The best way to build a go to market strategy is to copy someone else. Unless you want to make money, or grow consistently, and then it’s not such a great idea. Let me show you why with three go to market strategy examples.
The right strategy doesn’t depend on your product, but your buyers.
Let’s take a look at the companies, their buyers, and their strategy. At the end I’ll give you a model for working this out for yourself.
For my first example, let’s take a company that wants to own the desktop computing market. Firstly, come up with something that’s truly amazing and different, clever, unique. Take that to as broad a market as you possibly can, and this is what the company I’m about to talk about did. Take it to as broad a market as you possibly can. Find out from that early market experience what group of buyers are likely to be a good market for you to focus on in the future. Start very broadly, selling very widely. Find the pattern and then find a niche that you think might be worth dominating, and then completely change the strategy and focus just on that.
Let’s pick the design industry and dominate that market. Why design? Well, they’re kind of cool, so if you’re going to use them as an example for others, it’s a good reference point. Secondly, they’re a very insular group. They certainly move between design companies, but they only move between design companies. They tend not to move out of the industry. They stay within their own group. They talk to each other a lot. They’re self-referencing, very mobile which is great for contagion because you’re trying to spread a virus.
Once we’ve dominated that first market, then we can move on to another market. Let’s say education. Why education? Well, again, it’s a very good trumpeting,. It’s a good market to create users early on and for them to want to stick with a product later on. Pick a second niche. Work out what it needs to completely meet its needs, provide that, dominate that market, and then move on to a third market, and a fourth, and a fifth.
At some point, we’ve got so many niches that we don’t really need niches anymore. Everybody’s buying a product like this. By the way, your name’s Apple and your product is the Mac, and that’s exactly what they did.
Leader in an enterprise software category
For my second go to market strategy example, I’m going to pick an established player in an established market. Very different story. This established player in an established market had done such a good job of riding the enterprise applications market, that they were near dominant in that space. That’s good news, but it’s also bad news. The bad news is that pretty much all of the market, the enterprise market, had already bought either from this company, or from one of their competitors. Whilst they enjoyed the lion’s share of the market, the market was pretty much drying up. Everybody had bought a product like this from either them or from their competitor.
The investors still wanted growth. In fact, they wanted 20% plus annual growth. How do you do that in mature markets? Do you just allow the market to decline gracefully, don’t over-invest and just enjoy the ride down? No. The investors, again, were after growth. What do they do? Because they own so much of the market, if they can slow the decline of the market down, sure it benefits their competitors, but it benefits them even more. They’ve got the lion’s share of the market.
What do they do? They find new uses and new users. One of those new users was sales and marketing not previously using the enterprise applications. That’s a great new user and a new use. Small businesses who’ve tended not to buy enterprise-grade applications, by definition. How can you make your enterprise applications the right size for smaller businesses and take it to them in a way that they’re willing to digest it? Doing that, 20% annual growth year on year heading towards 20 billion, and your name is SAP.
Challenger in enterprise software
For my third go to market strategy example, again I’ll stick to a mature market, but this time the company’s not the gorilla. In fact, they’re probably fourth on a good day. Maybe less, maybe fifth or sixth in the market. It’s a big market, and they’ve done well, they’ve profited, and they’ve used those profits to continue to invest in sales and marketing as well as R&D. The problem is that as the market started to decline, their fortunes declined. They’ll continue to invest, but they’re investing in order to grow their share in a market that was pretty much consolidating. Now we’re losing money hand over fist.
What’s the right strategy then? Like the second example for go to market strategy example I gave, it’s a declining market, it’s maxed out, it’s declining. But in this case they don’t have the market power to slow the decline, to arrest the decline by extending it. What does that company do? They get bought out and buried in somebody else’s technology. They go from being a loss-making to profitable in 24 hours. How? By sacking the entire sales and marketing team and stopping the R&D. Certainly maintain the support, but stop the future enhancements of the product. Recognize that this product has reached its peak in a declining market. It’s not going to get any better than this. Don’t try to get more customers, serve those you have at the moment profitably. That’s exactly what CA did when they bought Ingres.
We’ve got 3 very different go to market strategy examples. Each of them different one from the other, each of them precisely correct according to what the market needed at that time. We need a way of forming a go to market strategy respectful of what the market needs, not what you the seller wants to do. That’s what we’ll look at shortly.
Lessons from these three go to market strategy examples
It all comes down to thinking about your buyer, not your product. What does the buyer need? It turns out that that changes as the market matures. I’m referring here, of course, to Geoffrey Moore’s Chasm Theory, of which I’m an avid fan.
Geoffrey Moore put this forward in Crossing the Chasm and Inside the Tornado. What many of us do when we describe market adoption is we put ourselves, the vendor, on that chart. It doesn’t matter where you are. What matters is where your market is. We need to identify where the market is and therefore, what they’re ready for and that changes over time. The right strategy when the market’s new is very different from the right strategy when the market is more established, regardless of where you are in your journey as the seller. It’s more about your buyer and where they are in their journey.
In the early market, the buyers want to gain strategic advantage, so you should take an incomplete product so that you can co-innovate with them. That’s what they want.
As the market matures a little bit, the next part of the market wants proof. Best way to give them proof is if they find others just like them are buying it, too. You want a micro-niche. Instead of being broad, you’re now selling very narrowly and it had better be a complete solution.
Then, after you’ve earned the first, and then the second, and then the third, seventh, eighth, ninth, tenth niche, there’s no need to have a niche strategy because there’s enough of the market that’s bought. What does the market need at this point? It no longer needs the confidence that this category’s worth buying. What they need now is the best product. You need a cracking product market price or better, and broad distribution. That’s what the market needs.
When the market peaks, it starts to max out, they basically want to prescribe the rules,. They’re a third or fourth time buyer at this stage, they know what they want, and they want you to comply with their expectations. They want to buy from the well-branded supplier to be a safe bet, and they want that well-branded supplier to meet their needs as they perceive them. Now you’re into customising around their well-shaped needs.
As the market declines, you either need to slow the decline with new uses and new users if you’re the gorilla, or if you’re not get out of the market as gracefully as you can.
Long story short, you’re shaping your strategy according to what the buyer needs, not what you as the seller want to do. Work at where your market is, work at what strategy is needed therefore. And do it, don’t just talk about it. Build and execute on a strategy that precisely meets what the market needs at that time, and plan for the next phase in the market so that when the buyers start to indicate that you’ve run out of one group of buyers, and you’re ready to move on to the next, then you’ve got strategy ready to execute for that next group of buyers.
As you know, Funnel Plan is a great way for sales and marketing together to make decisions and then articulate their decisions about the objectives, the strategy, the velocity, and the tactics that they’re going to use together to earn the right to serve new customers. Now we’re talking today about the strategy, in particular,. The strategy that’s determined by the maturity of the segment being targeted. Let’s zoom in and take a look before we take a look at the software.
In the Funnel Plan, we’ve identified an ideal client profile, the ICP. The ideal client profile describes what’s true for every segment that we’re serving.
Consider having a separate Funnel Plan for each of the major product groups that you’re taking to market. Not like what I did in that example, where I was trying to keep it short for you. Truthfully, you should have a different funnel plan for each major product group and probably each major geography.
If you don’t have a funnel plan yet, go get a free one at funnelplan.com. Go get yourself a free funnel plan, of course, there’s more power in the paid versions, but start with a free one. You can describe your target market and the strategy and the tactics that you’re going to use to take that story to market.
I’ve got lots more lined up for next week. Until then, may your funnel be full, and always flowing
Our thanks to:
- You for watching this week’s show
- Geoffrey Moore for Chasm Theory
- John Ang for video production
- Lisbeth Pena for blog production
- Hugh Macfarlane for scripting and presenting this week’s show