CEO FRIDAY: The Bottom Up Adoption Curve (4/6)

David Barrett —  August 5, 2011 — 2 Comments

After a quick halftime break, let’s resume the second half of the series. As mentioned in the past, this is the fourth in a six-part series elaborating on a presentation I gave at the AlwaysOn OnMobile 2011 conference titled “Disrupting the Enterprise”. I suggest reading from the start (or watching the video) and then continuing on below.

Recap: The Three Conditions Underpinning Sales (N+1).0

So there are three interesting conditions at work:

  1. The “Consumerization of IT” empowers employees to promote products up the chain in an enterprise
  2. “Word of Mouth” has become a “Winner Takes All” phenomoneon where early dominance of the global conversation becomes self-reinforcing
  3. There was a one-time “Cascade of App Stores” that gave a substantial and lasting advantage to first movers

The upshot of all of this is I feel there is an enormous opportunity to reach into previously inaccessible parts of the market using a sales strategy that I call Sales… 3.0? 4.0? Let’s just say 10.0 to get ahead of the curve. The very modestly named “Sales 10.0″ strategy conists of three principles:

Principle #1: The Bottom Up Adoption Curve

Many industries share a common chart: a very wide base of customers at the “bottom” of the market, narrowing down to a very pointy tip of customers at the “top”. What “bottom vs top” actually means and how it’s quantified depends on the market. But if you’re reading this blog, odds are you’re targeting the “bottom” of the market while some other big company has a stranglehold on the “top”.

At some point, the big company at the top will decide it wants to capture some of the action down at the bottom. It’ll do this by instructing its massive salesforce to start going after smaller deals — probably by adjusting their commission incentives to make smaller deals more attractive than they’d normally be (or by hiring a new sales force devoted to just this). If they’re really serious, they’ll come out with some new product targeted squarely at the small business space.

But don’t worry, because odds are no matter what they try, it’s not going to work. The product and skills needed to operate in and maximize the value of the top of the market just don’t translate down market. Small businesses aren’t small versions of big businesses, they’re an entirely different beast. Any company optimized to hunt whales just isn’t suited to trap squirrels.

This is where the “bottom up adoption curve” comes into play.

In the top-down sale, you typically start talking with senior management — nobody really experiences the product until they’ve already signed off on it. But the bottom-up sale reverses the process, giving a trial of the product straight to the rank-and-file employees, before senior management even hears of it. So while a top-down salesperson would fight tooth and nail to get a limited trial authorized by senior management, the bottom-up product just walks in and starts a trial on day one. Top-down requires some high-level introduction to start a conversation with a new customer, while bottom-up can start with anybody, anywhere in the company — the lower the better. While the top-down company builds a wide range of complex features that appeal to management, the bottom-up company builds the few core features that the actual users of the product love.

The end result is the bottom up adoption curve reaches out directly to the innovators in every company, empowers them to initiate a limited trial without the need for anybody’s permission, and then champion the results internally — essentially giving you an “inside man” pulling for you in every sales lead.

So it’s “bottom up” because you start with the users first, and percolate up to senior management only after the trial has already successfully completed (and thus, there’s no reason to say no). And its an “adoption curve” because it takes a graduated “innovators first” strategy where those who come before learn and train the people who come after (as opposed to a top-down sale where all users are signed up at the same time). It allows your product to be pulled into organizations by the people who need it most, and then sold to all internal stakeholders by someone intimately familiar with the local conditions — all without you ever picking up the phone.

So it’s a system that definitely works in the small business space. It’s very hard to design a product to accomodate it, and it’s very hard to get all the incentives to line up. But when you do, it takes off under its own steam, with each new user expanding your salesforce — and thanking you for it. Everybody wins.

But it’s also “bottom up” in another sense: with this technique, you start with the bottom of the market, and gradually work your way “up” to the top.

Granted, this is the only thing that will work at the very bottom of the market. The deals are so small, and there’s just so damn many of them, you absolutely need to have something like this to survive. The most important feature you ever build is the one that finds the next customer, automatically, while you’re asleep.

And to be fair, if you were only going to sell to the top of the market, you wouldn’t bother with this. It’s really tricky stuff, and it’s so much easier and more effective to just go out and get a sales force (assuming the cost of sale is substantially less than the revneue it brings).

But if you *do* start out at the bottom, and if you *have* already gone through the trouble to make this work… why not use it upmarket as well? After all, there’s nothing about this process that doesn’t work in large companies as well as small. Sure, big companies have bigger requirements. And you might need to get more clever about how exactly you support your internal champions — giving them the tools they need to start a trial without anybody noticing, and promote your product up the food chain in a non-disruptive fashion. But maybe it’ll work there too?

The bottom up adoption curve is a strategy for not merely taking over companies, but taking over markets. And as we’ll see next week, holding onto them forever when you get them.

Thanks for reading, keep an eye out here to read more next Friday!

Previous: A Cascade of App Stores (3/6)

David Barrett

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Founder of Expensify, destroyer of expense reports, and savior to frustrated employees worldwide.

Trackbacks and Pingbacks:

  1. CEO FRIDAY: A Cascade of App Stores (3/6) « Expensify Blog - August 5, 2011

    […] Previous: Word Of Mouth is Winner Takes All (2/6) Next: The Bottom Up Adoption Curve (4/6) […]

  2. Expensify Hiring Salesforce of the Future « Expensify Blog - October 28, 2011

    […] anything about Expensify, you’ve probably heard our CEO David Barrett speak about the “bottom up adoption curve“. As a freemium service, Expensify has seen exceptional bottom up adoption among small […]

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