The title of this blog is a question I often hear from clients … and unfortunately, the answer is usually an “it depends.” The next reasonable question to ask is, “What does it depend on?”
Before I discuss some key go-to-market (GTM) considerations, a quick story around a typical situation I often encounter:
The client grew their business both organically and inorganically, with the latter being through numerous acquisitions. Although there were some operational synergies on the back-end (e.g., HR, Finance, IT, etc.), the front-office sales teams were still selling in a siloed manner. Some business unit (think acquisition companies) sales teams were competing against their own company – multiple sellers were calling on the same customer and often meeting in their waiting room. The sellers were positioning different offerings but to the same customers and through the same channel – direct field sales. In some Voice of the Customer interviews, the client’s customers told me that they were frustrated at having so many meetings, calls, and follow-ups from the same company and that each product sales team seemed oblivious to what the other units/teams were doing. The client’s GTM strategy wasn’t coherent, coordinated, or integrated and it adversely impacted customer satisfaction and loyalty.
First, we probably should define our terms, as go-to-market (GTM) can mean different things to different people and business functions. In the broadest sense, the strategic questions and roadmap will traverse multiple functions within a company, such as marketing, product development, and sales, among others.
In a nutshell, a go-to-market model will include the following areas:
- What market segments you want to pursue
- What offerings (product and services) you want to sell
- What channels or routes-to-market (RTM) you want to use
As you define each GTM area, you can to begin to answer the macro question around what offerings, to what market segments, through which channels.
The channels can include direct field sales, partners, eCommerce, contact centers, or a retail storefront, among other variants. Some sub-components of the GTM definition, which I’ll address in a follow-on blog post, may include marketing tactics, value propositions, and customer experience management.
Per the above GTM areas, there are many strategic decisions that need to be made to determine a go-to-market model, which should be re-visited on a semi-annual basis or more frequently, depending on how dynamic the market and industry are (e.g., the software industry is usually more dynamic than consumer packaged goods).
For each GTM area, let me share some considerations to think about and discuss with your team.
- Choosing the right market segments is both an art and science – you will get some wrong. The key question is, “When do you withdraw?”
- Sizing the market segments is inexact but can be done via some benchmarks and build-up models or sampling around addressable spend
- Market segments should be measureable, substantial, and profitable to pursue – if you are missing any of those elements, you should probably stay away
Offerings (Products and Services)
- Most companies have a Pareto (80/20) relationship with regards to the performance of their offerings – many firms have too many SKUs or product choices. It is a well-known strategy to leverage a single platform (think Toyota Camry and Lexus) or product model (Southwest Airlines just using the Boeing 737’s) to minimize costs, maintenance, and inventory challenges.
- Some offerings are a better fit for certain channels – you are generally not going to sell paper clips via a direct field sales force, just as you wouldn’t sell complex system integration projects via an eCommerce site.
- Most new product launches fail – there are many reasons, but some GTM related ones are not identifying a precise market or audience for the offering and not having done the relevant pre-launch market research.
- Omnichannel is the new multi-channel concept – having a seamless experience across channels, devices (e.g., mobile), and touchpoints. Most consumers and buyers use numerous channels as they execute their buying process.
- Each channel has advantages and disadvantages, depending on the objectives for it and the RTM strategy for the offering. For example, a mature offering that has declining gross margins may start to be a bad fit for an expensive direct sales channel – the evolving economics may not make sense anymore.
- The channel strategy should be linked to the corporate growth strategy – for example, partners can accelerate the time-to-market and the building of a ‘beachhead,’ but they can also make it harder to manage the customer experience and stay close to the end user.
Per the questions above and the choices involved, the number of offering-channel-segment combinations is considerable, and some paths will be wrong. Not unlike picking stocks, you have to frequently re-assess your overall GTM portfolio to determine if you should ‘double down’ on your winners and ‘cut your losses short.’
Implications for the Sales Team
If you are a sales leader, what are the implications of GTM decisions? Once your segments, offerings, and channels are defined, the next question becomes how do I structure, size, and align my sales organization accordingly? We have developed a detailed guide to address these questions, using our 4C framework for Sales Resource Optimization (Customer, Coverage, Capacity, and Capability) here:
Today, products obsolesce, commoditization, and the migration of customer value are happening even quicker. If you don't adapt your GTM model and sales team structure, it will be hard to exploit market changes and be agile enough to shift investments. We have had a number of clients throw good money after bad businesses … and ultimately, their growth businesses were under-funded and didn’t reach their fullest potential.
For a broad, comprehensive look at GTM considerations, see our Go-to-Market Primer here.