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What is a Go-To Market model?

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] By definition, a Go-To Market model is the high-level strategy you use to acquire and onboard customers.

Most B2B SaaS businesses uses variations of one of these 3 Go-To Market strategies:

• Touchless acquisition – Businesses using a touchless acquisition strategy acquire their customers without any human touch. They use marketing tactics like paid advertising & search engine optimization to attract people to their website, get them to signup for the product and eventually become paying customers, all without ever talking to a human. Well-known B2B SaaS businesses who predominantly use this model include Basecamp, Unbounce, & MailChimp.
• Sales-Based – Businesses using a Sales-based model acquire customers by having a team of sales people that talk to potential customers and convince them of the benefits of the product. The marketing team are focused on using tactics like search engine optimization & content marketing to attract potential customers to the website, and are then making various offers (demos, gated content pieces, etc.) to try to convert these visitors into leads that can be passed over to the sales team. Well-known B2B SaaS businesses who predominantly use this model include Salesforce, HubSpot & Workday.
• Channel – Businesses using a channel model acquire customers by selling their software to some sort of intermediary, who then resell it to the end user. This intermediary could be a marketing agency who then resells the software to their clients, or it could be a VAR (value-added reseller) who sells it to their customer base along with some extra products or services (such as customization services, implementation assistance, etc). Well-known SaaS business who leverage channel sales include Xero, Campaign Monitor & Magento.

It’s not uncommon for B2B SaaS companies to incorporate more than one of these strategies in their own unique Go-To Market model.

For instance, Xero uses a touchless acquisition model to acquire customers directly, whilst also working with accountants to get them to switch their clients over to the Xero platform.

Campaign Monitor even leverages all 3 of these strategies in their Go-To Market model. They use tactics like paid advertising, SEO & content to acquire customers directly through a touchless model, while also having a number of inside sales representatives that focus on closing bigger deals. On top of that, they’ve built a set of features in the product that allows web design & marketing agencies to resell it to their clients, thus leveraging a channel strategy as part of the overall Go-To Market model as well.

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How do you decide the right Go-To Market model for your B2B SaaS product?

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] Unfortunately, there is no one-size-fits-all answer here.

As mentioned earlier, companies like MailChimp and Unbounce have been very successful using variations of the touchless acquisition model, while companies like Salesforce and HubSpot have become billion-dollar companies off the back of a Sales-based model.

The key to success is finding the right model for the unique characteristics of your product and your business. To help you do this, I’ve listed a number of factors that you should take into account when working out the right model for your B2B SaaS business:[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’20’ up=” down=”]

1. Target Market

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] Who is the target market for your product? And how big is that market? If your product is targeted at small businesses, then the number of potential customers is likely huge and a touchless acquisition strategy is going to make the most sense. On the other hand, if your target market is the Fortune 500 then your market size is much smaller, and an inside sales process may make more sense.[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”]

2. Product complexity

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] How easy it is for people to get started with your product? Is it the kind of product that someone can sign up and start using without needing dedicated training? If so, then that lends itself nicely to a touchless acquisition strategy. If, on the other hand, your product requires extensive training to start using, then it’s more likely you’ll need to employ a sales-based or channel strategy.[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”]

3. Price

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] At what price point will you be selling your product? Is it going to be $19 per month? Or are customers going to be on $100,000 annual contracts? If it’s a low price point, then a touchless acquisition strategy could work for your business. Alternatively, if you’re going to be selling your product at a price point that is in the tens of thousands of dollars annually, touchless acquisition is unlikely to work and you’ll probably need to adopt a sales-based or channel strategy.[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”]

4. Adoption Cycle

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] How do users typically adopt your product? Is it the kind of product where one employee starts using it, sees the value it brings, and adoption organically expands out from there? Or is does it need to be adopted top-down (I.e. the product is chosen by the CxO and then the rest of the company is forced to use it)? If it’s the former, a touchless acquisition model can work amazingly as you can get one employee using your product and adoption will organically spread through the organisation, but if it’s the later then it becomes much harder to acquire customers without touching them as they’ll likely need help getting onboarded with your product and training employees to use it.[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”]

5. Availability of resellers

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] Is there an industry or segment of businesses who could potentially sell your product to end users? If so, then a channel strategy could be a viable option for you. Xero, a company that makes cloud accounting software targeted at small businesses, recognized that nearly every small business uses an accountant to help with their taxes and accounting, so they leverage accountants to drive channel sales. Similarly, in the early days of Campaign Monitor they recognized that many small businesses turned to their web design agency to create and send email campaigns, so they built features that allowed these agencies to resell the product to their clients and activated channel sales as part of the Go-To Market model.[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”]

6. Business Resources

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] What kind of resources do you have available in the business? Do you have the revenue or funding to sustain the costs of building a sales team? And what about the costs of supporting a sales team (I.e. a marketing person to generate leads, customer service people to support customers, etc.)? Atlassian – whose ‘no salespeople’ go-to market strategy is often touted as revolutionary – attribute their decision to adopt that model largely to the fact they didn’t have any money to build a sales team, and so they had to find a different way to acquire customers if they were going to build a business.[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”]

7. Desire

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] What kind of company do you want to run? Do you want to have a big sales team selling big deals to enterprise customers? Or would you rather build products that help small businesses? Basecamp (previously 37 signals) is one of the most successful SaaS companies of all time, and they’ve adopted the touchless acquisition model simply because they wanted to create products for small business and not for enterprises, and so the touchless acquisition model was what supported that desire.

 

What’s interesting about this list of factors that determine your Go-To Market strategy is how interlinked they are.

For instance, if you want to target small businesses but have a complicated product that requires hands-on training and a lengthy sales process, then your business will likely fail as your cost of acquiring a customer (including the cost of maintaining sales reps) would far outweigh what you could sell your product to a small business for.

Similarly, if you’re creating a product that is fairly complex and targeted at Fortune 500 companies, but don’t have the desire or resources to hire and support sales representatives, then you’ll likely have a lot of trouble acquiring customers as these companies have lengthy buying processes that will require a sales person to work with them through.

So instead of thinking of each of these factors individually and making your decision based on 1 or 2 of them, you need to think about them holistically, as ensuring your chosen model lines up with all of the above factors is critical to the success of your business.

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In conclusion

[vc_separator type=’transparent’ width=” position=’center’ color=” border_style=” thickness=’10’ up=” down=”] Correctly defining your Go-To Market strategy is one of the most important factors in determining the success of your B2B SaaS company, and something I’ve seen many companies get wrong in the past (and something I’ve gotten wrong before as well).

So spend some time thinking through your Go-To Market strategy and making sure it’s aligned with your target market, product complexity, price point, etc, as if you get those things right you’ll find that your sales & marketing efforts will be a lot more effective down the line.

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