Three Phases of Tech Company Growth

Everything grows and changes. Kids become adults, sprouts become trees, and startups become mature companies. Technology companies in particular tend to follow a predictable evolutionary process. They begin with an innovative technology—the proverbial “better mousetrap.” It would be nice if, as the proverb suggests, the world would then beat a path to your door, but that’s seldom how it works.

When you focus on an innovative product, word trickles out and first customers are the “early adopters.” They find out about the innovation by accident, by diligent search, or by word of mouth. This is the product-driven phase of development, in which you sell to buyers are willing to take a risk on a technology that will give them an advantage over their competitors. And because the product is unique, profit margins can be substantial. Sales and marketing can be relatively inefficient, even non-existent, and you can still bring in revenue. In the product-driven phase engineers and designers are your drivers. The challenge is expanding beyond the relatively small universe of early adopters.

Once you’ve sold to the early adopters and your product has developed some competition, more selling is required and margins get slimmer. This happens faster today than ever before, and when it does you’ve entered the sales-driven phase. It takes a sales force to identify prospects, overcome objections, and take on the competition. In this phase salespeople are your drivers. They can help expand your market, but heavy emphasis on a salesforce is costly and labor-intensive.

As the market matures and competition develops, the challenge is to maintain leadership and continue expanding your market while controlling costs and avoiding the margin-devouring scourge of commoditization. Success depends on recognizing marketing as a strategic resource, analyzing the market, positioning the company and its products, and communicating both internally and externally to help maximize revenue and control the cost of sales. This is the final marketing-driven phase, and marketers are your drivers. Product and sales are still critical, but marketing can help drive growth, direct innovation, expand your market, monitor competition, and maximize the efficiency of your salesforce.

Because technology companies start with an innovative product, they run the risk of stalling in the product- or sales-driven phase of development. Early adoption of a marketing focus – not just having a marketing function but being truly marketing-driven – helps you maintain leadership, expand and control your market(s), and master competition and change. It lets you identify and expand the universe of prospective buyers, anticipate their wants and needs, and free your salesforce to focus on closing sales and managing key accounts. You’ll be more effective in the market, you’ll grow faster, and you’ll be more profitable.

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