Go-to-Market - Let’s Get SaaS-y
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Go-to-Market (GTM), another industry catch phrase or a better way to ensure Marketing, Sales and Customer Success are integrated and aligned to the customer journey?
GTM is the subject for today’s SaaS Barometer Newsletter as the topic is trending amongst industry thought leaders and practitioners alike!
Go-to-Market Origin
The first mention of Go-to-Market that I could find was in a Harvard Business Review article written by Rowland Moriarty and Usula Moran in November, 1990. The term was used to highlight the lack of a well defined marketing architecture to optimize the cost and coverage of leveraging new channels and methods to acquire customers.
Theni, 12 years later in 2002, Lawrence Friendman published the book “Go To Market Strategy: Advanced Techniques and Tools for Selling More Products, to More Customers, More Profitably”. The author offers a clear and practical framework for developing a go to market strategy including choosing the right markets, channels, products, customers, and value proposition(s) to increase growth and profits.
Wikipedia defines it as: “go-to–market strategy or GTM strategy is the plan of an organization, utilizing their outside resources (e.g., sales force and distributors), to deliver their unique value proposition to customers ("go-to-market") and to achieve a competitive advantage. The goal is to enhance the overall customer experience by not only offering a superior product and/or more competitive pricing, but also creating a clear framework and plan to penetrate a defined market and/or target audience”.
Go-to-Market in Today’s SaaS Industry
Gartner recently published an article entitled: What a Go-to-Market Strategy Is, and Why SaaS Providers Need It which defines go-to-market (GTM) strategy as “a comprehensive plan that outlines how a product will enter and capture the targeted market. The GTM strategy focuses on two main aspects”:
Identifying the ideal target customer for an offering, whether introducing a new product to an existing market or taking an existing product to a new market.
Determining the best way to get the product in front of the target users.
Gartner specifically highlighted that “a GTM strategy is a holistic approach that unifies all business strategies and sets the groundwork for them, from product development and marketing to sales and customer success”.
Recently the concept of “Go-to-Market” has been expanded to include almost every aspect of how vendors identify, acquire, retain and expand customer relationships. The common components of GTM include:
The “strategy” defining how to target, acquire, retain and grow customers
The “organizations” responsible to execute the GTM strategy including Marketing, Sales and Customer Success
The “processes” used to align the GTM organizations to the customer lifecycle
The “technologies” leveraged to automate process, and enable the resources responsible for the GTM process
The “data” required to identify, contact and measure the effectiveness of the GTM strategy
Go-to-Market (GTM) is becoming a catch-phrase that encompasses everything required to align Marketing, Sales and Customer Success to the customer lifecycle resulting in more efficient, productive and profitable revenue growth.
The broader vision behind GTM builds upon the foundational premise that motivated me to originally found RevOps Squared (now Benchmarkit) in 2008 - to enable companies to better use data and metrics to align Marketing, Sales and Services…even before Customer Success was a thing! I digress, but Revenue Operations has not become the “strategic function” that I initially envisioned as a mechanism to align and integrate the data, processes, platforms and resources across all the functions that are part of the modern “GTM” organization.
Go-to-Market Motions
When we benchmark any category of SaaS Performance Metrics, one of the company attributes that we use for segmenting the benchmarks is the “Go-to-Market” motion which are segmented by three primary GTM motions:
👉 Sales-Led Growth
Revenue growth, especially for initial customer acquisition is driven primarily through traditional Marketing and Sales methods that focus on the economic decision maker in a human-centric first model
👉 Product-Led Growth
Revenue growth, including initial user acquisition and expansion is driven primarily through digital marketing and product engagement methods that focus on the user and the activation of that initial user(s).
👉 Hybrid Growth
Initial user and customer acquisition relies on “product-led” methods to drive awareness and initial user(s) acquisition, but transitions to a more traditional sales model for expanding the user relationship to teams, departments and the enterprise over time.
Go-to-Market Thought Leaders and Educational Content
As the Go-to-Market term began to build momentum, several key industry thought leaders emerged…or maybe the momentum increased because of the below influencers that I have followed to observe the early days of the GTM evolution. Below are some key players that I recommend you follow to stay abreast of the fast-moving GTM trends:
👉 GTM Partners and Sangram Vajre
Sangram was the Chief Marketing Officer at Pardot, an early Marketing Automation company that was purchased by Salesforce, and then the co-founder and CMO at Terminus, an early innovator in the technology enablement and automation of Account-Based Programs.
Sangram authored “Move - The 4-question Go-to-Market Framework” which was one of my favorite reads in the early days of the GTM evolution. You can listen to Sangram discuss the concepts behind the book and use-case examples on the Metrics that Measure Up podcast.
GTM Partners provides helpful GTM frameworks, publishes GTM Research and conducts workshops in cities around the U.S. bringing together early adopters and GTM practitioners. GTM Partners is a founding member of the GTM Consortium.
👉 Jacco van der Kooij and Winning by Design
Winning by Design promotes the “Bow Tie” framework (image below) which builds upon a concept initially used in the travel industry. The Bow Tie model highlights that the customer lifecycle spans multiple customer stages, and builds upon the fact that the majority of profit in a recurring revenue business model is generated 12-18 months after a company becomes a B2B SaaS customer.
Jacco recently published a book entitled “Revenue Architecture” which will become required reading for the modern GTM practitioner in a recurring revenue business.
Jacco recently joined me on the Metrics that Measure Up podcast to discuss if SaaS has lost Product-Market Fit, which was a catalyst for writing Revenue Architecture. You can listen to our entire conversation by clicking here.
Winning by Design and Jacco were driving forces behind the formation of the GTM Consortium.
👉 Sam Jacobs and Pavilion
Pavilion is one of the largest B2B communities developed with the goal to unlock professional potential. Beyond the community building and member engagement events that Pavilion holds for CEOs and GTM executive leaders, they also provide educational programs for multiple roles across the GTM discipline.
Pavilion is also a founding member of the GTM Consortium and the creator of the GTM Event (GTM 2024) that brings together executive GTM leaders across the industry to share best practices, discuss GTM challenges and evolve the concept of an integrated and aligned GTM strategy, processes, and organizational structure.
The purpose of the above is not to promote or sponsor a specific vendor or industry influencer, but to highlight resources and companies that are helping to drive the GTM evolution forward.
👉 ICONIQ | Growth Ventures
ICONIQ has done a great job at creating a series of GTM articles, content and helpful assets for any B2B SaaS CEO, CFO or GTM leader. One of my favorite assets is the GTM article on Building GTM Teams, and then the Essential GTM Metrics Board Slides.
SaaS Talk™ with the Metrics Brothers has covered the GTM Metrics Board Slides and the ICONIQ SaaS Benchmarks Report in great detail.
The GTM Metrics that Matter:
No SaaS Barometer Newsletter would be complete without the inclusion of at least some metrics and benchmarking content. The foundational concepts behind an integrated Go-to-Market strategy are closely aligned with the foundation; premise behind Benchmarkit, and our SaaS Performance Metrics Framework (Newsletter Edition #7). Below is a summary of the top 5 SaaS-y metrics.
1️⃣ Annual Recurring Revenue (ARR) Growth
Growth remains the number one metric in B2B SaaS companies that correlates to Enterprise Value to Revenue multiples. Though efficient growth defined as growth that is delivered profitably is increasingly important, growth currently still has a 2x - 3x higher impact on EV:Rev multiples than profitability alone.
2️⃣ Rule of 40
The Rule of 40 measures the combination of growth rate + profitability. The most common variable used for growth in a recurring revenue business is ARR growth and Free Cash Flow Margin is the primary profitability component. In public SaaS companies GAAP revenue is typically used for the growth component, as ARR is not a GAAP approved or required reporting metric.
3️⃣CAC Ratio
Measures the amount of Sales and Marketing expenses consumed to acquire and expand one dollar of New ARR. For more advanced B2B SaaS companies and GTM organizations, measuring the Blended, New and Expansion CAC Ratios is a best practice.
4️⃣Gross Revenue Retention (GRR) and Net Revenue Retention (NRR)
GRR measures the percentage of ARR retained from a cohort of customers from one subscription period to the next period following the renewal cycle. NRR measures the percentage of ARR retained and expanded from a cohort of customers from one subscription period to the subsequent subscription cycle.
5️⃣ Customer Lifetime Value to CAC Ratio
Discussed previously in the SaaS Barometer, CLTV:CAC Ratio is an investor favorite metrics that measures the ratio of Customer Lifetime Value to the Customer Acquisition Cost. This metric is a compound metric that factors in multiple variables including customer churn, gross margin, average revenue per account and average cost to acquire a new customer.
Dave Kellogg and I discuss many of the above metrics, and concepts in detail on the SaaS Talk™ with the Metrics Brothers podcast.
The Future and Hope for Go-to-Market
I am hopeful that a holistic Go-to-Market strategy that integrates the data, processes, platforms, organizations, and employees responsible for acquiring, retaining and expanding customer relationships will yield increased revenue growth efficiency and company value.
Previous attempts of better aligning Marketing, Sales and Customer Success, including the introduction of Revenue Operations or the creation of the Chief Revenue Officer role, have not yielded the improved operating performance that was often the catalyst for the new approaches.
When an integrated Go-to-Market strategy is embarked upon by a company, they can materially increase the opportunity for success if the CEO sponsored initiative is built upon a foundation of shared goals and shared performance metrics that span across every organization that has responsible for revenue growth, and that is aligned with the entire customer journey including customer acquisition, retention and expansion!
For the love of SaaS!!!