Craig Burton

Essay Note

The Burtonian Methodology in 10 Essays. Today, I begin a series of essays. The Burtonian Essays. There are 10 essays. Each essay has two or three parts. Here is the first part of essay number one. As far as a schedule goes… I will post them when I post them.

The Mythical Three Tier Demographic Model

Introduction

One of the most common mistakes made by technology companies stems from confusion about technology customer demographics. This leads to a mythical limited demographic perspective. I am not saying this perspective is wrong. It is just too limiting and does not address the realities of the market. Vendors need to rethink how they approach the potential customers by expanding the demographic thinking beyond the mythical three tiers to include the Technology Adoption Life Cycle demographic.

The Mythical Three Tiers

The traditional thinking is that designing demographics for targeting customers is done by dividing the customers into size. “How many people are in your company?” is the discussion.

This is an easy discussion; it categorizes the target customer into simple definitions that make it seem easy then to build products that match the demographic.

We have our “Standard Edition” for the small business, the “Professional Edition” for the medium size customer and the “Enterprise Edition” for the enterprise customer. It also keeps the pricing relatively simple—one to 10 licenses for the standard edition, 10 to 50 licenses for the Professional Edition and call your sales rep for Enterprise pricing.

Figure 1—The Mythical Demographic displays the common approach taken by new and old technology companies when they try to identify their customer demographic.

The thinking continues even further in the narrowness of this approach.

One school of thought usually says:

“There is no money in the ‘small to medium’ business, therefore the only viable target customer is the enterprise. All we need to do is get a few sales in the Fortune 1000 and our job is done! Let’s find a really good direct sales bull dog and bring in the big-bucks!”

The Mythical Demographic

Figure 1—The Mythical Demographic

This thinking has been the undoing of many a would-be successful startup.

At the other end of the mythical spectrum is the vendor that pursues this line of logic. “The enterprise customer is dominated by the big guys. We can never take the business from them. Let’s focus on the SMB (Small to Medium sized Business) market—the Fortune ‘eight Million’ as opposed to the Fortune 1000.” This type of company then pursues a product, pricing, and channel strategy focused on the SMB customer. Again, I am not saying this is completely wrong, I am saying that it is extremely limiting as a lexicon to describe the target customer and what is happening in the market place as it relates to technology.

Mr. Matrix Says

Grimace

The “Enterprise” is not the holy grail!