As web-based consumer businesses have taken root, we have evolved our thinking at the Chasm Group to reflect how technology adoption operates in this world.  Unlike enterprise B2B markets where mainstream adoption chasms happen in transitioning from high risk to proven solutions, the world of web-based applications and social media is one where systems of engagement rule.  For this sector, we created the Four Gears Model.

The Four Gears are Engage Consumers, Acquire Traffic, Enlist Evangelists, and Monetize.  Here, the market adoption gears spin in anything but a linear progression, and usually start with freemiums as a starting point. 

Let’s go a bit deeper.

ENGAGE:  The first step for web-based consumer businesses is to create an experience that is so compelling and differentiated that users will want to repeat it.   Repetition creates a pattern of consumption that is a key underpinning of a mass market. 

ACQUIRE:  This second gear is about driving traffic, and seeks to answer the question…can this business scale.  But the Acquisition gear modifies the Engagement gear in what is an iterative process.  Acquiring new customers with additional needs places demands on your product to engage those new users.  So as you onboard new consumers, you onboard new content to broaden the offer to appeal to a growing, more diverse user base.

ENLIST:  As you approach your product tipping point, it’s time to scale like crazy.  Now you must hyper-engage with a small, vocal minority of users who have shown a propensity to evangelize on your behalf.  They love you because they believe in you so much that your product is part of their identity.

In a perfect world, your evangelists would definitely recommend you to a friend. This is what fuels viral marketing and drives down cost of consumer acquisition. But this vocal minority may be people who generally like your product and might recommend you to a friend.  This forestalls churn but doesn’t drive virality.  And if your vocal minority has concerns about recommending you, you can experience counter-evangelism (think “Super Size Me”, a movie about McDonalds).

MONETIZE:  Finally, we come to the topic of monetization.  The Four Gears model is about your URL…Ubiquity Now, Revenue Later.  This is where many web-based consumer businesses stumble.  Monetization slows the gears so you have to feather it in.  Done too soon or quickly, it pops the clutch and stalls the engine.  It takes a lot of experimentation to get the pricing right, and every money move you make requires ramping the engine back up as fast as possible. Interestingly, many highly successful web-based consumer businesses are sold to larger entities at very heady valuations without dealing with monetization. 

Putting it together, the number one priority for web-based consumer businesses is rapid adoption, number two is engagement (using your service intensively), and number three is enlistment/referrals.  Get that right and the money will follow.  If you’re a $20M company with 55 employees like WhatsApp, how does $19 billion grab you?

Has your business growth flattened or even decayed in your market, and no amount of marketing or sales seems to be able to help it? What do you do? Develop new solutions for this market? Try to enter adjacent markets? Here is a process that we have seen used successfully in a number of different technology companies to recharge growth in revenue and profits.

Start with re-examining the Mission and Vision of your company. Why does your company exist, and what would it look like in 5 years if it was more successful in fulfilling that Mission? Don’t accept some generic statement like “to increase shareholder value.” Your Mission statement should be unique to your company, and not apply just the same to General Motors, Apple Computer, or Mrs. Fields Cookies. What will you NOT do?

The Mission and Vision statements give you the framework to take the next steps, illustrated below:

Gather the Strategic Planning team to kick-off a Strategic Planning session. This team is usually composed of the Senior Executive Staff along with some company thought leaders and maybe a key outside partner or two. An expert facilitator (such as one from TrustedPeer.com) can really help focus the effort and move things along, but the CEO should be the main driver. Give yourselves enough time to develop a robust and validated plan – usually 2 to 4 months, depending upon people’s availability and the amount to market research undertaken.

The first four steps should be done in parallel:

1. Identify what must be done to defend your current market share. The plan may involve developing new solutions, refreshing older ones, and adding marketing and service resources to provide increasing value and love to your customers.
   
   
2. Identify opportunities to enter new or adjacent markets, where you don’t currently play. This exercise is challenging because the opportunities (and the work to find them) may seem endless. Fortunately, the Internet and search engines allow efficient ways of finding and researching many opportunities. Don’t be afraid to engage outside experts or buy professional reports in areas of potential interest. Don’t just look in the most obvious and familiar places – encourage creative thought and cast a wide net. And don’t just look at areas where you have a “core competency” (see the blog: Tenet #1 of Ten Tenets of Strategy: Your core competency is not your strategy). Needed core competencies can be acquired and unneeded ones can be divested. What is important is that the new opportunities optimally fulfill your Mission and Vision. For each opportunity identified, do a short SWOT and market sizing. Pick a person in the team to “champion” each one and write a brief business case.
   
   
3. Define the market criteria for markets you may want to pursue. What are the Total Available Market (TAM) and Segmented Addressable Market (SAM) sizes that you need to see to make it worthwhile? What are the minimum revenues and margin you would consider? How fast should the total market be growing before you would consider it? What barriers to entry would keep you from entering it? How much are you willing to invest to enter a new market? These criteria will be your filter for subsequent steps.
   

4. Do a capability assessment: What are your company’s Core Capabilities? (Not your Core Competencies; see Tenet #2 of Ten Tenets of Strategy: Compete on Core Capabilities). We advise you to seek outside experts to help you figure out what you do that makes you successful in the first place. It’s a bit like medical self-diagnosis – too easy to be fooled by your own self biases.

5. By this time, you should have identified 20 or 30 or more possible opportunities to either protect and grow your existing markets or grow into new ones. Now it is time to filter and prioritize. Look at the brief business case for each of those opportunities and apply your market criteria to them. How does each one stack-up against the others? Prioritize and pick the top 5 to 10 candidates.

6. Have the “champions” for each of the top opportunities lead a “deep dive” market research effort and write a more detailed business case. Give them the time and resources to do a proper job so that the market size, potential share, achievable margins, etc. are reasonably accurate and validated. The business case should contain potential Value Propositions for your company: what customers will you serve, what pain or unmet needs are you addressing, and what would your solution need to add to have them choose it over other available solutions?

7. Prioritize the opportunities based on comparing these business cases, and on your “bandwidth” – your appetite and resources available for such initiatives. Most companies cannot attempt more than 3 or 4 new such initiatives at the same time. The winning initiatives will form the basis of your market strategy; make sure that the whole team buys into pursuing them.

8. Study how your market strategy matches your capability assessment: what are your strengths and gaps for entering these markets? What do you need to do to fill the gaps and strengthen your core capabilities? These factors are critical in deciding your market strategy.

9. Validate your decision through further market studies, and develop a detailed market strategy plan, including goals, timing, investment, resources needed and scenario planning. Decide what events or metrics might trigger a change in your plans. Discuss these plans and tweak them until every member of the team is satisfied that it is a plan with the highest probability for success. This plan becomes the Plan of Record.

10. Present the Plan of Record to the Board or Executive Committee for approval or modification.

Of course, this process or any other Strategic Planning process cannot guarantee that you will be successful. It needs to be followed by excellent execution, inspirational leadership, and a fair measure of good luck. But it does give you the best chance of success.

To book an expert session with Scott, go to Scott's page on TrustedPeer.

Black Friday is a term marketing executives have come up with to kick-start billions of dollars in holiday sales.  Retailers, both large and small, give their Thanksgiving weekend sales effort an extraordinary push to accomplish two very important goals:

• Invite retail customers to take advantage of great Thanksgiving weekend prices to increase yearly revenue.  
• Build customer loyalty.  Retail customers typically reward retailers with their business if the perception of product value and quality and service is consistent with their first experience on Thanksgiving weekend.

Ads touting big discounts are the order of the day, but the second goal, establishing a long-term relationship with the customer, is a harder nut to crack, especially in shaky economic times.  How might a company ensure that consumers will come back after the Black Friday frenzy is over?

Best Buy, which specializes in electronics and computers, is a good example of a business that has an aggressive plan to increase sales and retain customers by:  

• Matching competitors' online prices to disrupt "showrooming," which they fell victim to in the past few years. (Showrooming is the use of phone apps to scan the bar code of a product to show the lowest price among online retailers.)  
• Introducing "My Best Buy," a new loyalty program consisting of three tiers of progressively added incentives that includes bonus points for purchases, concierge-type customer service, and extended return privileges.  

With their retail traffic at its peak in the next few days, Best Buy is hoping that the combination of discounts and perks will provide the right opportunity to increase sales and retain customers through the holidays and beyond.  Retailers don't want a one-time customer sale and great prices with great service initiates the feeling of customer loyalty.  Many businesses would do well to consider how to implement their own double-barreled approach this holiday season.

Have you experienced excellent sales and service recently?  Which stores have earned your loyalty?