Mar 23rd, 2021
What is a go-to-market strategy?
Components of go-to-market strategy
Go-to-market strategy framework
Examples and templates of go-to-market strategy
Starting a business can be an exciting adventure. Among the most popular reasons to start a business are financial independence, career growth opportunity, creative freedom, and personal satisfaction. However, to get your business going, you need to deal with many issues, including legal, sales and marketing, financial, people management, and many more.
Launching a startup can be challenging during the first few years. According to US Small Business Administration data, about two-thirds of newly established businesses survive through the two-year mark, and almost a half strive for longer than five years. The factors that contribute to the startup failure are the absence of market need, shortage of funds, inappropriate team, and cost issues. Due to these reasons, a business plan is the number one step in creating a successful startup.
Proper planning helps define your products and services, clarify your business objectives and analyze the competitors. Your business plan should include a marketing approach to make people aware of your products and let them find you. This document serves as a roadmap to structure your business and the tool to convince investors that your company will bring them many happy returns.
Go-to-market strategy is the company’s tactical plan to deliver value to customers by launching the new product or service to achieve a competitive advantage. The go-to-market strategy provides the algorithm to take the product to market and make it visible and known among potential buyers. It can be created for a new product or feature that targets a new customer segment, a new price-based segment, or a new geographical market. For example, if the company selling products in the low-cost segment wants to serve the premium segment with a new product, the GTM strategy might be a good solution.
Go-to-market strategy answers three main questions: who the customers are, what the offering is, and how the target customers can be reached in a scalable and repeatable way. In simple words, a go-to-market strategy is an outline of how the product will be delivered to customers.
Businesses can benefit from developing a go-to-market strategy in the following ways: it can reduce time to market, save costs on failed product launches, provide a positive customer experience, clarify the mission and ensure a successful product launch. Also, the GTM strategy helps reduce customer acquisition costs, strengthens the company’s capacity to tackle challenges, guides the team throughout the process, and establishes a path for growth.
To build an effective GTM strategy, you need to communicate with your customers, have a mission-driven company, and keep up with the competitors. Consequently, the successful go-to-market strategy includes three C’s: Customers, Company, and Competitors.
The three-component model is a popular concept to develop an effective GTM strategy. The components are dynamic and interrelated, and each of them affects the other ones.
Customers are the target audience and driving force of your business. First, define who your audience is. The product should meet their requirements. You can gather a lot of relevant customer data by using in-depth interviews and questionnaires. The questions relate to demographics, gender, disposable income, the reason for buying your products, the details of the decision-making process, and pain points.
Additionally, you can use secondary sources of information about your customers: read available industry researches; review industry specialized online and paper media sources, such as websites or magazines; research customer profiles in Twitter or Linkedin to understand what do they publish, what do they discuss, what sources of information do they subscribe to. Finally, if you already have a website, review your users’ behavior to gather additional insights.
After collecting the essential data about your customers, you can run a social media campaign with a request to leave the contact details like email address and phone number. This base will allow you to stay in touch with the customers by providing additional materials like how-to videos and coupons. Personalize your messaging with the customers and use storytelling to connect with the audience.
To become successful, the company should clarify the mission, identify the resources, aspirations, and competencies. These factors determine whether the focus of your business will be on price leadership or operational efficiency, innovative culture with product leadership, or a service-oriented culture. The strong values help to ensure that the marketing strategy remains constant in the long run.
The most important part of the go-to-market strategy is the product. Building a great product requires a lot of skills, curiosity, and creativity. To develop a successful product, the company needs to learn through trial and error, considering the changing technology, business opportunities, team dynamics, and customer needs. Furthermore, creating a great product is a never-ending process. The market needs are changing all the time, so the product should adapt to the inevitable changes. One of the best ways to examine the market need is to launch the beta version of the product and improve it by gathering feedback.
Also, you need to estimate the product cost to understand the lower bound for pricing. Then you should assess the value of the product to potential buyers, so later, you would define the upper bound for pricing. It is essential to analyze the pricing strategies of your competitors. Taking into account this information, you will be able to set the prices.
To stand out from the competition, you should create a unique value proposition and analyze your competitors. The data should include product portfolios, capabilities, the way they present themselves, goals, and accomplishments. Some of the sources of information about your competitors include their website, annual reports, and newsletters. You may analyze customer reviews, define what is missing in the competitors’ products, and then consider what features you can add to your product to satisfy customers’ needs.
The other features to review are the competitor’s pricing, content strategy, the way they market the products, the level of engagement on the competitors’ content, social media strategies, and presence. In addition, you can perform a SWOT analysis to learn about your competitors’ strengths, weaknesses, opportunities, and threats.
Once you've armed yourself with the preliminary research into your customers, your company, and your competition, you're ready to start creating the GTM strategy. Below we'll review the most effective frameworks and relevant examples to help you develop a GTM strategy particularly suitable for your business.
The go-to-market strategy framework consists of ten simple steps that will provide you with a deeper understanding of the target market, your industry, product-market fit, competition, demand, and distribution. The strategy covers a lot of information that will prevent you from mistakes while bringing the product to market or mastering the new market segment.
There are two common purchasing scenarios for the products. In the first case, the purchasing party is a non-business customer or a small business. In the second case, the purchasing party is a larger enterprise.
When your target audience is non-business customers, you need to create a realistic buyer persona. It will be helpful in developing products and creating content to better target potential buyers. A buyer persona is a fictional character who has characteristics of the ideal customer based on research. The features of buyer persona are the name, behavioral traits, demographic information, and interests.
You need to perform several simple steps to create the audience persona. Carry out your audience research considering age, location, interests, spending patterns, and challenges with the help of Google Analytics, customer database, and social media analytics. Then identify the problems your target audience is trying to solve and understand what support you can offer.
In the case of creating the buyer persona for larger businesses or enterprises, the course of actions will be different. The first step is to analyze who will buy your product and who will make the purchasing decision for your offering. The decision-makers are called “the buying center”.
The buying center usually comprises seven roles during the sales process: initiator, user, influencer, decision-maker, buyer, approver, and gatekeeper. The initiator is the one who demonstrates the initial interest in the product. The user is the person who uses your product regularly. The influencer has the power to affect other people’s purchasing decisions. The decision-maker usually approves the purchase. The buyer manages the budget. The approver is a person who grants the final approval and then pushes the initiative to a management level. Finally, the gatekeeper has the right to prevent the implementation of the product.
To convince these people to buy your product, you need to understand their motives, goals, problems, and pain points. The roles may change depending on the industry, your product, and other factors.
Once you have defined the buyer personas, you need to clarify their problems and whether your product or service would fit their needs. At this stage, you should consider your product value and your buyer personas’ pain points, which they face daily. Moreover, you have to look at the bigger picture and research the industry’s struggles and your product’s impact on the target market.
Then study your competition and define the features of your product that differentiate you from the existing solutions. It is essential to learn what the target audience likes and dislikes about the available products.
Messaging is a set of key points your company uses to talk about itself and the value you provide to customers. Messaging is focused on what and how you communicate about your company, product, or service. It will become the basis for various marketing materials, such as slogans, press releases, social media posts, presentations, etc.
Your message aims to convey the main idea about your product or service to potential buyers, express what value you offer, why you are different, what you stand for and what problems you solve. It is crucial to establish an emotional connection with your customers addressing their needs and desires. Use humor and speak the natural language consumers talk about in everyday life.
You need to start by defining the company’s marketing strategy and the objectives you want to achieve with your messaging. The next step is to identify the keywords that would be associated with your company, product, or service. Following, you should draft concise and memorable message statements. You can organize the statements into a framework, including the target audience, positioning, and brand promise.
The competitors’ messaging strategy is a good source of information that will help you develop your statements. Define the distinguishing factors that set you apart from the competition: what makes your product unique and why your customers should choose it over the other offerings.
The buyer’s journey helps predict your customer’s behavior and the number of stages during the purchase process. Consider the customer’s journey from the buyer’s perspective and your company’s perspective.
The buyer’s journey typically consists of four stages:
Pricing sends a message to your customers about the value your product provides. The pricing might reflect the idea that your product is exclusive and, accordingly, it would be more expensive. On the other hand, the lower price can be your advantage over the other competitors. The pricing depends on the target market, your competitors, and other aspects like PR and marketing. To set a reasonable price, you need to take into account the needs of your buyer personas to understand whether it fits their goals.
Building brand awareness is a necessary step to draw your audience’s attention. This stage covers branding, lead generation, content creation, website, PR, events, and advertising. The popular methods to reach the target audience include social media, search ads, emails, landing pages, cold calls, industry conferences, webinars, and Ebooks. Once the potential buyers get interested in the product, it is time to proceed to the next stage and provide the educational materials or free trials to motivate them to make a decision.
Content marketing is a very effective tool to encourage your customers to purchase and turn one-time shoppers into loyal buyers. The content educates the customers about the problems you solve and increases brand awareness. The customers will be able to find your content by conducting a keyword search. Search Engine Optimization will enhance the chances of your content appearing higher in the search results. Therefore, it would increase your traffic and boost sales.
The demand for video content is growing year over year. According to the study by HubSpot, more than 54% of consumers prefer videos from brands over other types of content. More than 86% of businesses use videos as a marketing tool to increase user engagement, build brand awareness and improve customer loyalty. Moreover, videos are the most-shared and very measurement-friendly type of content.
Your business can increase engagement and convert users due to video content shared through Youtube, Instagram, Facebook, and TikTok. You can create different types of videos to promote your brand, such as product demos, testimonials, interviews, how-to videos, and more.
This step clarifies how the prospects become your customers. You need to mind how your team would find the potential buyers, engage with them and then sell your products. It is essential to know what tools your sales team will use to optimize sales. The sales representatives might need software tools and presentations to demonstrate your product’s value to potential customers. The other issues for consideration are the training of the team and the ways to manage sales reporting.
Customer support turns your one-time buyers into customers for life. To develop loyalty and make the buyer feel special, you should create friendly customer service. It is important to think about the offer you would provide to your clients to help them use your products - the tools, the software, and the customer support team. Consider using social media platforms to monitor and respond to queries and complaints.
The success metrics help estimate whether you are reaching your goals. While choosing the suitable metrics, keep in mind whether the metrics align with the company’s strategy, the difficulty of calculations, and the time needed to analyze the results. The indicators that will help you estimate your company’s health include Monthly Recurring Revenue, Annual Recurring Revenue, Customer Acquisition Cost, Customer Lifetime Value, and Net Revenue Retention.
The following frameworks are useful models to review the company’s marketing capabilities from various points of view. The frameworks will help evaluate marketing operations’ effectiveness and determine the changes needed to support new strategic direction.
The lack of thoughtful planning is one of the common reasons for startup failure. That is why the robust GTM strategy is a hedge against future risks. You need to choose between the broad set of buyers or narrow target market, channel sales or direct sales, and two-sided or one-sided markets.
The startup GTM strategy framework was created by Michael J Skok for the Harvard innovation lab. On the left side of the picture, there is a simple marketing and sales cycle that describes the stages the potential customer passes on his way to the purchase of the product. At first, the customer becomes aware of your offering, then comes the interest and understanding of how the product can serve the customer’s needs. The following stages are the engagement of the potential buyer, purchase of the trial, and finally, the purchase of the product.
It is often difficult to measure the progress with engaging the audience and turning the potential customers into interested buyers. So you need to pay attention to metrics like Net Promoter Score that will help you estimate the results.
Michael J Skok states that in the case of startups, the building of a brand should be based not on the product or service. Instead, it should manifest the founders, team, ideas they represent, and the company’s culture. Also, the startup should be consistent from the start to get brand integrity.
When launching a startup, answer the following questions:
The main feature that distinguishes SaaS go-to-market strategy from the other companies is the target audience. You are marketing to people, who are grouped in companies, so you need to choose not only the most suitable company but also bear in mind the decision-makers.
The go-to-market strategy will also depend on the company’s size, and it will differ for enterprises and small businesses in each case. Another distinctive feature of the SaaS go-to-market strategy is the opportunity to provide free trials of the product. It eliminates the need to talk to a sales representative before making a purchase. However, the competition in the SaaS market grows, and the customer acquisition cost increases as well.
The template by DevSquad for SaaS businesses contains the foundational points you need to think through to develop an effective GTM strategy. This template is very convenient for building a GTM strategy because it fits one page and brings together all the major elements. With the template’s help, you can define one end-user and buyer persona, stick to one audience, one target market, and one main acquisition channel at a time. You can identify the best niche for your product and apply a narrower approach to your plan.
This strategy is designed to prevent entrepreneurs from making such mistakes as targeting too many markets at once, using too many marketing channels, and reaching out to enterprises where the sales cycle is usually longer and more complicated than for smaller companies.
Salesforce GTM strategy proposes defining the market segment you are targeting, describing the key characteristics of your potential buyers, and identifying your offering and value proposition. Also, you need to think through the channels for communication with the customers, budgeting, financial model, and marketing plan.
To build your value proposition, you need to develop a simple statement that describes your offering and its advantages over your competitors. To define communication channels, think about where your customers would purchase your product and how they would receive support and answers to the questions. Creating the budget requires prioritizing your business needs like sales and development and making forecasts concerning future profits.
The last part of Salesforce’s strategy is marketing activities such as creating a marketing plan and marketing calendar with the events where you will demonstrate product value to customers. The last point of the strategy requires discussing the goals with the team and collecting feedback.
According to McKinsey’s approach, the go-to-market strategy includes seven directions of growth applicable for well-established businesses.
Successful companies often use several directions of growth simultaneously; some of them, like Disney, use all seven paths at once.
IBM is a vivid example of the exceptional implementation of the new go-to-market strategy. IBM’s selling model changed in the 1980s due to the changes in the IT market when the number of customers grew, but they decreased in size. At first, the company had only one sales channel — the distributors or direct sales force. When this model proved ineffective, IBM started adding new channels, including value-added resellers, direct mail, telemarketing, dealers, and catalog operations.
In recent years, the company added about 18 new channels to communicate with the clients. The new GTM model is called hybrid because it combines direct and indirect channels. Due to the hybrid model, IBM managed to achieve a competitive advantage in the market, and now it is a leading cloud platform company.
Developing a winning go-to-market strategy is critical before bringing a new product to market or entering the new market. When creating the GTM strategy, keep in mind the main components: customers, company, and competitors. The other elements for consideration include target markets, channels, product or service, price, and positioning. Before you start building the strategy, think of the current state of your business, your existing product portfolio (that's where BCG growth-share matrix may come in handy), your objectives, the methods to achieve the goals, and how long the implementation would take.
The most important steps are to define target customers and target markets. The next step is to understand what customers’ problems the product would solve. Then you should develop messaging, consider the buyer’s journey, create a pricing strategy, build brand awareness and generate content. The last steps are developing a sales funnel, customer support service, and measuring the results. Though GTM strategy is only the first stage of achieving business success, it gives your company a greater chance to accomplish impressive results.