While recently listening to a deal pitch-review, I watched a number of entrepreneurs selling “a better mousetrap”. Although they had some improvements in their technology- focused value proposition, they failed to understand the inhibitions to adoption in the market. I asked them to focus their attention on the inherent switching costs for customers who are choosing this new alternative solution to a business problem. They did not understand what I meant.
I call this “the 10% better mousetrap fallacy”.
Changing customer behavior is not an exact science. Switching costs to move to a new technology solution include process changes, retraining, supply chain impacts, documentation and plain old inertia. In many cases, it’s just easier and more cost effective to keep using what’s worked before. A new approach needs to offer an order of magnitude impact to get attention and traction. Sometimes this can be in acquisition cost or in operating efficiency over time. It could also come indirectly– –as in increased synergy with other processes or better leverage with suppliers.
New approaches to business needs also need to assessed against the overall priorities of the customer set. If a new solution has impact, but is 10th on a list of fifteen priorities, the adoption rate will be slow. Organizations tend to focus on their top 3-4 priorities and may never get to 10th. Higher impact for them are the high priority items. It’s easier to let the important, but lower priority areas continue as is.
What’s an entrepreneur to do? I suggest he or she build an order of magnitude impact into your value proposition. Understand the decision priorities for your targeted customer segments. Define your market entry segments as those where you have the largest impact and see the priority ranked in the “Top 3” for the customer. Using this strategy, the entrepreneur will have that super-duper mousetrap targeted at very likely adopters.