Taking your product to market involves the 4Ps and being aware of who the customer is. To take your product to market, start with defining the markets you’re going after and the target customer. Then understand where they are and how you plan to reach them. Where do these target customers typically buy a similar product or service and which channels do we promote in?
Next, it’s important to both create a product that uniquely solves a set of pain points and position this idea in the minds of prospective customers. And finally, a go-to-market strategy involves capturing the value you create and deliver through a pricing strategy. Going to market is about delivering value to the right customer—and then capturing some of it.
Define the Market
Start by defining the ideal market. This definition will guide everything else. Where can your product most effectively solve the needs of customers? Large businesses or enterprises? Small to mid-sized businesses? Or consumers?
Identify the Buyer’s Center and Journey
Purchase decisions are often undertaken as a group, particularly in a B2B context. This group, the buying center, is a collection of different individuals who influence the process of buying something. There’s the initiator, the person that starts the buying process and shows initial interest, the user, the influencer, the decision-maker, the buyer, and the approver.
After determining the roles of the buying center for your product and their needs, map value requirements to each persona. Document each persona, their pain points, the value they expect, and the right channel to reach them. If you’re trying to influence Chief Information Officers with a value proposition of being able to reduce risk, you need to reach them through the channels they participate in: top IT publications, their favorite forums, and the analysts they consult.
With a clear understanding of the buying center’s personas and their individual needs, understand the unique buyer’s journey for your product. What are the stages from how your customer goes from hearing about you for the first time to deciding to buy your solution? Mapping out this process helps you understand what it takes to communicate value and influence prospective customers.
Define the Distribution Strategy
A large part of defining a GTM strategy is determining the right distribution. Distribution is the way you get your product to customers.
The appropriate distribution and sales strategy depends on, once again, the customer. If you have a new polyester shirt you believe has potential, you would reach more of your target customers by selling through popular retailers. Here, retailers are the intermediary—allowing you to reach many end customers in a more cost-effective manner than selling to each individual customer directly. For this shirt, selling through this channel was most effective, but the right one depends on your target customer. Some of the most common distribution models include self-service, inside sales, field sales, and channel.
The self-service model is when a customer makes a purchase on their own. Its popularity among SaaS companies is indicative of the model’s effectiveness. It’s profitable and allows the ability to scale. We interact with self-service models when subscribing to Netflix or buying a product on Amazon.
Self-service works well for low-complexity products that see a high volume of sales. Depending on a web of factors, distribution is based on pricing, cost of customer acquisition, the product, and target customer. If the average selling price (ASP) for an entertainment streaming service is $5, the cost of customer acquisition must mirror that, at $5 or less. It’s impossible for a sales representative to directly sell the service to 18,000 users to cover the cost of acquisition. It would be impossible to just break even.
While self-service means forgoing a traditional direct sales approach, the laws of selling still apply. You will need to rely on marketing efforts to drive revenue by creating awareness, educational content, and conversion elements that shepherd the entire purchase process from awareness to close.
For a product with a low amount of complexity and a mid-tier price point, an inside sales model allows you to proactively guide customers in their buying process. A higher ASP brings higher expectations for the customer, such as signed contracts, premium SLAs, and the ability to get human support when problems arise. This risk-driven need for more human relationships in the purchase decision loop leverages many of the elements of a self-service model: more content to allow customers to self-educate and more automated mechanisms for easier onboarding and support.
The field sales model is a complete sales organization. A team of sales managers, field reps, sales engineers, a sales development representative (SDR) team, and sales operations. It involves significant investment since you’re not only creating a comprehensive organization, but field reps are also experienced, highly-compensated individuals. This model is suited for selling complex products to large enterprise customers that need significant hand-holding. Since significant value is being transacted between the average customer and the company, there’s more emphasis on relationships.
A field sales model is simple to start with but is a challenge to scale. It’s expensive and equipping a large, distributed organization to sell requires you to train them so they can be productive.
In the channel model, a third-party—an outside agency or partner—sells your product for you. The drawback of selling through a channel partner is less control over the customer experience and sales process, as well as less access to customer feedback. For example, selling a new smartphone to users directly, rather than through a channel, gives you control over providing a consistent experience for your customers. And with this level of proximity, gaining feedback from customers can help improve your product, especially if it’s at an earlier stage in its lifecycle.
The benefits of a channel approach include lower sales and marketing costs and the ability to scale efficiently. In contrast to building and growing an in-house sales team, the cost of overhead and training is lower with channel partners. For a mature product (proven to solve a problem and has seen product-market fit), using channel partners is a compelling long-term distribution strategy.
The nuances depend on the nature of your product as well. Ben Horowitz, co-founder and general partner at venture capital firm Andreessen Horowitz, describes distribution as a function of the target customer and the nature of your product. That is: channel = f(product, target customer). With regard to the customer variable, is the buying decision a group or individual decision? On the product side, does it have complexities? Do you need to invest much in personalized customer education or implementation in their environment? The nature of the product and the customer informs the expected acquisition costs versus the expected revenue, given the context. Knowing these two variables helps you meet your goals by choosing the right distribution channel.
For example, if we’re selling a data security software product to a very small business (VSB), direct sales would be an ineffective sales strategy. Sales expenditure to acquire the customer would far exceed the revenue generated per account.
Generate Interest: Content Strategy
With a deep understanding of your target prospective customer, their needs, where they are, and their buying journey, you can now create a demand funnel that sets a framework for how you plan to capture the attention of prospects, hone their attention into convincing them to consider buying your product and winning their business.
Outbound and inbound marketing are two strategies that can give your funnel a gravitational pull and generate interest among your prospects.
An outbound strategy is a well-worn and well-known approach. It’s the approach in which you send emails, call, or proactively get leads at a conference. Getting leads through this strategy is expensive and has a low conversion rate. It’s not easy to push prospects down a path. On the other hand, an inbound strategy is a more effective and cheaper tactic. Rather than directly reaching out, you’re delivering informational content such as blogs, podcasts, white papers about your domain. With an inbound approach, you’re delivering value to customers before they even buy your product.
Most go-to-market strategies regarding interest generation are not binary. Most companies have a healthy mix of both inbound and outbound tactics. However, consumers are increasingly less receptive to outbound acquisition methods such as paid email and telemarketing. The Direct Marketing Association revealed that more than 93% of telemarketing calls end in failure. By generating content and information, it not only decreases the cost of acquisition for more of your customers but has a compounding effect. For example, if you are a digital greeting card company, investing in being the thought leader on the Internet about holidays and celebrations brings in more leads and builds a strong brand.
Both the funnel and your go-to-market strategy are not static. Understand how they are performing in order to optimize them. For product marketers, one of the key outcomes of strong strategy and execution is selling success. Specifically, pipeline generation, or how many opportunities come into the sales funnel.
With the sales funnel, the metrics you need to optimize are volume, conversion rates, and time. While the overall win rate can show the effectiveness of your GTM strategy, being able to dissect the funnel can reveal opportunities to optimize conversion rates. If a significant portion of prospects drops out of the funnel in the middle, that is an area to investigate and focus on.