I’ve done a couple of briefing calls with the folks at Igloo Software this year. They have a number of intranet, collaboration and other tools that compete with the likes of Jive, Saleforce’s Chatter and Lithium.
What has impressed me about Igloo is how they seem to be following the market adoption principles that Geoffrey Moore outlined in his first book, Crossing the Chasm. While that book may be a decade plus old, the lessons are still as true today for enterprise solutions as they were years back.
Geoff argued that too many firms lacked a focus in selling their new solutions. They jumped on any lead without any regard for the industry vertical in rested within. It meant that the solution remained generic and lacked specificity and depth. These same vendors also failed to create the ‘whole product’. For example, creating an MP3 player is not a whole product. As Apple proved, if you give customers an MP3 product that is supported with a rich library of music that is very easy and low cost to access, then you’ve got a solution. Creating a whole product can be expensive but it is the key to differentiation.
If you follow Geoff’s reasoning further, he argues that successful firms find underserved niches. They built out a whole product for that vertical or sub-vertical (note: it could also be a departmental solution) with the intent of capturing 85% market share in that niche. Once a firm beachhead has been established here, then the company can begin to pursue other markets or buyers with whole products targeted for them.
In Igloo’s case, the company has staked out three verticals: high tech, health care and professional services. These are industries where lots of data types and content are needed within and beyond the customer’s firm. Information is the currency of these verticals. Igloo also targets a specific buyer in these firms so that it is selling a solution that both resonates and solves a key buyer’s need. They aren’t trying to use Igloo to solve unique, one-off problems everywhere they go (although existing customers are extending the solution’s usefulness in all new areas). They are creating a war-chest of focused case studies, sales proof points, etc. that reinforce the whole product.
Igloo’s results speak to this focus. The company has acquired 250 customers, many of them large, publicly traded firms. They now have over 500,000 users of the software. Growth is, if I recorded this correctly, 80% YOY. Deal sizes have increased 3X in one quarter alone.
Repeatedly, I run into software firms that don’t follow the chasm strategy. They believe 7-10% annual growth rate is acceptable. It isn’t. I’ll tell them to craft focused market offerings and whole products so that their marketing and sales efforts can be easier and more effective. If they listen, great. If they don’t, well, I know what I’ll be writing about them for the next several years (hint: it will be boring or an obituary).
While I’m thinking along these lines, let me add that Intacct, a cloud financial software vendor, has been really good at maintaining its focus, too. It targets a specific sized firm, tailors its solution for these companies, lines up a critical team of partners to implement and/or support the customer, etc. Others, myself included, have tempted them to move upmarket but they know their niche. They seem to have the focus and whole product concept down well.
Good job to both firms.