Starting a startup can be challenging in the first few years. According to the U.S. Small Business Administration, about two-thirds of new businesses survive two years and almost half survive more than five years. Factors leading to entrepreneurial failure include lack of market demand, shortage of funds, inappropriate team, cost issues, etc. Therefore, it is particularly important for companies to have a complete GTM strategy for listing.
A business plan is the first step in creating a successful startup. Proper planning helps define your products and services, clarify your business goals, and analyze competitors. Your business plan should include a marketing approach that makes people aware of your product and allows them to find you. This article serves as a roadmap for building your business and a tool for convincing investors that your company will generate strong returns for them.
After talking with a marketing executive at a leading company, I realized that many people are confused and think that a go-to-market (GTM) strategy is just about bringing a new product or service to market. In fact, I believe that successful businesses continually adjust their GTM strategies as new information becomes available in the market, such as customer demand, competitor activity, technological innovation, and many other factors that may require changes to be made in response to these factors. response, which is essential for continued growth. A go-to-market strategy (GTM strategy) is a plan of action that specifies how a company will reach target customers and gain a competitive advantage.
01. 4 Quadrants of Startup Go-to-Market (GTM) Strategy
What?
The purpose of a go-to-market strategy is to map out a company's approach to achieving and maintaining competitive advantage in the future. Therefore, it determines what the company has to offer to its target customers and the value proposition. It also deeply considers what makes the company unique compared to its competitors' products.
Who?
The entire marketing team works directly with customers who drive go-to-market strategies. For example, they may work with salespeople to develop competitive pricing strategies based on changes in consumer behavior , or they may use competitive advantage to target customers in certain sales channels or in certain regional markets.
Where?
Go-to-market strategies help marketers identify gaps, lack of awareness about the product among customers, align with channel wise sales, this is the point where the 80/20 rule is applied to get maximum returns and sales numbers, with more clarity on how to promote and where to create product demand.
How?
More sales channels are used to empower market coverage models, sales strategies, compensation plans, sales training, sales tools and channel conflicts. Outlining your distribution model will help you think through problems and opportunities and help get everyone on the same page to gain a competitive advantage.
02. Templates and examples of go-to-market strategies for startups
The following framework is a useful model for looking at a company's marketing capabilities from different perspectives. These frameworks will help evaluate the effectiveness of marketing operations and identify changes needed to support new strategic directions.
2.1 Market entry strategy template for startups
Lack of thoughtful planning is one of the common reasons why startups fail. That's why a robust GTM strategy can hedge against future risk. You need to choose between a broad buyer base or a narrow target market, channel sales or direct sales, and two-sided or one-sided markets.
The GTM Strategy Framework for Startups was created by Michael J Skok for the Harvard University Innovation Lab. There is a simple marketing and sales cycle on the left side of the image, describing the stages a potential customer goes through in purchasing a product. First, customers become aware of your product, and then become interested in and understand how the product meets their needs. The following stages are potential buyer engagement, trial purchase, and final purchase of the product.
It's often difficult to measure progress in engaging your audience and converting prospects into interested buyers. Therefore, you need to focus on metrics like Net Promoter Score, which will help you estimate your results.
Michael J Skok said that for start-ups, brand building should not be based on products or services. Instead, it should reflect the founders, the team, the ideas they stand for, and the company’s culture. Additionally, startups should be consistent from the beginning to gain brand integrity.
When launching a startup, answer these questions:
- What about the world that is changing to make us necessary?
- What is our fundamental commitment to our customers?
- What makes you unique?
- What makes you valuable to your customers?
- What emotion do you want to evoke in your customers?
- What would your startup look like if it were a person?
- How will you present yourself to the world?
Developing a Go-to-Market Strategy All of this can seem a little overwhelming. So where would you start? Often, the best answer is through research.
Market research is most useful in identifying and evaluating competitive markets. It's great for creating context and helping determine what you want to do and where. Gather raw data about your company and competitors. This is helpful for the four steps of your GTM strategy.
2.2 Salesforce’s market entry strategy
Salesforce GTM strategy recommends defining the market segments you are targeting, describing the key characteristics of potential buyers, and identifying your products and value proposition. Additionally, you need to consider your customer communication channels, budget, financial model, and marketing plan.
To build your value proposition, you need to develop a simple statement that describes your product and its advantages over your competitors. To define communication channels, think about where customers will purchase your product and how they will get support and questions answered. Creating a budget requires prioritizing business needs such as sales and development, as well as forecasting future profits.
The final part of a Salesforce strategy is marketing activities, such as creating a marketing plan and marketing calendar that contain activities that demonstrate the value of the product to customers. The final point of this strategy requires discussing the goals with the team and gathering feedback.
2.3 McKinsey’s market entry framework for mature companies
According to McKinsey's approach, go-to-market strategies include seven growth directions applicable to mature companies.
- The first way the company can grow is by selling a wider product range to existing customers. You can increase purchase frequency or sell additional products or services through promotional programs.
- Another way is to attract new customers through your existing product range.
- One of the most common ways to grow your business is by launching new products and services.
- You can redesign your value delivery system by offering more benefits to customers, such as increased product selection, a wider range of services, or lower prices.
- Large companies can improve the industrial structure through acquisitions of other companies and mergers.
- Your company can expand into new geographic markets or expand coverage in areas where you already operate.
- Many companies grow by venturing into new businesses where they can apply their existing skills.
Successful companies often pursue multiple growth directions simultaneously; some, such as Disney, use all seven paths simultaneously.
2.4 Implementation of IBM’s market entry strategy
IBM is a vivid example of a well-executed new market entry strategy. IBM's sales model changed in the 1980s due to changes in the IT market, with the number of customers increasing but the scale shrinking. Initially, the company had only one sales channel—distributors or a direct sales force. When this model proved ineffective, IBM began adding new channels, including value-added resellers, direct mail, telemarketing, resellers, and catalog operations.
In recent years, the company has added approximately 18 new channels for communicating with customers. The new GTM model is called hybrid model because it combines direct and indirect channels. Due to the hybrid model, IBM achieved a competitive advantage in the market and is now a leading cloud platform company.
03. Summary
Before bringing a new product to market or entering a new market, developing a successful go-to-market strategy is critical. When creating a GTM strategy, keep the main components in mind: customers, company, and competitors. Other factors to consider include target market, channel, product or service, price and positioning. Before you start developing a strategy, consider the current situation of your business, your goals, how to achieve them, and how long implementation will take.
The most important step is to define your target customers and target market. The next step is to understand what problem your product will solve for your customers. You should then develop your messaging, consider the buyer’s journey, create a pricing strategy, build brand awareness and generate content. The final step is developing a sales funnel, customer support services, and measuring results. While a GTM strategy is just the first step toward business success, it gives your company a greater chance of achieving impressive results.
Original link:
Getting Started | Strategies for startups to successfully enter the market
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