A Go To Market (GTM) Strategy describes who your target customer is for a given product offer, how you intend to attract and convert those customers, and the market size of that opportunity. If you can nail all of that, you have an instant recipe for success!
But of course it's not that easy, which is why we have developed a framework, (and provided a template), to help guide you through each component of your GTM strategy.
90% of startups fail because they don't really understand their customer needs, and/or they are unable to achieve product-market fit. On top of that, if your customers don't know about your product, or it's too hard to signup, they're more than likely go to your competitor. And if you don't understand the size of your market before you start, your aspirations of becoming a Unicorn might not be well founded!
Which is why you should go to the effort of defining your GTM strategy, because it will get you that much closer to creating scalable, sustainable growth for your business.
There are four components to the GTM Strategy Framework
1. Who to target
2. With what offer
3. Via what channels
4. For what value
Each can be broken down into a statement that encompasses where you have decided to play, and how you intend to win. The framework below displays each component, and the strategic decisions you need to make for each.
Download the Template (Google Slide)
We'll go through each component in detail, but before we do that, let's see how it plays out in reality. Here are two examples that show how the framework can be utilised across quite different scenarios and situations.
Example: Enterprise GTM Strategy
We will target customer service leaders (buyers) and business leaders (influencers), in consumer facing enterprises $1B+ revenue in USA, who need to cut costs and improve CX.
Our predictive tool for customer service agents will reduce agent time to serve, and create better customer outcomes, and is less expensive than other solutions.
We will use events, content marketing and partnerships to build awareness and generate leads, and field sales and partner sales to convert customers.
This has total addressable market TAM of 5,000 customers of which we intend to gain 10% market share, which results in approx. $50M revenue for the business.
Example: Micro business GTM Strategy
We will target small business owners (2-15 staff), in plumbing or electrical maintenance in Australia, who need to manage their business more efficiently.
Our software that runs the entirety of your business will reduce errors and save time and money, and is easier to use than other solutions.
We will use SEO/SEM, partner marketing, and a free trial to build awareness and generate leads, and self-service and inside sales to convert customers.
This has total addressable market TAM of 40,000 customers of which we intend to gain 15% market share, which results in approx. $9M revenue for the business.
Now that you can see what we are aiming for, you can probably also discern that the detail behind every word and statement can have a very significant meaning and impact.
Let's break it down, component by component.
Who to Target (Part 1 of Product Market Fit)
In this section we determine who we are targeting, and what problem they have. The narrower we can define each component, the more targeted and specific we can be.
We will target these people or roles, in these segment(s) in these region(s), who need to solve this problem.
People and/or Roles
Number one rule: not all people in a demographic are the same. Consider Ozzy Osborne and Prince Charles. Both male, the same age, and live in London. I suspect their buying habits and purchase criteria are quite different. Beware the demographics trap.
Try to identify a role or behaviour within your target group. For example Business Owner or Business Administrator if you're targeting small business software. Consider within a family, who is the person who Manages The Finances, who is the Primary Grocery Buyer, the Primary Mid-Week Meal Preparer? Does it matter if they are male or female, 62 or 22? Probably not.
Often, you'll be targeting more than one person or role. In health care, often the Carer is as important, and sometimes more, than the Patient. If your product is for kids, you'll need to target the Parent also.
In B2B, often the person's role is more important than the characteristics of the individual, as their role drives their context, needs and incentives. Also, the bigger the organisation you are targeting, the more likely you will need to account for multiple roles including The Buyer (Business Lead, i.e. Head of Consumer Banking), The Influencers (Functional Leads, i.e. Head of Marketing), The Gatekeepers (Procurement, CFO) etc. Often you need all these roles covered to make a sale into large Enterprises.
Segments
Market segmentation is the process of dividing your target market into smaller, more defined categories. It segments people or organisations into groups that share similar characteristics such as context, needs or attitudes.
For example, there are multiple types of plumbers - maintenance, residential and commercial plumbers - and their business needs are significantly different based upon this.
In enterprise, your target segments may be defined by organisation size and/or revenue, industry, end customer type, or even culture - pioneering, follower or traditional.
In households, you might segment by health conscious or dietary choices, convenience buyers vs cost conscious buyers.
The narrower you can define your segment(s) the more efficient and effective your product, sales and marketing will be.
Regions
Regions can be countries, suburbs or any kind of geographic area.
Defining the regions you actively intend to target early on, can help remove a lot of distractions that can be created by trying to accommodate other regions down the track. It always seems easy to enter a new market or country, but it's a bit more like peeling an onion, you solve one thing, but then there is another, and then another, and then another.
Basic things like local compliance, finance, and legal requirements need to be addressed when entering new countries. Then of course the much harder aspects of understanding the local competitive environment, cultural norms and perceptions can make or break your efforts.
To have the greatest chance of success, nail one region, then intentionally and deliberately move to the next region.
The problem you are solving
The problem is most important aspect of who you are targeting! If your target customer doesn't have a problem you can solve, you have no business.
A few questions you need to be sure of when defining the problem you are solving:
Is the problem important to the person or organisation?
Are they willing to pay to solve the problem?
I have spent time with many founders who have done their due diligence and talked to prospective clients, who have all said they definitely have "the problem they are trying to solve". But the critical aspect they didn't cover was how important that problem is in the context of all their other problems, and are they willing to pay to solve it.
It's an uphill battle if the problem you are solving is 10th on your customer's priority list, and there is no budget, or not enough ROI to pay for it to be solved.
Doing customer research is an art form, the questions you ask, and how you ask them, are critical to the understanding you gain from it.
Make sure you know that the problem you are solving for is worth solving.
With What Offer (Part 2 of Product Market Fit)
In this section we describe what our solution to the customer's problem is, and why it is preferable to other options they have.
Our product will deliver these outcomes and is different or better in this way to other solutions.
Product
A product can be a physical or virtual product, a service, an offer, or a combination of all those things. It's your solution to the problem your customer has.
In the prior section, you've defined your customer and their problem, this is where we describe the solution to their problem.
Your product might be payroll software for small businesses, or a grocery delivery service, or a patient - clinical trial matching service. Spend some time really clarifying and articulating what your product is - it's like the old "elevator pitch" - you need to be able to describe your business, in a way anyone can understand, in just a few seconds.
Outcomes you deliver
The key word here is "outcome". What is the result or outcome the customer gets when they use your product. Avoid describing what it does or how, and focus more on the result.
Your outcomes should directly relate to the problem your customer needs solving.
For example, our plumber needs to "run a more efficient business" (the problem), so our product "reduces errors and saves them time and money" (the outcome) which is a result of running a more efficient business.
A poor execution of this statement would be, our plumber needs to "run a more efficient business" (the problem), so our product "manages quoting, invoicing and scheduling" - this is the "how", not the outcome. It's possible you could manage quoting, invoicing and scheduling and not deliver on a more efficient business at all.
What outcome do you deliver?
Your differentiator
How is your product different to other options your customer has? Other options are often competitive or similar products, but not always.
For example, two significant options customers often have is a) Do nothing, keep things as is, b) Try to do it themselves. These can be significant competing options, and you'll need to be able to articulate how your product is different or better than these alternatives.
In commodity markets where products are very similar if not the same, you might rely on your brand or your social impact to differentiate. But in most cases, it'll be a feature of your product or service, or how you deliver your product that is different.
Make sure your differentiator is something your customers highly value, otherwise it's not a differentiator at all.
Via What Channels (Go To Market Fit)
Once you have your Product Market Fit sorted, we need to work out how to ensure our prospective customers are aware that our product exists, and they understand how our product can help them solve their problem.
We will use these marketing channels to build awareness and generate leads, and these sales channels to convert customers.
Marketing channels
For the purpose of this exercise, we'll assume the primary goal for our marketing channels is to build awareness and generate leads.
The type of customer you are targeting, and the product you have to offer will determine the best channels to reach your customer. For example if you are targeting an enterprise customer, you are likely to use events, content marketing and partnerships. If you are targeting plumbers, you're more likely to invest in SEO/SEM, social media and a free trial.
Examples of marketing channels include: SEO/SEM, email, social media, free trial/freemium, user referrals, events, content marketing, partnerships, PR, outdoor media, TV/Radio etc.
When you're starting out you're likely to try a number of different channels - be sure you are constantly optimising your execution for high quality leads (not volume of leads), and can measure your ROI to ensure your choices are delivering the best results.
Sales channels
Once you have inbound leads, you need to work out the best way to convert them.
If your customer is more likely to convert once they have seen the product and played with it, you should consider enabling them to signup and onboard themselves via self service.
If your product requires a bit more explanation, you might consider Inside Sales, where someone is always available on the phone or by video to help customers understand if the product is right for them.
If you are targeting larger businesses, you're more likely to need a Field Sales team, or Account Executives that go out and talk to your prospects.
You should always be optimising for the least friction for customers, and most efficient methods for the business.
Be wary of sales incentives or customer promises that drive greater conversion, but in the long run produce greater churn. Better to invest in getting customers that will love your product and stay, than a lot of additional customers that don't stay and potentially leave disgruntled.
For What Value (Business Growth)
Before we go off and execute on all the good ideas and decisions we've made, we need to make sure the market is big enough to deliver value worth our while.
This has a total addressable market (TAM) of n customers, of which we intend to gain x% market share, which results in approx. $M revenue for the business.
Total Addressable Market (TAM)
Determining your TAM, in some cases will be easy, and in others quite difficult. What you're after is an indicative number of possible customers.
If you are targeting an industry that is well understood, it's likely you'll be able to get some indicative numbers from a Google search. For example if you're looking for the number of plumbing or veterinary businesses in Australia, that information is quite easily accessible.
If you're targeting individuals who like contemporary jewellery or modern art, this is much harder. Your best bet is to find some kind of proxy number (like how many Australians visited a modern art museum last year) that you can use as an indicative market size.
Market Share
Market share is the percent of all possible customers (your TAM) you intend to go after.
When determining your target market share, consider competitive solutions already in play and their existing market share, and also account for customer who will never convert to you or your competitors. If you are in a competitive environment, will you be attaining new customers in this market, or will you be capturing share from your competitors?
Anywhere from 1-30% can be reasonable depending upon the market, but if you're just starting out, be very conservative, and start with 1-2% market share and then see how you go.
Be aware that 3% of a huge market, can provide more prospects than 30% of a smaller market.
Revenue
Revenue, or the value delivered to the business, is the outcome we are seeking in all of this. For most companies, revenue will be the metric used to determine success and/or growth.
To determine your target revenue, calculate your potential number of customers, times by your expected annual revenue per customer.
Example:
1. Calculate your potential number of customers, e.g. (TAM x market share), or (20,000 TAM x 5% market share) = 1,000 customers
2. Determine your expected annual revenue per customer (lets say $1,000/year per customer)
3. Calculate your potential number of customers x revenue per customer e.g. 1,000 customers x $1,000/year = $1M/year
But value, of course, can be different depending upon the purpose of your organisation. If you are a Non-Profit or a Government entity, you may have a different metric to measure the value you create. If that's so, you should replace the revenue with your own value metric.
In summary
If you spend time defining your Go To Market Strategy properly, it will force you to decide where to play, and how to win, and just as importantly, what you choose not to do. With this you will have a much greater chance striving for something reasonable and attainable, and it will significantly enhance your chance of success.
We hope you find this framework useful and informative - please put the Template to good use.
Feedback is very very welcome, drop a note in the comments below, or email jeni@gobigadvisory.com
