What does it mean a go-to-market strategy?
Initially, we always refer to the phrase ‘Go-To-Market Strategy,’ abbreviated as GTM. GTM, or Go-To-Market strategy in brief, is a practical plan that summarizes the factors on which the success of our product depends when introducing it to a new market. It can be applied to the launch of a product, the launch of a company, or the introduction of a brand to the market.
One common misconception about this topic is that many people think GTM is a marketing plan because of the similarity between the word ‘Market’ and ‘Marketing.’ Despite their overlap in many aspects, they are two different things. In simple terms, GTM is a more comprehensive picture of the product, the form of enterprise management, including marketing. Therefore, GTM is what will define the general framework you will aim for when working on a marketing plan.
You are not required to create a large document and fill it with information. You are simply building a tool that will help you in the future with various aspects and make decisions easily. For example, planning the product shape, identifying the target audience, forming the team, and outlining the marketing and sales team’s framework, etc. So, your plan needs to be short and concise, and it should be agile, meaning it should be adaptable or updatable as soon as it enters the market and receives feedback from customers.
I understand that the topic may still be unclear to you, so let’s dive deeper into the details. Hopefully, by the end of this post, things will become clearer for you.
Why do you need a go-to-market strategy?
To answer some questions for yourself, such as: Why are we creating this product? For whom? How can we make the target audience respond to it and buy it? What problems will the public face, and how will we solve them? Like the old saying goes, it may take years to build a good reputation and seconds to destroy it.
First of all!
Before you start any plan or strategy, it’s natural to do some research, as the GTM is a summary of your market vision. I hope that if you haven’t done it yet, stop and do some market research. Grab a pen and paper, work on each paragraph we will discuss, and if something is unclear, go study that aspect of the market and then come back to continue. It’s natural that you won’t finish it in one sitting, but I have good news for you; I’ve prepared a shortcut for you. Spend 10 minutes on it, and it will give you an overview before you dive into the details!
Let’s agree that when you see the word “product” in this post, it means any product, service, or brand you are working on and planning to bring to the market.
Aligning Your Product with Market Needs “PMF”
Before diving into your Go-To-Market (GTM) strategy, the first question you need to answer is: What problems will your product solve? Have you ensured the viability of this solution and validated it?
You might feel confident in the solution or product you are offering, but I caution you against approaching this superficially! Statistically, 24% of failed startups did so because they created products that the market didn’t want, despite their confidence in solving a particular problem. When they worked on building and launching the product, it turned out that the perceived problem wasn’t real or wasn’t significant enough for people to invest in.
I introduced the term “PMF” in the heading, but I haven’t explained it yet. If you’re unfamiliar with the concept, in simple terms, it’s your goal in the first two or three years of your startup. In colloquial terms, it means having alignment between your product and the target market, and having a genuine demand for your product rather than you trying to push it. I recommend you Google this concept if it’s still new to you.
The success of your product depends on marketing efforts or sales?!
Let’s agree that both always complement each other, but here we are talking about the balance between them. In other words, who will you rely on more? Professor Mark Leslie from Stanford University explained this as follows: Marketing and sales are like muscles. If you focus on the marketing muscle, you’ll need to use the sales muscle less, and vice versa. When you know your customer or the market you’re in well, you’ll know which muscle will bring better results. At that point, the structure of your startup will be based on it, allowing you to scale or grow faster. Some markets may be negatively sensitive to direct or traditional sales and will need to rely more on marketing in them.
let’s take two examples of products from the same industry to make it clearer.
First Example: “Analytica” is a SaaS product that provides risk analysis and customer management services for insurance companies, with prices ranging from $5,000 to $20,000 per month based on the number of users & customers. The product targets medium and large insurance companies in countries like the Netherlands and neighboring ones. Given the relatively low number of insurance companies in the Netherlands (70 medium and 30 large), Analytica needs a strong sales team to engage in direct sales, conduct demo presentations, negotiate pricing, and close deals. This is especially crucial during the initial stages and validation period, requiring a robust sales and business development team.
Second Example: “Socializer” is a SaaS product that is aimed at marketers managing multiple social media accounts. Priced between $9 and $49 per month based on user count and features, Socializer is cost-effective. Unlike Analytica, it primarily relies on marketing activities, offering a free limited-time trial to potential customers. Since the target audience consists of marketing professionals (Social Media Specialists, for instance), and the product is affordable, a large sales team may not be necessary. Instead, the founders can focus on marketing efforts, potentially establishing a small call center for customer inquiries and, in the future, a small team or individual to target large enterprises with specific social media management needs.
In conclusion, the decision on whether to prioritize marketing or sales activities depends on factors such as product pricing, target market, and the nature of the industry. Professor Leslie has provided a simple model to determine product sensitivity to marketing, helping guide the go-to-market strategy and adapt the team and activities accordingly. This strategic decision-making process will shape the company’s approach from day one and into the future.
Leslie Compass Framework For GTM
Professor Mark Leslie from Stanford University has developed a framework that we’ll discuss in a very simplified manner to help you determine the success of your product or startup, relying more on marketing or sales. This model is called the “Leslie Compass.”
Simply put, this framework consists of 7 criteria or questions. If most of your answers lean towards the left side, it means you’ll rely more on marketing. If most of your answers lean toward the right side, it means you’ll rely more on sales. And don’t forget, there’s hardly any business or product that won’t need both. However, initially, when your resources, time, and funds are limited, you need to focus on what will bring the greater result. Let’s take a closer look at these criteria, and things will become clearer. Let’s go.
The criteria are as follows:
- Price: Is it cheap or expensive?
- Market size: Is it large or small?
- Product complexity: Is it simple or complex?
- Suitability: Does it fit all segments, or does it require modifications for each individual customer?
- Customer type: Is the end consumer or selling to institutions?
- Customer relationship: Is it a one-time transaction or a long-term relationship?
- Customer interaction: Is the interaction light or frequent?
Now, let’s elaborate on each criterion so that you can apply this information effectively.
Price
If your product is cheap, it would be highly impractical to bring in a sales representative to follow up with a group of clients until the sale is made. For example, imagine a toothpaste company sending a representative to convince people on the street to buy their product for 10 pounds! Certainly not.
On the other hand, if the product is expensive, like an apartment priced at half a million pounds, can you imagine that merely posting it on a classified ads website and doing some marketing would lead someone to buy it online with their credit card without visiting the company, meeting a representative, seeing and inspecting it, and negotiating the price and payment method? Certainly not.
Naturally, because toothpaste is cheap, the company markets it, and people buy it off the shelf without consulting a sales representative. Also, because the apartment is expensive, it is natural for real estate companies to rely on sales representatives to help clients make purchasing decisions.
Market Size
A thought-provoking question… How many Coca-Cola drinks are sold in a day compared to how many cars are sold in a day? Certainly, Coca-Cola sells more, and it does so on its own without needing sales representatives. Of course, Coca-Cola will advertise more if it wants to increase its sales. On the other hand, the number of people buying cars is low, and each potential customer tends to consider more than one model before making a purchase because it is a costly decision. As a company selling cars and aiming to boost sales, you will need a skilled sales team to convince these customers.
Product Complexity
Let’s apply this factor to the products we’ve just imagined.
Socializer is a simple product, it’s an application for managing social media accounts. In simple terms, it allows you to collaborate with your team & create a schedule for posting on Facebook and Instagram. It’s easy, right?
On the other hand, Analytica is an application for risk analysis for insurance companies. How does it work, you ask? Well, let’s set up a meeting with your senior management so I can explain this application precisely. In about 1 & half to 2 hours demo, I’ll show you how this application can help your company. Then we can set a meeting with your security & compliance team to review our security measures, then we may have to meet with your ICT team to plan for custom integration with your in-house custom CRM, if my sales team made it this far, then we may be able to start talking with your procurement department to complete the purchase.
Do you now see how complex products being sold to an enterprise businesses may look like? The example didn’t even show the process of customer onboarding.
Simpler products are easy to sell and can be done without the intervention of a sales representative. For example, you definitely don’t need to talk to anyone to create an account on WhatsApp. Since you don’t need anyone to explain it to you, you can download it from the App Store and start using it right away.
Product-Market-Fit
PMF directly influences sales velocity by ensuring that the product precisely meets customer needs. When a SaaS solution resonates with the target market, it accelerates sales because customers readily see its value, resulting in quicker adoption and shorter sales cycles. A strong product-market fit enhances customer satisfaction, referrals, and loyalty, contributing to sustained momentum in SaaS sales.
Customer Type
Will an individual “end customer” or a business use this product?! If you are selling decor supplies to homeowners, how will you deal with them if they don’t like the color of the product? Will you check if you have the color that suits them in stock? Otherwise, you will apologize and that’s it. However, if you are supplying wood to factories producing decor supplies, you must definitely supply wood that matches in terms of type, color, and specifications. You will make an effort to provide the needs of each factory you sell to separately.
Customer Relationship
If you’re selling computer supplies in a store and a customer comes in, buys a mouse, pays for it, and leaves, do you know anything about them? Or do they know anything about you? Most likely not. You don’t need to build a friendship with them, and most likely, you won’t see them again until a few months later, if they don’t find a closer place to buy from next time!
However, if you’re an import company supplying computer supplies to businesses, you will probably get to know and establish connections with the owners and managers of these companies. They will buy from you in large quantities on a regular basis. You might even provide them with account managers who will monitor their needs throughout the year. You will also interact with procurement managers and accountants, being courteous to expedite their payment processes. Each of these clients will likely continue working with you for years to come, so it’s essential to be close to them for your company to thrive and grow.
Touch
In a real estate sales company, can you imagine how many times you might engage the customer before they make the decision to purchase? Definitely more than once – once individually, once with their spouse because she influences the buying decision, another time to negotiate the payment method, and yet another time to finalize the contract and make an upfront payment for the property. Is this possible if the customer is buying a product like a mobile phone case that costs less than 5 euros? Definitely not.
I apologize if I go into a lot of details, but I wanted to cover all the points so that if there’s any unclear point among them. Let’s quickly see if we apply this to our products, Socializer and Analytica.
In short, it is clear that the product Socializer mostly meets all the criteria applicable to the left side. This means that they will rely more on marketing efforts and less on sales teams, which, for example, they would have a small sales team focused only on larger customers “mid-market”.
On the other hand, Analytica’s product is expensive and requires customization for each client individually. Because the market is limited, the potential number of clients is small, and the product price is high. Therefore, the focus will be on building a strong sales team capable of acquiring the largest possible number of enterprises to use their application. And their marketing efforts would be focused on generating mind-market leads.
Certainly, this is a simple presentation, but it gives you a comprehensive overview of how you enter the market, utilize your resources more effectively, and succeed in gaining traction, achieving tangible results before your funds run out. Of course, you shouldn’t just be content with these few pieces of information; you need to work on market entry strategies in a deeper way, such as:
What is the general strategy you will work on? Pricing strategy? Marketing strategy? Sales strategy? Support strategy? Product strategy? Success metrics? Ask yourself important questions like why you are entering the market now and what are your expectations.
And don’t forget our agreement… that any product needs both muscles, along with some marketing and sales! The challenge is how to balance them and employ them to promote growth in a healthy way.