Saturday, March 06, 2010

Credibility and Market Leadership

The most important quality a growing solar company needs for rapid market access and positive competitive positioning is credibility. Credibility can be gained by inference, reference or evidence.
  • Inference is often used by startups to gain recognition. Who invests in a company is often more important than how much is invested.  Much of the initial interest in Genentech was stimulated by the involvement of Kleiner, Perkins Caufield & Byers. Similarly, the interests of Venrock Associates and Sequoia Capital in Apple Computer provided "larger than reality" credibility. The quality of investors and directors, along with the backgrounds of initial employees say a lot about the company to the marketplace.
  • Reference, or word-of-mouth, is the most important credibility-building tool an emerging company can use. Almost all computers, from personal to mainframes, are still bought because of word-of-mouth. All service-based businesses are word-of-mouth. And, in all segments of the high-technology industry, there are networks of analysts, industry experts, BOS and supporting product producers, and bloggers/journalists who spread the word.  Moreover, potential customers understand and rely on word-of-mouth to determine a new company's credibility.
  • Evidence is the third factor that builds credibility. Satisfied customers are essential. But the most visible reinforcing evidence is growth and profits from the business. This falls under the category of "If you're so good, why aren't you making money?" Many solar companies suffer from lack of evidence of financial success because they believe only public companies disclose results.
Other kinds of evidence exist, of course. These include clearly differentiated product performance, market share growth, significant products, the quality of initial customers, and the company's alliance partners, along with the quality of investors. All of these can be tangible evidence of credibility.

Related Articles:
Word-of-Mouth Communication
Word-of-Mouth Communication Part 2
Measuring Word-of-Mouth

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