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RFID Companies Need to Focus on Getting the Technology Across the Chasm

Short-term tactics can achieve small gains, but sales of RFID products won't ramp up until five market conditions are met.
Posted By Mark Roberti, 12.01.2014

I've been covering radio frequency identification technology for nearly 14 years. During that span of time, I've seen a lot of companies make the same mistakes. One of the most common is to shift tactics frequently in an effort to hit on something that will propel sales forward. Unfortunately, this often has the opposite effect, and sometimes leads to firms with good technology and products going out of business.

Everyone is frustrated by the fact that the RFID market has not grown faster, including me. I've seen businesses reposition themselves as "sensor network" providers and, more recently, as "Internet of Things" companies, in the hope that this might turbocharge sales. I've seen firms make personnel changes and go to different trade shows, always believing there is a pot of gold out there somewhere if they can just find the right rainbow.

RFID Journal has done more marketing than any company in the RFID industry. We've served more than 100 million banner ads for our products, sent more than 10 million e-mails and mailed more than 1 million brochures. These have been sent to RFID Journal readers, as well as to many media and association partner lists.

What I've learned from all this marketing is that there is no magic bullet, no perfect positioning, no high-powered sales and marketing guru, no untapped pool of RFID buyers and no special offers that will jumpstart sales. I believe Geoffrey Moore is right. In his books, Crossing the Chasm and Inside the Tornado, he says five market conditions must exist for a technology to achieve mass adoption. There must be:

• A problem that no other technology can solve
• A global standard
• A whole product
• A technology gorilla
• A critical mass of users

The RFID market is in the chasm and has been there for several years. The way out of the chasm—the way to drive sales growth—is to build a whole product (or partner to create one), and then use one customer to win another and another and another. Over time, a company can reach critical mass and the technology can go mainstream. This is the technology adoption lifecycle, and it is almost as immutable as the laws of physics.

Changing personnel and strategies might achieve some incremental benefits, but sales of RFID hardware, software and solutions will not tornado until these market conditions exist. And short-term strategies often move RFID companies farther from these conditions rather than closer.

How so? Well, if you are an RFID company selling tags, readers or software, and you begin to position yourself as a sensor network or Internet of Things company, then you are failing to consistently reinforce the message that RFID can solve a problem that no other technology can solve. You might also fail to use existing customers (because they are seen as using an RFID solution) to convert new leads into additional customers.

If you attend IoT or industry events, you will be diverting resources away from RFID events, and you will fail to convert end users looking for RFID solutions into users. That delays the day when RFID reaches critical mass. I know one company that collected 1,200 business cards at one industry event, and its sales team wasted six months calling and following up with those people—who were not interested in RFID. As a result, they lost a half-year of time they could have spent selling to those who are interested in RFID. The company lost revenue and failed to move the market closer to critical mass during those months.

I realize CEOs are often working with very little information about the market. Their thought is that every company can benefit from tracking and managing its physical items via RFID, so we should be selling more. For many years, I felt the same way. After reading Geoffrey Moore's books, I realized that the only companies that will invest in RFID while the technology is still in the chasm are those that have a problem big enough to warrant an investment in what they consider to be a relatively unproven technology. I changed RFID Journal's marketing strategy to focus on this group. I also spend a lot of time personally trying to help each reader who asks me for advice, because we need to convert one interested company at a time in order to achieve critical mass.

I believe the market is starting to shift to a new phase. Retailers that were among the first to use RFID did so because they had inventory problems that were so serious, or competitive issues so dire, that they had to invest in the technology. But now that they've proved the business case, other retailers are becoming interested as well. We are getting closer to critical mass in retail every month.

Ironically, changes in personnel, shifts in marketing tactics, and changes in technology positioning could wind up slowing adoption, because RFID companies end up not converting retailers and others interested in using RFID into actual users. To use a baseball metaphor, the industry needs to keep hitting singles if we want to win the game, but going for home runs will likely lead to strikeouts.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.


Jeroen Struycken 2014-12-02 04:37:28 PM
Thanks for the post Mark. I agree fully to the point that keep pushing the 'new; technology is not working in this phase of the market development. Whether we like it or not, it seems that we are in the chasm and living though this as an industry will require us (all) to stop talking about RFID but demonstrate that we can solve the relevant problems. My believe is that there is sufficient experiences and examples in the retail market to do this with, and the companies that get it right first be on top of the wave. I am looking forward to that moment.
Dhaval Kotecha 2014-12-16 10:17:07 AM
Hey Mark....Enjoyed the article.... I strongly feel that companies have to be more focused on what best they can do and only do that has value to the customer rather than running on the hype.... I feel due to heavy international funding in RFID companies during the initial hype in 2002 and onwards.... the expectation out of the companies was very high to deliver and that is why they kept shifting strategies and people as you mentioned....Take alone example of india...there have been close to 8-10 companies who have spend close to 6-8 yrs in the space and then have vanished... I have read both the books mentioned by you in your article and may be that is the reason why RapidRadio is doing very well because we are focused to Library industry and side by side keep generating more verticals like that without compromising our attention to library market....we are doing exactly the same what you have described in your article...and hence i got excited to share my views... Infact we have reached a position where we are close to exiting from our first round of funding and moving towards future filled with growth which we plan to fund on our own...I read RFID Journal quite often...but rarely get a chance to share my views...despite of having quite a deep understanding on Indian market.... I appreciate your frankness and the coverage you bring to RFID....Keep it up...
John Andry 2015-01-15 12:39:28 PM
I Agree with you ! I really appreciate your post, i am also a part of this industry, and i am agree with your post! Thanks you so much !

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