Accelerating Growth Through Data Science
Pattern89 CEO R. J. Talyor shares how the High Alpha data science team informed their product and marketing strategy.
Product Adoption Curve
What is technology adoption? It’s the process of accepting and using a new innovation. In theory, that’s simple. Yet it’s tricky, in practice, to know the stage at which an individual or organization can accept a new way of doing things. Here, we take a look at the stages in the technology adoption curve.
The Everett Rogers Adoption Curve (also discussed as the product diffusion curve) describes how people and groups learn about, and ultimately acquire, new innovations and ideas. What does this mean for software as a service (SaaS) marketers? To pitch their offerings with timely efficiency, they zero in on where people are in the adoption process.
First, here are the five main groups of people and their characteristics.
- Innovators. A select few people are always ahead of the curve. They’re willing to test new apps, technologies, and workplace innovations.
- Early Adopters. Members of this small, pioneering group will try what the innovators helped form and fine-tune. Then, they’ll diffuse the concept out into a broader community.
- Early Majority. This is the large group of consumers who adapt when the right new idea comes along—and they’re confident it can work for them.
- Late Majority. This crowd likes to do things way they’ve always done them. They’re interested only after an innovation is known, tried and true.
- Laggards. This small group represents the resistance to the technology adoption model for the time being.
The Rogers Adoption Curve concept shows that effectively promoting the adoption of a new product means knowing how to identify innovators and early adopters. These two groups make up 16% of the consumer pool: about 2.5% of consumers are innovators, and about 13.5% are early adopters.
Product Life Cycle
As SaaS start-ups know, product adoption is simply the process by which a potential customer first notices the offering and goes through the steps it takes to become an active, ongoing user. SaaS product adoption follows the Rogers Adoption Curve, as adoption of any technology does.
Technology adoption examples are everywhere. Consider the smartphone, and the product adoption timeline by which people gravitated to it and came to rely on their preferred phones:
- Awareness. Potential customers came across the innovation on the web or other media.
- Interest. They examined how the product might work, and considered what it might do for them. Perhaps they contacted the company for more news and information.
- Evaluation. They thought: Is this product worth a try? What makes this company really stand out to me?
- Trial. OK, let’s give it a whirl.
- Adoption. Wow! Where has this been all my life?
In the case of software as a service, working through these five stages of new product adoption moves the prospective customer from awareness, to a feeling of liking the product and preferring it to others, to a purchase decision. But how? For technology adoption life cycle examples such as the smartphone curve, the companies’ big task was helping people discover the features. Same goes for software as a service. Free trials or money-back assurances (see stage 4 above) allow the company to lead sales with the product.
Then, every month, a subscription-based service is “sold” once again to its user, and its features are what sets it apart.
New Products: Enhancing the Adoption and Diffusion Process
Everett Rogers, a U.S.-based sociology expert, used the term diffusion of innovations to elucidate the broader impact of the product adoption curve. Today, the term fits the diffusion of SaaS innovation. Increasingly, people perform, store, and share work in the cloud. It’s empowering to realize that people adopt software as a service one client at a time.
Product led growth (PLG) makes a free, discounted, or guaranteed product or service the key driver of adoption of a useful innovation. All told, knowing the dynamics of product adoption helps a company encourage a strong conversion rate from a free trial to a paid subscription. It then supports renewals and engenders lasting loyalty—even brand evangelism.
Key factors for keeping a watch on the product life cycle are:
- The ability to measure the customers’ use of their subscription or any given new feature; and
- The capacity to detect where users are most likely to drop out, so their journey can be improved at those points.
Therefore, encouraging SaaS product adoption means knowing the stages in the customer’s adoption process, and smoothing or enhancing the journey. It’s all about creating user happiness, formed by the “aha! moments” when they find the right solution, for the right issue, at the right time.
Improving the client’s experience at key points encourages SaaS product adoption, just as it encourages the adoption of other tech products and services. As a baseline, the company must devise a user-friendly onboarding path. A service’s value shines in that smooth start that doesn’t waste customers’ time, but does help users figure out how the innovation works to address their needs.
Diffusion of Innovation
The diffusion of innovation pattern, once recognized, becomes evident in the ways people react to many innovations. Iconic diffusion of innovation examples appear in major historical turning points. Technology adaptation examples include the adoption of the printing press, as well as the use of paper itself.
People can be categorized, based on their rates of adoption, as distinct consumer types. Each group has a certain level of interest, knowledge, an excitement for a product, and for trying it and integrating it into their lives. Using patterns derived from the Rogers diffusion of innovation framework, driving customer engagement plays out through the 5 stages of technology adoption:
- Knowledge. Knowledge is awareness. Repeated awareness increases the likelihood of engagement. Search marketing and social media are great tools for this.
- Persuasion. The more unique benefits can be advertised, and the better they fit current needs, the more likely a customer will try the solution.
- Decision. Actual buying commitments occur in unpredictable ways; they could come down to the likability of a company’s ads.
- Implementation. The sale is made. After the sale, a new customer still needs good communication and support to stick with the service.
- Confirmation. The diffusion of innovation pattern is really borne out here, as the subscriber talks to others, directly or through online reviews, about how well the innovation works. Great customer service makes a huge difference for continued diffusion.
For companies that research, develop, and offer new products and new features, applying diffusion of innovation theory can create a successful product launch.
Early Adopters Marketing
The phrase “early adopter” might seem intuitive and eternal to the modern ear, yet it has a source: Everett Rogers. Focusing on early adopters makes sense in marketing, as these energetic users and diffusers will lead the early majority. How, then, can marketers attract early adopters? Beyond free trial offers, adoption process marketing involves turning product adoption knowledge loose on this group. Concrete examples include:
- Dynamic guides to using the service.
- Video tutorials.
- Test versions with live chats in the software.
All of these features enhance the early rate of adoption of software as a service. Next, following the early adopters marketing strategy, a company can focus similar initiatives on the early and late majorities. Why? Because these two groups combined make up nearly 70% of consumers. The early half needs proof that something is useful to their peers before they’ll try it. Proof, in early majority marketing, means offering free trials, enabling referrals and invitations from friends, and inspiring positive reviews.
Expect the late majority to wait years before replacing legacy systems. Will innovative marketing do it? Possibly, but for the late majority, it’s not enough. A company must amass a body of proof that a large segment of their peers uses the innovation. Yet late majority adopters do consider case studies and testimonials.
As for appealing to laggards in marketing strategies, a realistic approach would circumvent this highly risk-averse group.
Early Adopter Curve
A novel concept takes off after first inspiring the innovators, and then sparking the early adopters. From there, an innovation will diffuse out into social acceptance in waves, as one group of people follows the next to ultimate acceptance of any novel idea. So, when solving the puzzle of how to drive product adoption, the early adopter curve is a critical piece. What characteristics do early adopters share? When examining the habits of early adopters vs mainstream customers, we find that the former are:
- Role models.
- Willing to buy the latest thing even when it’s inconvenient to obtain, and would get cheaper (or better) if they wait.
In 2007, the first iPhone came out, providing a spectacular early adopters example, as buyers flocked to be first in line—although it would improve and drop drastically in price within months. The early buyers were prized customers who supplied key feedback for later versions, even as they created a buzz for the first one. Of course, not every software innovation has the same cachet. Yet all great marketing for tech products and services first create a persona of their early adopters. Then they go to where those people are; in the SaaS space, that might be a conference for a specific industry. Then, they launch the product to this key group—often a free trial version.