More than 90% of SaaS startups fail within three years of launch despite adequate funding and initial growth. Failure to establish a product-market fit is the most common reason for failure, which boils down to a poor go-to-market strategy.
Here is a comprehensive guide to how SaaS startups can develop effective go-to-market strategies to increase conversions and revenue.
What Is a Go-To-Market Strategy?
A go-to-market (GTM) strategy is a strategic action plan for launching a new product or service to the market. It aims at creating a blueprint for delivering a product/service to the end customer while considering factors like pricing, marketing, distribution, acquisition, retention, and more.
Why Do SaaS Startups Need a Go-To-Market Strategy?
As a SaaS startup, the success of your products depends on your GTM strategy. You may have a revolutionary product, but if you don’t define your ideal customer profile (ICP) and position your product appropriately, it will fail. A GTM strategy gives you a step-by-step process of developing and launching a product that succeeds even in the most competitive markets.
Some benefits of a well-devised GTM strategy are:
- A well-defined plan for founders and stakeholders
- Better cost management
- Reduced time to market
- Increased agility and ability to adapt to changes
- Improved challenge management
- Alignment with customer and market requirements
- Increased chances of product success
- Establishing a growth path
- Enhanced customer experience and satisfaction
- Ensuring regulatory compliance
How Is a Go-To-Market Strategy Different from a Business Model?
A GTM strategy might seem similar to a business model, as both discuss the blueprint for succeeding in a new market and gaining a competitive edge. However, the two are different in terms of their purpose and planning. Let’s discuss the difference between a GTM strategy and a business model.
A business model is a comprehensive framework that outlines key elements of an organization. The purpose of a business model is to develop a systematic approach to unlock the true potential of an organization while delivering value to customers. It also mentions the monetization strategies of an organization.
Here’s a visual representation of a business model.
A GTM strategy, on the other hand, is product-specific and aimed at planning how a company will launch new products or services in a way that attracts customers, drives repeat business, and provides a competitive advantage.
Here’s a visual representation of a GTM strategy.
Important Elements of a Go-To-Market Strategy
A GTM strategy will be different for each company; however, there are certain elements that every GTM strategy must have. These include:
- Problems your potential customers are facing and the solutions they need
- Business validation (by pre-selling your product)
- Feedback from customers (by offering your product for beta testing)
- Pricing strategy
- Ideal customer profile (ICP) and buyer persona
- Detailed information about customers
- Position strategy
How to Build a Go-To-Market Strategy that Gives You a Competitive Edge
Having discussed the importance of a GTM strategy and the elements it should include, let’s delve into a step-by-step process of creating a successful GTM strategy.
Determine Who You Are Attempting to Reach
The first step in developing any business strategy – GTM strategy, business model, business plan, pitch deck, etc. – is to define your target audience. As a visionary startup owner, you could feel the temptation to sell to every customer in the market. Sadly, not all customers will get equal value from your solution.
For example, Trello was developed for business owners and project managers looking for an easy way to manage small and simple projects and team communications. Businesses that need to manage more complex projects will go for holistic solutions like Asana or Wrike.
Lack of market need is the biggest reason why startups fail. That’s why defining a target audience is one of the first things startups should do when building a GTM strategy. You need to identify your audience based on:
- Geographical locations
- Psychological attributes
Once you’ve found your product-market fit, you’ll need to create ideal customer profiles and buyer personas to streamline your positioning and marketing.
Define Your Offer and Unique Value Proposition
Next, you need to craft your offer ad value proposition. This is the easiest part of creating a GTM, provided that you know your product really well. All you need to do is ask yourself: “What is the one thing that makes my product the best solution to the problem your customers are facing?
Suppose your product is a CRM software solution that helps small and medium businesses manage customer relationships. Your value proposition could be that your solution offers the most third-party integrations in the entire CRM space, or it enables full automation of CRM operations.
For example, Salesforce, the leading enterprise solutions vendor globally, has the following USPs:
- Department-specific (HR, sales, marketing) and industry-specific (IT, real estate, retail)
- Flexible solutions with myriad integrations
- Competitive pricing and high value for money
Salesforce offers holistic enterprise solutions to medium and large businesses at an affordable price to help them reduce operational expenses, enhance organizational efficiency, improve customer experience, and catalyze business growth.
It’s your turn now. Try to summarize your unique offering in one sentence, and that will be your USP.
Establish Your Brand, Positioning, and Marketing Strategy
Developing a branding and marketing strategy to position your product in the market is one of the most critical aspects of a GTM strategy. If you fail to position yourself in the market correctly, you won’t be able to attract your target customers.
First, you need to establish your brand. If you are a newly formed startup, be sure to have a name and logo that your customers can relate to. You also need to define the following attributes of your brand:
- Language and voice
You must have heard of HubSpot, a popular marketing platform and vendor of SaaS products. Here’s what HubSpot’s brand attributes look like:
- Personality: Youthful and energetic
- Language: Informal, warm, and helpful
- Values: Transparency, flexibility, belonging, and autonomy
- Color: Calypso (blue) and Lorax (red)
Once you have your brand established, you need to decide how you want to position your brand in front of your target customers. You can start by answering these three questions.
- How do you want your customers to perceive your brand and product?
- What makes your brand different from your competitors?
- What is your USP (already answered), and what is the biggest benefit you offer?
You can also follow this ultimate guide to brand positioning.
Finally, you need to create a marketing plan. There are several marketing strategies SaaS companies can take, but let’s stick to the most popular approach leveraged by most companies. It comprises three key elements:
SaaS companies that use content marketing see:
- 30% higher growth rates
- 5-10% higher retention rates
- up to 647% higher return on investment
An effective content marketing strategy can help you drive more organic traffic, attract more backlinks, and leverage gated content to generate more leads.
Most businesses think of blogging when they hear content marketing. While blogging is an essential element of a content marketing strategy, you must also use webinars, case studies, and various types of videos – such as educational videos, explainer videos, and testimonial videos – to make it more effective.
Running PPC ads is a cost-effective way to advertise your product and reach a broad, highly targeted customer base. You can run search engine ads and target high-volume keywords to bring your product out in front of people, increase brand awareness, and support your organic content marketing efforts.
All the major SaaS companies have an impressive social media presence. For instance, Salesforce has 543k followers on Twitter and 144k followers on Instagram. Survey Monkey, the world’s leading survey software vendor, has 45.5k followers on Twitter, 13.9k followers on Instagram, and 24.8k subscribers on YouTube.
Social media goes a long way in making your marketing strategy complete and user-centric. You can use social media to increase brand awareness, improve customer engagement, and offer customer support.
Decide Which Channels You’ll Use
Choosing the best channels is a part of developing a marketing strategy, but let’s discuss it separately as you can use certain channels for both marketing and customer service.
Twitter is a common example. All major SaaS brands use Twitter to answer customer queries and provide quick customer service.
Twitter is a natural choice for SaaS companies, but there are other channels as well that you should use to reach and engage a broader customer base. LinkedIn is another lucrative channel SaaS startups shouldn’t overlook. More than 55 million companies are listed on LinkedIn, and it could turn out to be a gold mine for SaaS startups.
Also, don’t forget about offline marketing. In this increasingly digital world, new businesses often sideline offline advertising. Leveraging offline channels the right way can help you reach more customers and increase awareness.
Look at this ad by HipChat (now merged with Slack).
However, make sure to bridge the offline-online gap by integrating your offline and digital marketing. QR codes can help you bridge this gap. You can create a dynamic QR code with a logo and put it up on your offline ad. Link the code to your sign-up or free-trial page to generate leads and conversions.
Develop a Pricing Strategy
You’ll need to work with your marketing and finance teams to develop a pricing model and strategy. The majority of SaaS companies use subscription billing models instead of charging one-time software license costs. The subscription model is more flexible for users as it doesn’t require a large upfront investment and they can stop using the product whenever they want.
As for your pricing strategy, the tiered pricing structure is the most common among SaaS vendors. This structure includes multiple tiers, with each tier having more features and being costlier than the previous one.
Often, vendors have a freemium model. Through this model, they allow a user to use the product with limited features for free and then try to have them upgrade to higher plans.
A good example of the tiered pricing model is Zendesk, a popular customer service software provider. Zendesk offers three plans: Suite Team, Suite Growth, and Suite Professional, priced at $49, $79, and $99 per month, respectively.
Choose Your Sales Strategy
Not many SaaS startups focus on developing a sales strategy. You need to build a sales strategy that aligns with your target audience, pricing, and market budget.
Mission Matrix is an effective approach to developing a SaaS sales strategy. It classified SaaS customers into three types:
- Small businesses
- Medium-size businesses
- Large enterprises
Based on the target audience, SaaS businesses can use one of the following sales strategies:
- Low-Touch: Low cost per acquisition and minimal interaction with the sales team; ideal for targeting small businesses (low product price, high user volume)
- High-Touch: High acquisition costs and numerous interactions with the sales team required; best for targeting large corporations (high product price, low user volume)
- Medium-Touch: A mix of low-touch and high-touch sales strategies (medium product price, medium user volume)
Set Clear Goals and KPIs
The final step in creating a GTM strategy is to set clear goals and select the right metrics to track. Be sure to monitor your GTM strategy from the beginning. Some important metrics to track include:
- Engagement (total website visits, social media interaction, etc.)
- Conversions (free trial sign-ups)
- Upsells (users upgrading from free to paid versions)
- Customer acquisition costs (CAC)
- Return on investment (ROI) on marketing strategy
- Customer lifetime value (LTV)
- Sales cycle length
Analyze these metrics and identify where you could improve. For example, if your website visits are high but free trial sign-ups are low, you might need to make your product landing page more persuasive.
As a SaaS business, developing a world-class product isn’t your biggest challenge. The major hurdle is to get the first 1,000 customers, and then the first 10,000 customers, and so on. This is only possible if you have a robust go-to-market strategy that defines your target audience, product-market fit, and pricing and market positioning strategy. That’s why developing a GTM strategy should be your first step in launching a new SaaS product.