Why Do Your Customers Buy?

It was a question posed last week to one of the Junto II companies, by a member of its Mentor Team. The CEO didn't have an immediate answer. The company has grown rapidly the last two years, acquiring thousands of new customers, and yet it didn't have a ready answer to that simple question.

Sure, a few years ago, they did a survey of customers. But in the CEO's words, "I didn’t ask anything remotely close to 'why did you buy.'" The interesting point, however, is that the answer customers gave then (or would give today) might not be helpful to the company tomorrow.

The reason is that the customers that will enable growth and scaling might actually be different from the ones that allowed the company to gain traction. It's a reflection of the Product Adoption Lifecycle, applicable to most innovative products and services.

Research has proven that new technologies - and other innovations that ultimately reach obsolescence - go through this lifecycle. The basic point for startups is that the archetype of their earliest customers is not the same as their later ones. In other words, the company is more likely to grow and scale with a different type of customer than those who gave the startup its initial traction.

It was this basis upon which Geoffrey Moore conceived of the idea of "crossing the chasm", which has become a core tenet of startup marketing. The chasm is the second line from the left in the chart above. In Moore's research, he found that failed startups often followed strategies from their early years (to attract Innovators and Early Adopters, or "visionaries", in his words) as they tried to grow and scale (to attract the Majority, or "pragmatists").

That's the theory, of course, but startups need to understand the application of such concepts. And sometimes it's a wisdom-based question like, "Why do your customers buy?", that gets the brain going.