How to Pave the Way for Your High-Tech Solution
You’re in the construction industry, and you’ve got a new product with cutting-edge technology. However, you’re unsure how to go-to-market. Will your customers be receptive to your innovation, and if so, how will you capture its value?
We all know the story. A company launches a new high-tech solution promising construction savings and improved building efficiency, only to experience stagnant sales and slow adoption among contractors, developers, architects and other intermediaries. The innovators wanted to go all-in, believing that their offering is ready to market. What has gone wrong?
Unlike manufacturing, productivity in the commercial, institutional and residential construction industry has not improved over the past few decades. As a result, contractors, developers, owners and architects have become interested in various ways to help increase productivity. Innovative companies can capitalize on this opportunity by showcasing the value they can create for their customers. If you are planning on delivering innovative solutions in construction, here are two questions you should ask yourself:
- What are the economic benefits for your customers? Can your solution help developers/owners increase their price (rent) and sales volume (occupancy) while decreasing construction cost? Can you deliver on what you promise in a pilot program? Economic value creation will be pivotal in convincing your customers to take a chance on you.
- How do you plan on reaching your customers? What is your path to market? Who are the key stakeholders that you need to convince? This will be defined by who you would be competing against. Knowing this could put you in great advantage if you play it right.
Demonstrate Economic Benefits
To convince your customers to try your innovative offer, you need to have a solid business case to justify the upfront and recurring costs associated with your solution. Acquiring a new technology that has not been widely adopted can be intimidating for risk-averse customers. The potential benefits should be quantified, and the rate of returns and payback period should be strong enough to avoid customer resistance.
In most cases, though, sharing the ROI and related numbers will not be enough. Key stakeholders in construction will “believe it when they see it.” Reference projects are needed to provide proof of concept before the market embraces a new product, especially one requiring a higher upfront investment. An effective pilot project provides a strong reference for future customers when they can see the success of the solution first-hand, opening the door to additional opportunities.
Follow Non-Traditional Pathways to Market
Following the traditional go-to-market customer chain pathway may pose additional challenges. The current players have an established network of relationships which is difficult to break through, especially when purchasers need to be convinced to switch to an alternative solution. Additionally, players in the traditional customer chain may value-engineer the solution later in the process to remain price competitive. To avoid these challenges, innovative B2B companies that offer non-conventional solutions will need to follow a new path, outlined below, to access the right decision-makers and compete against the traditional players in the market.
The customer chain in a traditional pathway for a less differentiated product includes distributors, wholesalers, manufacturer’s reps, general contractors and building operators. However, a new customer chain is emerging for companies that sell advanced technology, especially green sustainable solutions, at a larger scale. Gaining market access for advanced solutions requires an early presence to influence top decision-makers like building owners looking for savings, brokers/operators that have insight into tenant needs, and end customers that will use the product.
A solution provider interested in a commercial/institutional building project should target customer chain decision makers that have the following specific roles and emerging needs:
- Building owners, who finance construction projects and have the final say on building investments, that seek sustainable solutions to improve the building’s attractiveness to tenants and overall facility value
- Brokers/operators, who negotiate leases on behalf of the building owner and at times operate the building as well, that have substantial insight into end-customer needs
- End customers, who are either going to own the building or have a significant tenant lease and design influence over the space, that have enough size and scale of real estate assets, a strong corporate mission towards sustainability, and a track record of marketing sustainable solutions
Companies selling innovative solutions should not disregard other players in the customer chain, but also acknowledge that they may not have as much influence as they do when selling traditional solutions. Traditional players such as distributors, contractors and plumbers/electrical technicians are often consulted in the selection of more accustomed products but have little influence over purchase decisions related to complex, integrated solutions, since they have limited experience with large-scale innovation investments.
Case: Sustainable Solutions in Water Conservation
The scarcity of environmental resources is a pressing issue, and as a result, there is a strong demand to use water and energy in more sustainable ways. In response, B2B companies are addressing this rising problem through innovative sustainable and smart building solutions. While energy conservation is already a focus for many environmentally conscious companies, water conservation is also an emerging subject, particularly as new regulations and legislation encourage going green.
Blue Canyon worked with an international plumbing solutions provider to expand into new markets with their high-tech green products. As a B2B company that develops and markets high-tech water conservation solutions for commercial buildings, it faced unique challenges in gaining broad market access. These difficulties arose from marketing a product that had limited market familiarity and required higher investment costs as well as complex installation and integration processes. We cautioned them in entering this new market without strengthening their business case, testing saving assumptions to fortify sales and following a non-traditional customer chain pathway to get to market.
It is a challenging quest to enter and successfully build a new market, especially if your product’s value proposition depends on savings that the customer may not see immediately. There is a tremendous opportunity in the sustainable solution market, but only for those who are ready with proven savings, strong references, and access to the right decision-makers.