Whether you are still searching for your first customer or you believe you have proven product-market fit, there are still three things you need in your go-to-market strategy to succeed.
Go-To-Market: Think big
Your Marketing Strategy: Create a demand generation engine
Sales Strategy: Scale sales
Go-To-Market Strategy: Think Big
Nothing is harder to coach than thinking big(ger)! But if you want a competitive advantage, you need to do just that. If you just closed your first customer, what will it take to close the next 25? If you’ve achieved $1m in annual ARR, you probably popped the cork. It might feel as though planning next year at $2m is aggressive. After all, $2m is quarter over quarter growth of 20%. But the key to success is planning for and pivoting to a plan that will take you to $5m, $20m, and $40m. This will be one of the big things that set your go-to-market strategy apart and give you a competitive advantage. It’s not enough to rely on your existing customers. You need a strong marketing plan directed at your target market if you truly want to succeed.
What you’ll need to succeed next year should already be planned by the end of the second quarter this year. This will give you a leg up when trying to reach prospective customers. Most software companies plan for next year in the fourth quarter, or worse are still planning for the year in the first quarter of that year. This is not the go-to-market plan you want to follow.
A strong go-to-market strategy is required. A strong go-to-market strategy starts with the identification of your ideal customer profile (ICP). Most startups end up in Geoffrey Moore’s chasm because they don’t define and rigorously sell within your ICP. Having an ICP and selling within your ICP helps ensure you turn customers into references. This happens when you narrow in on your target market. Ideally, those references turn into case studies with quantifiable metrics to help you cross the chasm.
When you are working hard to keep the lights on it’s hard to stay disciplined and only sell to your ICP. The irony of following the discipline of ICP only selling is that it exponentially accelerates growth. The chasm is full of companies who sold outside their ICP because they couldn’t successfully implement them, even after pouring more resources into trying to save those customers. And they don’t turn into references, case studies, or provide metrics based on value and success. This happens when we don’t go after our target audience.
Marketing Strategy: Create A Demand Generation Engine
Demand generation is about building a pipeline of truly qualified leads. Not all potential customers are going to be your target customers. If the top of the funnel activity is based on prospects that optimistic sellers “believe” they can sell, versus a disciplined measurable go-to-market process, the metrics and KPIs needed to scale will not be reliable.
Information like we need 4x or 5x or even 6x forecast in our pipeline on a monthly/quarterly basis to achieve sales targets is more than worthless because they waste everyone’s time and energy. Waste goes beyond sales to marketing, product marketing, client success, marketing campaigns, R&D, and executive management.
The right company ratio of qualified leads to revenue can only be reliably calculated if you have a clearly defined target market/target audience. The go-to-market system and process should ideally be 90% accurate in their ability to predict revenue from the pipeline. This is critical for the confidence to hire and scale the business ahead of actually closing deals.
How many of the deals in your pipeline will turn to revenue? How long is the cycle time? All of these will be useless without the right go-to-market and ICP.
Nothing mentioned has anything to do with the product. This is perhaps the most overlooked piece people miss when creating their go-to-market strategies. Mentioning only products is not the business model to be followed today. People buy what the effect will be.
Your Value Proposition
What the story is behind the product and service. Often companies will spend exponential amounts of time on the pricing strategy, but that is of little help if you can’t get people to buy the product. People will often spend more on something than you would think because they are willing to spend extra to get the benefits and ease of use that comes with what your product will provide them.
Don’t get too lost in the pricing strategy. Focus on the story behind the product. This is the greatest thing you can do for your value proposition. Make your product not something people feel they are being sold, but something they feel they absolutely need.
Demand gen is not about how many people come to your website. It’s also not about how many leads you generate. It’s about how many qualified ICP-qualified prospects, or people in your target audience, are generated that end up on the forecast. Then it’s designing a conduit, (notice I didn’t say funnel or sales process) that creates a buyer’s journey that leads to logical, in the eyes of the customer, next steps on the way to closure. Following this method has greatly changed our customer’s buying process for the better.
Sales Strategy: Scaling Sales
In a few short years, successful software companies will develop a sales engine with people who understand the problem you solve for the customer. This is how you create an ideal sales team.
We are not still not talking about the product. It’s about sellers understanding the problem you solve and the value created for the customer.
Molding a sales organization that solves problems, alleviates pain, and understands the opportunity they create for prospects, that results in quantifiable value for the customer, is how you scale sales.
The buyer’s journey philosophy of selling isn’t new, yet 98% of sellers are still product-centric. And 98% of organizations are still providing product-heavy presentations and processes to sellers. This leads to low closure rates, long cycles, and poor fit customers.
It takes months to ramp up a new sales rep. And after many months sellers are still only marginally successful. There are two reasons for this. The number one reason is that we haven’t hired right, and number two is we haven’t armed them with the right tools and process to succeed.
Scaling sales for growth of $1m to $5m or from $5m to $20m requires an onboarding process that provides sellers with an easy to understand ICP, a demand gen process that finds ICPs to turn over to sellers, and a buyers journey process that helps sellers guide prospects through a conduit to success.
All three: having a strong go-to-market by thinking big, having a solid marketing strategy that is creating a demand generation engine, and scaling sales have to happen at the same time as you create an environment supported by by-product lead growth. Now we are talking about the product!
Today even companies that sell products with a high ASP must find a way to help prospects discover and trial before there is any sales interaction. And small ticket software is sold over the phone or with a straight-through-no-touch-process designed for frictionless buying.
To succeed you must scale a sales team at the same time as you build out product capabilities that simultaneously allow prospects to learn and evaluate on their own. These are some of the best things you can do for your go to market strategy!
Founders who ignore building both rarely succeed!