed.
Typical reasons against new tools are switching costs, process changes and time to train employees. These issues often come from IT and can be turned into a differentiator for the own company with an active approach. Apple, Google and actually all big tech companies have guides to make the change easy for the users. This works not only for competitor solutions but also for new solutions such as ours, for example, from traditional paper manuals or video to AR documentation.
In addition, especially in corporate groups, there is risk thinking in middle management and the fear of making the wrong decisions. Whoever can help the decision-makers to minimize risk has an advantage. This can be done communicatively with a clear definition of deliverables and KPIs. In addition, the monetization models can be adapted to allow a gradual entry without full risk for the decision-maker. We have introduced our bundles that deliver results in 60 days with a fixed budget and a clear plan without requiring large investment decisions. The result is that 80% of bundle customers convert to the licensing phase.
#3: Undefined Value
The Value, yes. We could write a book about it now but keep it simple. It is important to understand that Value is not equal to Value. It is important to find out how buyers and decision-makers define value for the company and themselves. Let’s take a look at the main value categories:
Economic/financial value: increase sales and profits, reduce costs, increase or get budgets.
Operational value: process improvements, higher productivity and efficiency, faster training, fewer errors, higher quality, higher customer satisfaction
Social value: reputation, brand, market positioning, competitive landscape on the company side. Career, status and recognition on the personal side of buyers, decision-makers or users.
Once the value category has been identified, appropriate means can be used to represent the value. Without knowing what drives a buyer or user, it is fishing in the ocean.
Savings and revenue growth can be illustrated with results from success stories. Simple calculators help companies to show this with their own figures. With new technologies, it is often difficult to define the right KPIs to measure success in comparison to previous solutions.
Drift shows a very simple example of how customers can get a sense of value. This can be extended to different industries and use cases.
#4: No habit formation/change
While the first three topics focus more on the buyers and decision-makers, we now come to the users. Users are often the undiscovered potential, which is why it is advisable to use user feedback as a value and change driver, especially in enterprise software, where we usually talk to business leaders and IT departments.
If you want to convince users to use new solutions, you have to understand the principle of habit formation. What triggers us to form or change habits and how can we influence them? Marketing, Sales and Customer Success have it easy when they understand if, when and where the users see the value in the product – or not. The prerequisite for this is a reward. What do I get out of using the new solution? Can I achieve better results, work easier?
Think of an example like Uber. Instead of calling a cab by phone and waiting 30 minutes to get from A to B for inflated prices, I can now use an app to have transportation within minutes. What is this “a-ha moment” with your solution? Read more about how habit formation works in my article “How Habit Loops impact Tech Adoption“.
An often underestimated means to support and accelerate habit formation and adoption is seamless onboarding. Unfortunately, I see that many marketing teams leave the journey beforehand, leaving product and customer success alone. Onboarding is part of the story and besides adoption, it also offers the possibility to use the results of feedback sessions in marketing later on. Marketing is a battle of perceptions, not a battle of products!
Take a look at how Superhuman uses its unique onboarding as a differentiator and positioning.
#5: Friction in User Experience
New technologies often suffer from the fact that the user experience is a bit shaky. Products don’t yet have the full set of functionalities or integrations missing. This can cause friction in the early adoption phase.
From the product and engineering side, it is important to implement what actually works even if it seems too simple. If features are technically demanding and the high quality in development shows, this can be a pain for the users and make life very difficult for marketing, sales and customer success. The result is many POCs but no adoption.
The more complex new technologies and products are, the more guidance and training users need to quickly deliver presentable results. Onboarding with simple templates and personal support is the key to lasting adoption.
Test if your GTM is adoption-ready
Rapid and sustained adoption of new solutions needs all 5 factors. Individual building blocks can help but the full potential can only be achieved in combination.
Depending on the GTM process and model (product-led, sales-led, sales-assisted, self-serve), the focus is defined differently and requirements are adapted.
What I have described are our learnings from ten years with new technologies, in which we had to learn a lot, did some things right and also wrong, and worked out many of the points mentioned.
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Dirk Schart is CMO of the No. 1 Enterprise AR startup RE’FLEKT. He is a brand and growth leader and focuses on B2B software and SaaS models —from zero to hero. Dirk is the former Director of SaaS Products at HyperloopTT, and helped scale SkyWork from 30 to 200+ in less than 18 months. He mentors startups at the German Accelerator in Silicon Valley. Dirk is the author of “Augmented and Mixed Reality for Marketing” and spends his free time as Heavy Metal Rockstar 🎸