Hi there -
Here is this week’s “1 principle, 2 strategies, and 3 actionable tactics” for running lean…
1 Universal Principle
“The Early Adopter Paradox.”
(Share this on Twitter)
When you try to market to everyone, you reach no one. This is why you should start with early adopters.
“Niche,” “beachhead market,” and “ideal customer profile (ICP)” are all synonyms of early adopters.
This is sound advice. But, when defining early adopters, it’s easy to stack a bunch of defining traits because you’re trying to narrow down on a smaller sub-segment of your ideal customers.
This is when you encounter the early adopter paradox.
The more traits you use, the smaller your early adopter segment gets. Isn’t the goal to grow your addressable market, not shrink it?
More importantly, the danger of going too narrow is creating a “friendly” customer bubble that bursts when you run out of these customers.
In today’s issue, I’ll share some strategies for navigating this Goldilocks sizing problem.
2 Underlying Strategies at Play
I. The early adopter segment is a lot bigger than you think.
Just how big should the early adopter segment be? Take a look at this adoption curve from Roger’s Diffusion of Innovations:
This means that if you plan on building a $100m VC-backable startup, you should plan on demonstrating at least $10m of value from your early adopter segment.
That much value puts you in product/market fit territory.
In other words, one should aim to achieve product/market fit (the inflection point in your hockey stick) with just your early adopter segment.
If you aren’t planning on a $100m startup, use a traction roadmap to determine your product/market fit point. That is how big your early adopter segment needs to be.
II. Early adopters are not cheap customers.
Most people conflate early adopters with early champions or innovators of a new product.
These are people who like to be the first to try anything new, whether it’s a new restaurant or a new technology. Think foodie influencers and technology influencers.
Because of their influencer status, they also typically, not always, expect these products to be given to them for free or at a discount.
These are NOT early adopters.
Early adopters want to be first because they want to achieve better outcomes than their peers. And they aren’t price-sensitive. They are more than happy to pay fair prices, and sometimes even a premium, to go first.
In the next section, I’ll share some actionable steps for defining your early adopter segment.
3 Actionable Tactics
I. Clear the slate.
The stakes are too high to get your early adopter segment wrong, so I clear the slate first. It’s too easy to guess attributes and confuse correlation with causation.
The art of good customer segmentation is finding fewer, not more, attributes that cause people to buy from you.
II. Start with the one attribute all early adopters have.
All customers share one universal attribute — a switching trigger.
A switching trigger is an event in the customer’s timeline that causes their “old way” of doing a job to break, prompting them to consider a “new way.”
This is the one attribute I start with.
Sometimes, switching triggers are obvious. Most of the times, they are not, and have to be discovered.
III. Layer on additional causal attributes through discovery, not guessing.
The most effective way to uncover switching triggers is through carefully scripted customer interviews.
With the right targeting and questioning, not only do you quickly uncover switching triggers but a host of other insights, like
- desired outcomes,
- chosen solutions,
- problems, pet peeves, or struggles worth solving.
Add them to your early adopter criteria if they pass the causality test. Otherwise, skip them.
That's all for today. See you next week.
Ash
Author of Running Lean and creator of Lean Canvas
.
.
P.S.
And yes, forget personas at this stage of your journey.
Personas are more applicable at scale when you serve many different types of customer segments.
Your goal in a startup is to serve a single early adopter segment until you’ve demonstrated product/market fit.