Table of contents
- What is a go-to-market (GTM) stratagy?
- The evolution of new business models
- Market considerations
- Defining the ideal customer profile and beachhead
- Growth strategy
What is a go-to-market (GTM) strategy?
The definition of a go-to-market (GTM) strategy is simple: drive awareness, accessibility, and retention of a product from initial validation to scaling it for a much larger market population. As you might imagine, the strategies adopted will transform over time based on market confirmation.
The general notion is that go-to-market strategies are transactional, so companies often wait to execute until the product is ready to deploy.
However, a good product manager initiates the GTM strategy when conceptualizing a product idea. The strategy should capture new realities around business models, market maturity, brand positioning, competitive forces, and growth strategy.
The evolution of new business models
Software-defined solutions and as-a-service business models necessitate a transformational approach to GTM strategy. Products do not reach end-of-life anymore; they evolve and drive continuous innovation.
The lifecycle below represents how organizations now think about products and solutions. Every lifecycle step requires a conscious approach to a market strategy, not just the launch phase.
The product inception phase captures a pain point and creative solutions. Product strategy, however, needs to consider the product’s market entry, differentiation, viability, and feasibility. Each phase validates the hypothesis and refines the GTM strategy as we move through the cycle.
Products are rarely fire-and-forget nowadays. The deliberation on building stickiness, increasing switching costs, and creating long-term value for the customer is crucial.
Analyze, aspire, action, accomplish
When introducing a new product in a new or an existing market, I often use the Analyze, Aspire, Action, Accomplish model, which applies various frameworks at distinct stages of the product lifecycle.
The intent is not to explain the tools captured within the framework but to present the key outcomes from each phase:
The analysis phase requires a solid understanding of customer pain points (said and unsaid), market dynamics (what is available, why it is insufficient), and potential solutions to minimize or eradicate the gap.
At this stage, the GTM aspects are usually not critical. However, solving a problem with no avenue to reach the customer is also futile.
The aspirational step is where I believe the hypothesis for a GTM strategy is crucial. In product parlance, segmenting, targeting, and positioning (STP) is an essential activity.
The key questions here are:
- In what market segments do you have a real opportunity?
- What is the path to get there (e.g., who else do you need to come along with you)?
This step should also inform you of critical competitors and the differentiators you need to win in the market. It should define your ideal customer profile, and, more crucially, identify beachhead customers.
A conceptual example
When pursuing my MBA, my group worked (unofficially) with Marriott on a concept idea to offer an experience-first product. While considering Marriott’s breadth of brands, we selected JW Marriott and Sheraton to provide an experience beyond just room and food to the middle-aged and Millennials, respectively.
The package considered everything from travel, activities, pricing, and even specific pilot locations where the offer would be live first. The concept also identified messaging for the personas and essential ecosystem strategies, including travel and experience partners.
When creating a go-to-market strategy, you should consider the following:
Products and markets
The best GTM strategies to adopt often depend on the market’s maturity.
Consider an electric vehicle, for example. It is a new product in an existing market. The adoption threshold is dependent on solving the range anxiety.
As Tesla demonstrated, building a supercharger network was equally important as making the car itself.
I would argue that autonomous cars will be a new product in a new market. It’s easy to imagine this as an existing market, but an autonomous car has the potential to completely redefine how people think about car ownership.
In 2018, we researched cars, their perceived branding, and their attempt to rebrand themselves. It was interesting that vehicles such as Buick and Cadillac had transformed themselves to be more amenable to upper-middle class people in their early 40s (BMW and Lexus had held this market), whereas Lincoln failed.
Such repositioning requires a considerable thought process from a GTM perspective, especially regarding social messaging, following, advertisements, product considerations — the whole nine yards.
When considering the competition, think creatively. Brita, for example, opted not to compete with other kitchen appliances. Instead, it was sold in the water aisle, which positioned it to compete with bottled water.
Such decisions are not determined at the launch stage but during inception. Cialis beat Viagra by redefining the customer purchase criteria where Levitra wasn’t. Without going into too much detail, let’s just say that product differentiation was crucial in this endeavor.
Defining the ideal customer profile and beachhead
As part of our capstone project, thanks to a fantastic initiative from the NIU College of Business, we worked on a real-life GTM, from cradle to grave.
The solution was a way to minimize readmissions. Preventable readmissions (readmission is when a patient returns to the hospital within 21 days after discharge for any reason) cost over $25 billion, and Medicare incurs more than 60 percent of that cost.
Medicare instituted a penalty for hospitals where readmissions are too high. A database of all hospitals and their readmission rate (and propensity for pen) was available.
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Based on the information, we devised a method to segment the ideal market, their demographics, and five states that maximized the sales motion. Note that the “ideal customer profile” is not genuinely perfect — it was a “what’s possible” with the resources available on-hand.
In addition, we identified a set of hospitals that would be the best candidates for a pilot. An extensive amount of math went into parsing through the spreadsheets — my group was willing to recommend me for a Ph.D. just for that work — but we distilled it down to a single roadmap of client profiles (pilot, short-term, long-term).
While the GTM strategy was to work with the hospitals, the eventual goal was to work directly with Medicare to save them at least 30 percent of the $17 billion spent on unnecessary expenses.
Most articles about sales-led versus product-led growth strategies push one versus the other. The truth is, you have to pick what’s best for your situation. You should also know where the inflection point is to switch from one to the other (or use them in tandem).
Before I go further, let me explain as I best understand it — because my approach often is not to choose between the two consciously.
A sales-led approach to growth depends heavily on your sales team or channel partners. Depending on your product (transformational versus incremental) and who you are (Amazon versus startup), your sales team will connect with clients, build relationships, explain product benefits, and take it through the contractual process.
As you might imagine, the success of your product also depends on the sales organization’s willingness to sell. If you’re considering shifting from a perpetual to a recurring model and do not regard the sales angle, you’re sure to have a paperweight on your hands!
B2B products that require long contract cycles and considerable time to deploy and onboard often require a sales-led approach. However, this doesn’t imply that sales will influence the product features or roadmap.
A product-led approach often depends on organic growth, backed by an exploratory model (freemium, trial to buy), self-serve capabilities, and a seamless user experience when it comes to setting up and using the product.
Companies spend considerable finance on marketing rather than on the sales motion. The product-led strategy enables a broader net and a lower acquisition cost (CAC).
A prominent example of a B2C product that took a product-led approach include Spotify.
Unbelievably, AWS started as a product-led offering, with self-service capabilities and utilities that enabled faster time-to-market and monitoring usage, free trial, and cost transparency. It held the no. 1 position in cloud hosting and attracted small businesses, especially startups.
However, Azure, being late to the party, took a sales-led approach. It built strong channel and solution partners, offered end-to-end advisory and execution, and quickly catapulted to no. 1, led heavily by large contracts with the top companies in Fortune 500.
AWS has since transitioned to a hybrid model and built a substantial presence in the large-cap market by offering both a sales-led approach and a marketplace, which are add-ons once they acquire a client.
The most significant driver for a hybrid approach is the transformation to as-a-service models. Many organizations consider customer success management as a sales function. While partially true, CSMs are not purely commission-driven and are usually not in the loop during the initial stages of a sale.
The expectation of driving adoption, cross-selling, upselling, and renewals to minimize CAC implies that they provide the convergence between product and sales-led approaches. I reach out to CSMs for product feedback because it tends to be rooted in data
Side note: If you can’t monitor KPIs and back your CSMs, you shouldn’t be in the SaaS business!
Creating a go-to-market strategy is more art than science. However, it is crucial to start with a hypothesis, do it early, and make it fluid enough to pivot based on data.
Consider the type of product you are building, the markets you are targeting to define the brand, the competition, the pilot customers, and the growth strategy you must adopt. While no crystal ball guarantees success, a conscious approach will amplify the probability.
Featured image source: IconScout
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