The idea of a go-to-market strategy is unfortunately less understood than it should be. Why isn’t sales just enough?
Oftentimes people — even very good salespeople — will focus on one specific element of the go-to-market strategy, to the exclusion of other, equally important elements.
For example, when we work with clients on go-to-market, oftentimes they are overly concerned about the segmentation aspects. How will they segment to the exact right people most likely to become buyers?
That’s very important, yes.
But it misses other key elements:
- Value proposition
- Product/market fit
- Buyer personas
- Message/persona fit
- Ideal customer profiles
- ICP segmentation
- Regional understanding
- CAC / The sales model
Everything is important. It all has a place.
In this post, we’re going to walk through all the key elements at a 35,000-foot view. In corresponding posts, we’ll go into each element in more detail. Let’s start with value proposition.
This is ultimately the essence of what you do. This is how you bridge your customer’s gap from “before” to “after” he bought your product. The bigger the gap thethie higher the value and the more money.
See how this works?
If you meet someone random in an elevator or at the pub, how are you explaining your product or service to them?
What is the core value back to buyers of what you do?
There is a ton of confusion among decision-makers about this. For example, here’s one concept that some executives called “their value proposition:”
Revenue-focused marketing automation & sales effectiveness solutions unleash collaboration throughout the revenue cycle
Um. That’s essentially just buzzwords and “words of the moment.” It doesn’t actually say what the value of using that “revenue-focused marketing automation and sales effectiveness solution” would be.
Still others think a value proposition is a slogan, like “Just Do It.” It’s not that either.
Everything flows from the value proposition.
And in terms of staffing, think on it like this: If you’re solving a problem that you assumed existed, you need top 5% salespeople. They can still sell to an imagined problem. 95% of sales reps can’t do that. But if you’re solving a problem that’s a reality based on market research and calls made, then you have a legitimate chance of getting a foothold in this new market.
People have written entire books about product/market fit. This is just one section of one post. It will not be exhaustive.
The deal is this: value proposition is why you’re doing what you’re doing. Why are you even a company? Why does your value, your core idea, even matter?
Once you’ve set the “why,” now you’re moving to the “how.” That’s how you’re going to execute it and make this a profitable idea.
The core of “how” is product/market fit.
Sean Ellis, the founder of Growth Hackers, has one interesting idea about how to determine product-market fit.
He says that to test product market fit, send out an email to all of your users — at this stage it’s likely users of a minimum viable product — asking:
How would you feel if you could no longer use [product]?
- Very disappointed
- Somewhat disappointed
- Not disappointed (it isn’t really that useful)
- N/A — I no longer use [product]
If you find that over 40% of your users are saying that they would be “very disappointed” without your product, there is a great chance that you’re close on product-market fit.
In reality, the whole backbone of determining product-market fit is (a) research — in the pre-fit stages — and (b) talking to customers, both existing and potential. You can talk to customers on a “freemium” model too. (More on that later.) Everyone is going to have an opinion. Ask them questions like this:
- Why did you sign up / buy / download?
- How would you feel if you can no longer use the product?
- What alternative solutions do you use to solve this problem?
- What’s the primary benefit of these solutions over ours?
- What problems do you solve with it, what pains do you ease with it?
- Have you recommended our product to anyone?
- How would you describe this product to a friend?
- What type of person do you think would benefit from this problem?
- How can we improve this product to better fit your needs?
These questions can be done 1-on-1, over email, over the phone, etc. GDPR in the EU is going to make some of the emailing a bit more regulated, but if it’s an existing customer that opted in, those discussions will be fine. Here’s the thing there too: many customers want to be engaged in conversation. They get tired of getting emails from you about “TODAY ONLY 20% OFF,” especially in the early stages of engaging with your product. So use email as a feedback channel. Some of the best early-stage companies do that.
And remember, the goal is scale and growth:
You can’t get to scale without understanding your product-market fit.
What if you don’t have product-market fit? Answer: change the product and its related value proposition or move on to another market (ideal customer profile, we’ll get to that later).
This one is a little bit more controversial — as data becomes more and more normative for companies (and hopefully companies get better and better at utilizing it for decision-making), you could argue that personas will die out and give way to actual data points. That’s been argued well in a Wharton article entitled “How To Find Your Most Valuable Customers:”
Prior to the last couple of years, the technological infrastructure, the data … and skill sets in the market were just broadly not available to a lot of companies to understand individual behavior.… The idea of a persona or an average customer was the typical way that marketers would think about their customer base. But now with advancements in technology, with modeling, with more available [data and] skill sets, they are able to understand and predict future behavior at more granular levels, and it’s a dramatic shift that’s happening. It started in a lot of e-commerce businesses but now is spreading to bricks-and-mortar more traditional industries as well.
OK, but most companies aren’t there yet. Which means we still use a lot of personas, which tend to look like this:
These are more B2C than B2B, but you hopefully get the general idea.
Personas are mostly helpful as a psychological tool. They make it easier for sales and other departments to say “OK, these are the types of people we should be going after.”
Ideally the personas flow from the first two ideas we presented:
- These people understand and respond to the value proposition
- They are in the market whereby this product makes sense
- A buyer persona has a personal interest in your product (e.g. security to a CISO, cost reduction to a CFO, .etc.).
Personas are just a way of grouping them into logical boxes for the purposes of targeting, approaching, selling, etc.
When done generically, as they often are — “Sally the Shopper!” — they can be completely meaningless and it’s just an exercise in writing stuff out on cards that no one will ever look at.
When done right and based on actual conversations and data points, they can be a very helpful tool in the overall go-to-market strategy.
Think on it like this: When entering a new market sales teams are not experienced and sometimes listen too much to marketing and get this twisted. Not everything you do in the early stages is directed at the ultimate decision-maker/check-writer. You need to be talking to the right people, yes. Don’t get us wrong. But sometimes that includes also users or purchasing groups. Sometimes you need to build a trail to the decision-maker. And let’s also be honest about this: there are so, so, so, so, so many white papers and eBooks in every vertical now. True check-writers do NOT have the time to read them all. You are reaching a few that way, sure. But not all. Marketing often tells sales something like “This infographic reached 17 CTOs!” It did not. It likely reached people who report to someone who reports to the CTO. Be realistic and work your pipeline.
Does your sales pitch resonate at the particular persona? Do you pitch the technical features of your product to a CFO? This is about content.
Next to content is channel. Simply put: how are you reaching out to these personas? Think on concepts like:
- Branding guidelines
- Overall language
- Third-party outlets you want to cover you
- What you want these customers to say about how their product impacts you
Here’s a great stat that some of the best company-builders and go-to-market people know, but it’s not discussed as openly as it should be:
If you talk to customers about the early stages of a product/service and then use their language on future landing page iterations, the landing pages perform way better.
Too many companies get caught up on “power branding” and 3 hour-long meetings about messaging ideas and bringing in consultants and “content experts” and all that. In reality, branding is important, of course, but your customers are your community. You listen to that community about how the product/service is really working, and that helps shape your messaging. You iterate as you get more customers. An absolute power user of your product will be 10,000x more effective at shaping your messaging — this is not a joke — than some “branding consultant.” Trust us on that. Branding consultants have to get to scale to make their business work. Know how they get to scale? They basically pitch the same message and approach to everyone. That’s good for them, but not for your business.
Ideal Customer Profile
Similar to buyer personas in a way but here’s the focus on the company characteristics these Buyer Personas work for.
The ICP needs to be consistent. You can’t constantly “pivot” off it:
A good ICP must serve three purposes.
First, the ICP should enable me to identify a good prospect quickly.
Second, I should be able to simply convey the ICP to someone else in such a way they can find other ICPs.
Third, the ICP should be defined so systems can be built to identify them.
When you have defined your ICP you need to segment it to assign appropriate sales methods.
Usually, B2B ICP segmentation falls into four main categories:
- Enterprise/Company wide – selling a platform (CRM/ERP) using multi-year contracts
- Mid Market/Department – selling platforms and applications using annual contracts
- SMB/Group like – selling applications using an annual/monthly/usage contract
- Pro-user – selling a browser plug-in under a freemium/monthly/usage contract
If you start as SMB and move to enterprise sales, that’s called “going upstream.” Companies that start with enterprise and move down the chain is called, predictably, “downstream.”
Pro-Users are cost-centric and max out at spending $1,000/yr. In Mid-Market, the value of a specific product is obscured by many other products (it’s called “choice overload” or “the paradox of choice”) and deals are small.
The enterprise market has the biggest deals, but may use lengthy RFP/RFQ purchasing procedures based on spending thresholds — and are often focused on the service offered. SMB offers a greater flexibility, because they spend anywhere from $1,000 to $100,000, and have shorter 30-90 day sales cycles. SMBs need immediate impact to scale. They’re willing to spend if you have a legitimate solution.
Many SaaS companies use SMB as a jumping-off point, and here’s why (via SalesHacker):
An SMB with a $100k problem is willing to spend $12k on a solution. That same SMB is willing to spend 3x that for a $300k problem. 3x the problem, 3x the spend. An enterprise with a $1M problem is willing to spend $100k, however, it’s hard to convince the enterprise to spend 3x the money for 3x the problem. Purchasing procedures and spending thresholds put in place over decades have flattened out spending flexibility.
We work on this A LOT with our customers, specifically in the DACH market.
Expanding into a neighboring country, for example, has several challenges associated with it:
Local Competition: They speak the language (assuming there’s a difference in language) and are literally just around the corner. Maybe you’re the local hero in your country, very likely there’s also a local hero in your neighboring country.
International Competition: When you move to a second country, by technical definition you’re now “international.” So your competition can be from anywhere.
Brand Issues: No one knows who you are, why you came and how long you will stay – in short. Your reputation and successes in your home country don’t appeal to prospects in your neighbor country.
Delivery Issues: Most services degrade in some way when delivered across a longer distance, so you need your shipping/infrastructure to be completely sorted. If you are in the consulting business extra costs for travelling and accommodation might occur.
Your go-to-market needs to include an understanding of the different regions you’re going to try and enter, and how they differ in terms of the above.
And like with everything in go-to-market, you need to be asking the right questions:
Can you adapt to the business culture and language? You’re going to need to — and the dirty little secret is, you can if you want to. How do we know that? Humans were literally evolved to adapt. If you want the sale and the long-term contract that follows, adapt.
Regional understanding largely comes down to (a) research and (b) having the right partner. Without that 1-2 punch, you might flounder in your initial expansion efforts, even if it’s just 20 miles away.
CAC / The Sales Model
When you go-to-market, you have a few different options. Which to use depends on your ICP segmentations and related CAC (customer acquisition costs). If you’re selling a $2.99/month web plug-in to pro-users, would you fly across the world for those deals? Hopefully not.
No enterprise client is going to visit your website and enter a corporate credit card and drop $1M. That doesn’t happen either. Each go-to-market approach is based on who you’re targeting and your acquisition costs.
Some of the more conventional models:
Freemium: Free product with paid add-ons. One problem with freemium right now is that with the blow-up over Facebook and similar networks, people are starting to understand the old joke that “If the product is free, you’re the product.” As more become nervous about their data, the freemium model might drop in popularity a bit. Another problem is that a freemium is often good enough and no one buys paid add-ons.
Web Sales: Think about LinkedIn Sales Navigator here. If multiple customers from the same domain name sign up for a Freemium account, you can convince them to purchase “Corporate License” with “security” as an added feature. This can be automated.
Online Sales: SalesHacker gives the example of Zoom licenses here, noting customers want to talk to someone instead of using the online FAQ. Online chat offers a solution where Inside Sales Reps (ISR) field questions from the customer. This is preferred over inbound phone calls to avoid any challenges with accents, etc.
Inbound-centric inside sales: This works well for companies that use marketing to effectively generate leads. (Not all companies do that well at lead gen.) A sales development rep funnels questions to an account executive. The account executive tries to up-sell additional services.
Outbound-centric inside sales: The solution does not generate enough inbound leads, and/or the number of inbound leads generated doesn’t match quality. So now the sales team is scheduling meetings and going on-site to turn leads into conversions.
Field sales: Road warrior sales teams visiting the customers directly at their HQ or preferred meeting place. This is often tied to account-based selling, where an account development rep targets certain customers, often grouped regionally to reduce travel costs, and the sales principal heads to those customers to present the product. More expensive, but as face-to-face is often more impactful than digital, this can have a higher return. No one signs a $3M+ contract from a landing page. It just doesn’t happen.
Local sales force: Build up a sales team in one area and dominate that area for your niche. Also expensive, but can be very impactful too.
The bottom line
Companies have been meeting, planning, scheduling, and putting go-to-market strategies on spreadsheets for decades now. You know what? Most never work as planned. The best companies learn from the hiccups and talk to the early-stage customers — and get feedback internally from employees and those trying to sell it — and iterate and grow and develop. There are big, obvious examples of the most successful companies in the world: Amazon began trying to sell books, and that was basically it. Google was just a search engine. Apple is becoming a healthcare company now, and it definitely didn’t start that way.
Your go-to-market is an initial road map. You need the above elements, but more than anything, you need to realize it’s just the start of a long process. It’s going to change and evolve. It has to.