Friday, January 16, 2009

Inside Fast Growth Technology Companies

Fast growth firms need midcourse reevaluations

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Over 93 percent of “successful innovation” follows false starts, according to Clayton Christensen of the Harvard Business School. By the time a company has progressed from development to growth mode, its marketing program — if it has one — is often based on out-moded assumptions.

So, high-growth companies should conduct a midcourse marketing assessment. Among the things to review are your customers’ needs, practices and purchase preferences; the competitive landscape; your product descriptions; and your marketing and web strategies.

Have your customers’ needs and practices changed? While you were perfecting your technology, developing products, and building a customer base, customers’ needs may have shifted. Your company may lose customers because your products are now targeted at the wrong platform. You may need to pursue a different market segment or modify your offering. However, it is better to discover these changes through market research than through a failed marketing campaign. You cannot push a product on a market segment that does not want or need the product.

Do customers prefer to purchase products in new ways? Some customers still prefer to license software for use on their own equipment. Others are exploring cloud computing, which refers to a new delivery model. Customers use the Internet (described as a cloud) to access a vendor’s software. As they do not need to take possession of the software, and they do not even need IT expertise, many customers prefer to purchase software in this new way. By talking to customers, you can ascertain whether they prefer new ways to purchase your products.

Has the competitive landscape changed? As part of your midcourse correction, identify all new competitors. Find out what their products do and what they replace, and develop a suitable response. Don’t overestimate your own market opportunity by not considering your competitors’ market share.

Are your product descriptions clear and up-to-date? You cannot sell a product that no one understands. Describe the product in terms of benefits or problems solved. Include just as much detail as is necessary, and organize the details logically. Define acronyms and technical terms, and avoid jargon and marketing fluff. On your website you can provide an optional link to more technical information.

Do you have the marketing capability required in a growth environment? Fast-growing companies need the resources to build a separate marketing department led by a marketing vice president or director. This person is responsible for developing and implementing a marketing strategy that evolves along with the company. Knowledge of the company’s technology is essential, but the chief marketing officer must also have broad marketing experience and understand the value of market intelligence. This means obtaining customer and industry data before proposing a marketing strategy.

Is your old website appropriate for a fast-growing technology company? The message and look and feel of your website should be professional, and it should be consistent with the look and feel of your other marketing material. If you use blogs, social media, or search engine optimization, make sure that these initiatives are part of your overall marketing strategy. This may mean allocating additional resources. An outdated or unattended blog is worse than no blog at all.

High-growth technology companies are engaged in a game where the rules change constantly. Therefore, these companies must be able to identify changes in their market and their customer base. Then, they must adapt to these changes. Finding that it was difficult to sell its imaging devices to health care organizations, a company modified its products and marketing campaign for use in the defense industry. Of course, before making drastic mid-course changes, companies should conduct an exhaustive study of the alternatives.

 

Ruth Winett is the president of Winett Associates of Framingham, which provides market analysis services. She can be reached at www.winettassociates.com.