What is a go-to-market strategy?
You have done your competitor analysis – well done!
People are telling you they cannot wait to use your service – excellent!
But how are you going to bring your service or your product to market? What is your plan to not just reach potential customers but also acquire customers and keep them?
The go-to-market strategy describes your plan of bringing your product or service to market. It is a plan of action that shows all steps needed to reach customers and achieve a competitive advantage. A go-to-market strategy can be helpful in a variety of use cases. For example, when you want to enter the market with your new product, enter a new market with your existing product, or test new products in different markets to discover growth potential.
But what strategy brings you the best odds of having success? For example, should you use Product-Led Growth, Marketing-Led Growth, Sales-Led Growth, Community-Led Growth, or even a hybrid model? In short, picking the right go-to-market strategy is essential to make your SaaS journey a success.
This article will show you the definitions and strategies behind the different go-to-market models and helps you find out which go-to-market strategy is best for you to turn your SaaS business into a growth machine.
But let's start from the beginning.
Why is a go-to-market strategy so important?
In addition, a GTM strategy can also, to some extent, predict the success rate your upcoming product/service will have, based on market research and data regarding the competitive landscape. For instance, if you find out that there are already a ton of solid competitors out there and you cannot niche down, you want to learn about this as soon as possible to save time and money.
The six parts of having an excellent go-to-market strategy
I remember when I joined a Startup six years ago. Everybody in our team loved the idea we were working on, and we were convinced that the idea was worth our effort. We were so convinced that validating the concept did not seem necessary. We invested time and money and did our best, but the idea failed because of a lack of customers. Had we done our market research and validated the service upfront, we would have noticed that the product did not solve a real customer pain point. We might have been able to pivot or even abandon the idea altogether without too many losses. Lesson learned. Don't make the same mistake as I did.
The best way to gather early feedback is by doing user research (direct customer interviews early on) or having Net Promoter Score surveys. However, customer interviews might bring more valuable data than just using the NPS if you have just started.
If you have Product Market Fit, you don't naturally have GTM fit.
GTM fit is about having a replicable motion either driven by demand gen, product or sales.
• In what market do you want to sell your service/product?
• What is the addressable market size?
• Why this market?
• How much are people willing to pay for your service in this market?
• What are the specifics of this market?
• What has worked before, what has not?
• Why did it not work before?
• Who are my most significant competitors in this specific market?
• How am I going to differentiate myself from my competitors?
• Who are the decision-makers in this specific market?
• What keeps my customers up at night?
• What motivates my customers to solve their problems?
• What's the desired future state for my customers?
The key to a successful acquisition is not to find as many customers as possible but to find the right ones. Getting the right customers is a 2-step process – figuring out who your customers are and where your customers are. Skip these steps, and you will develop a service nobody uses.
• Viral marketing
• Public relations
• Unconventional PR
• Social and Display Ads
• Offline Ads
• Content marketing
• Email marketing
• Engineering as marketing
• Target Market blogs
• Business development
• Affiliate programs
• Existing platforms
• Trade shows
• Offline events
• Speaking engagements
• Community building
Each of these channels has already worked for SaaS and Start-up companies before, but not every channel will show the same results for different companies. However, there will be at least one channel that brings traction to your business.
Remember the last time you watched a car commercial? Did you ever notice that 90% of the time of a 1-minute commercial, they talk about the azure blue oceans you can reach with this car, the exclusive beaches you can see, and only 10% of the time about the extra features they provide? Great messaging is about showing your customers what they will get, what dreams they can fulfill, what experience they can have. Having persuasive messaging means talking about benefits rather than features.
Keep in mind that the first version of your messaging does not have to be perfect. Develop the first version of your messaging, test it with potential customers, iterate, and understand which version resonates with your audience.
Most of the time, your price should reflect the value and the position you want to take in the market and the manufacturing costs, plus your markup.
With these six essential factors in mind, you can craft an effective go-to-market strategy that brings the odds in your favor of creating a successful business.
The different go-to-market strategies and growth engines
What is Product-Led Growth, and what does it mean
Product-Led Growth has been out there for many years. Did you ever buy a car without a test drive? Did you ever rent an apartment without checking it first? I guess not. Nowadays, more and more companies see the benefits of having Product-Led Growth as the critical driver for a product's success. Letting people try out your product for free, building a customer base, and then helping them to upgrade to paid plans with added value is the goal.
Why should you use Product-Led Growth, and what are its benefits?
The benefits of having a PLG do not apply only to your users. Providing a fabulous customer experience will make your users stick longer with your service, reducing customer churn and increasing the customer lifetime value. Furthermore, your customer acquisition costs will drastically decrease without a long sales cycle and lead generation.
What are some examples of Product-Led Growth companies?
Jakob Knutzen, CEO at Butter even stresses that Product-Led Growth is not something that you artificially engineer, but rather a well-thought-out process you need to keep in mind right in the beginning.
Product-Led Growth is not something that you artificially engineer.
You need to build the very foundations of the product in a way that incentivizes people to share the product and engage with others within it. Only then will your product lead your growth.
Product led growth tactics and strategies
After evaluating customer feedback, create a list of behaviors that correlate with customer retention. Use this list to define your activation-metrics. These metrics are individual and vary from service to service. Examples for activation metrics are "10 app usages per month" or "adding 2 friends within the first week".
Ask yourself if customers who regularly use your service
• finish the onboarding process?
• interact with the core feature?
• connect with other customers?
Once you complement your customer feedback with your analytics data, it should be clear where people find value in your service. One of the best methods to bring customers fast to the AHA moment is onboarding.
1. Guide users fast to the magic moment, the AHA moment.
2. Reduce complexity and barriers to your service as much as possible.
This might mean leaving out unnecessary forms, sign-ups or long tutorials.
3. Use different channels to guide users to success.
Having a great onboarding flow in place not only reduces the churn rate but also your acquisition cost due to the fact that people will know how to use your service and will not feel the need to call your support team. In addition if people quickly find value in your service, they will develop a habit around it and use it regularly, which will further increase your customer lifetime value.
Product led growth KPIs & metrics
• Time to value
• Expansion revenue
• Customer lifetime value (CLV or LTV)
• Customer acquisition cost
• Revenue churn-Viral coefficient
• Viral cycle time
• Conversion Rate
What is Community-Led Growth, and what does it mean
Community building has become more and more relevant for businesses, especially since social media has taken over. Human-to-human interaction is king, and people don't want to engage with brands but want to connect with the product's founder and community. Keep in mind that people care about the shared mission rather than the community's platform. Before choosing a platform for your community, think about how people want to communicate, what media have worked before, and how people can derive the most value out of it.
Why should you use Community-Led Growth, and what are its benefits?
A community can support you in accelerating growth in different ways: It can help, for example, by providing valuable feedback which you can use to improve your service further, by answering user questions within a Q&A forum, by liking and sharing your marketing efforts, providing you with testimonials or by recommending your service to friends and this way acquiring new users. This will not only reduce your customer acquisition cost but also reduce your customer churn rate.
Community-Led Growth can be the primary driver for your business. However, combining CLG with other growth engines like Product-Led Growth can become a multiplier that accelerates your success. True to the motto - come for the community and the product, stay for the community and the product.
What are some examples of Community-Led Growth companies?
Another company that uses Community-Led Growth is GitHub, a version control tool for developers. The value in this community lies within reaching out to other developers, asking for help, and exchanging knowledge about the newest trends and solutions.
Besides Apple and GitHub, more and more companies see the power of communities and start growing their own. However, keep in mind not to misuse your community to promote your service. Instead, consider it a chance to provide value, talk to group members, and learn about the challenges they face. It is about value, not promotion.
Metrics & KPIs for Community Building
1. Define your companies' goal
2. Define what metrics will help reach this goal
3. Rank metrics based on business impact and viability
4. Create action steps to improve the underlying metrics
Monitoring the right metrics requires a sound business strategy. First, ask yourself what your companies' goal is. Here, it is vital to be as precise as possible. For example, "improving our community" is a poorly drafted goal since everybody has a different opinion of what that contains precisely. However, if you state it like "getting 5.000 more people in our Facebook Group till the end of this year because the number of community members influences our sales", it is clear what you are trying to achieve. Then, based on your overall goal, start creating key performance indicators. Key performance indicators (KPIs) represent the most critical metrics in your company and help you measure your growth. This goal may be to increase sales, reduce costs, or expand into a new market. KPIs are metrics that move the needle; therefore, keep their number limited.
After you have defined your KPIs, ask yourself what underlying metrics will help you reach your goal. For example, your goal could be to improve your customer lifetime by three months by the end of this year. A possible underlying metric that could directly influence this goal is the engagement rate within your community group.
Once you have a list of underlying metrics, start prioritizing these metrics based on impact and viability. For example, if you have three different metrics that could impact your KPI, think about which has the highest impact and is easiest to achieve.
What is Sales-Led Growth, and what does it mean?
Another challenge with Sales-Led Growth is that the whole process lacks focus on customer success or its product. Many salespeople try to make the sale and therefore over-promise. If there is a value gap between the sales team's promises and the features your product offers, customers immediately churn. Here is the thing: I am not saying that all Sales-Led Growth companies disregard their customers, but achieving one's quota at the end of the year/month is a genuine concern. As a result, a sale may be made even though your product may not be a good fit for the customer. One way to solve this problem is by combining Sales-Led Growth with other growth strategies, like PLG or Community-Led Growth. Sales-Led Growth per se is nothing bad, and very successful companies like Microsoft or Salesforce have been using this strategy. However, if you want to have sustainable growth and reduce your customer churn, do not over-promise but show your potential customers the value you offer right away.
Another common issue with Sales-Led Growth is scaling. A salesperson can only make that amount of phone calls per day. More revenue, therefore, means hiring more salespeople. According to statistics, the conversion rate for cold calling is around 3% (3% of the people you call are ready to buy immediately). In other words, if you want to acquire more customers, you have to make more calls. However, great sales teams are expensive, which means that your CAC is constantly high. Your CLV has to be high enough to regain the investments you made to get the customer to make this a profitable business.
Why should you use Sales-Led Growth, and what are its benefits?
Having high lifetime value customers is exemplary. However, keep in mind to avoid poor revenue diversity. For example, if you have three to four clients who make a large portion of your overall revenue, your business can fail even if just one or two of those high-value customers churn.
Another reason to go for the Sales-Led Growth approach is if you are targeting a niche market. Product-led Growth and Community-Led Growth especially bloom when you have a broad audience. On the other hand, if your target audience is small, directly contacting your leads might seem more tempting. Also, if you are seen as the expert in this field, building long-term relationships with potential customers is easier this way.
In addition, a direct approach works better if your product is new to the market. If you build a service that people have never seen before, potential customers need to be educated. Trying to do this with a product-led approach and letting people try on their own could lead to customer churn because they don't understand your product. However, with a Sales-Led Growth approach, you can directly communicate with leads and better understand their pain points and how success would look like for them.
What are some examples of Sales-Led Growth companies?
Metrics & KPIs for Sales-Led Growth
• Quality of leads
• Closing Rate
What is Marketing-Led Growth, and what does it mean?
Often, Marketing-Led Growth starts with a lead magnet. A lead magnet is a valuable information that potential customers can download in return for their email addresses. These email addresses are then used for lead nurturing campaigns.
Marketing-led Led Growth is a marathon, not a sprint. If you are looking for immediate results, MLG is not your way to go. The best tip I would give to anybody who starts their Startup or SaaS company is to start early on with marketing. One of the prime mistakes is to build your product, release it, and then start marketing. The issue here is that marketing will not get you the immediate results you desire. However, if you share your journey early on – even before your product is ready – you have the chance to get people interested in your offer right away. Once you release your product, the chance of getting people to sign up will skyrocket. In addition, sharing your journey early on helps you gain valuable customer feedback on your ideas, which in return will help you to improve your service and engage with your community.
But how can you do early marketing if your product is not yet available? For instance, let's imagine your startup/SaaS company is an app. Sharing your sketches/dribbles or wireframes with your social media community could be one approach. Thereby, people can see your progress and give you valuable feedback right away.
Another good way to start your marketing early on is by providing a landing page with your service, where people can sign up for your newsletter to get regular updates on the progress of your app. Then, once you release your app, you can let them know by sending them a special thank-you email.
So, if you wish to use social media marketing to draw attention to your service, first think about your target audience and how to reach them best. Running your marketing efforts on every social media platform there is makes little sense. Nowadays, there are too many social media platforms, and if you don't want to burn your marketing budget and time, you need to decide upfront. Are your customers founders and CEOs? Go for LinkedIn. Are your customers in the US? Think about Twitter. Are your customers children and teenagers? Think about TikTok. When you choose Marketing-Led Growth as your primary way to grow, keep in mind to track your individual marketing campaigns to see which marketing campaign drives the best results. For example, if you try one channel and do not see the expected results, try another one. Stay in this experimental mindset, and you will find the channel that works best for you.
Why should you use Marketing-Led Growth, and what are its benefits?
We talked about Sales-Led Growth and how an increase in revenue often implies an increase in salespeople. If you want more customers with Marketing-Led Growth, your goal is to create unique content that leads to your product. To do so, first think about what questions your potential customers have. What do they type into Google to find a solution? What keywords do they use? Then, based on their needs, create valuable content that immediately helps people and shows the value in your service. Combining this approach with Product-Led Growth, where people visit your website and can test the product for free, your chances of getting new customers increase. You no longer need to recruit more people.
Metrics & KPIs for Marketing-Led Growth
• Likes, shares, comments, impressions on social media:
With a good content marketing strategy for social media, you can get the word out and attract people to your business. However, posting content without measuring the likes, shares, comments, and impressions, you will not know which post attracts possible customers. To track those metrics, you can use a spreadsheet where you put in your social media posts and the precise results of each post. I recommend doing a monthly or even weekly review to see what works and what does not work. Rinse and repeat is the best way to improve those metrics. Once you know what kind of content your audience loves, keep posting similar content to improve those metrics.
• Click-through rate on social media
• Conversion rate on your website
• Marketing qualified leads & sales qualified leads (MQL & SQL)
• Dwell time
• Bounce rate
What go-to-market strategy should you use for your product?
CAC will dramatically be reduced
Helps you make people aware of your product right in the beginning
Helps you build long term relationships with customers
Helps you to get early feedback for your service
More revenue means more sales people
Offer valuable, exclusive content
Have a shared mission within the community
Let's start a conversation!