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.
Published: December 1, 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.