On the recent bi-weekly mastermind call with SaaS experts and mentors I interviewed Ryan Cahill about the go-to-market strategy.
Ryan is passionate about helping SaaS companies design, optimize and execute their sales and marketing strategies. He spent the last decade in the SaaS world working with different industry leaders. He has also consulted for hundreds of subscription startups, executives and entrepreneurs.
Ryan talks about the science of growth and where that is going to fit with post-product market fit.
Go-to-market is the strategy that you use to acquire new customers or expand on the ones you have.
In the diagram below, the left-hand side represents the number of customers or we’ll say users in this example and across the bottom is going to be the value of your product or service and so this can be in monthly or annual recurring dollars but we will be using annual for this example.
In most organizations as the price point goes up, the number of people that can afford the product goes down.
Product Led Growth (PLG)
Let us assume that the first tier is $5,000 a year. The go-to-market strategy that most commonly applied to this is what’s generally referred to as product lead growth. You can think of platforms like zoom or slack which are apps that you can just sign up for and start using immediately, then over time, you might end up buying more licenses, you might end up using them more. Generally speaking, you’re not talking to a salesperson, you’re not talking to someone in business development. It’s generally a technical interaction from a sales motion.
Inside Sales (IS)
Once you break the $5k-$7k mark, generally you’re usually engaging with somebody, you might have a couple of questions, you might need to see a demo. This stage is traditionally referred to as inside sales. In inside sales you are looking at a product, maybe you’re doing some research on the website, you pick up the phone, you call someone, they maybe answer a few questions for you and send you a contract, but you’re engaging with some human being at that point. This generally goes to about the $15,000 mark.
2 or more stage process
At the next point you will typically engage with two or more individuals through your sales evaluation as the customer. These can be someone in business development and sales or maybe it is sales and a technical resource. The assumption is that marketing is taking place across the entire process. This illustration is just focused on the sales approach.
3 stage process
Once you get within the $30k to $50k, this stage involves at least two people and sometimes three people. Sometimes you have a business development, sales and maybe a sales engineer. Sometimes you might have some industry strategists, you might have multiple people over here. This is often a three stage process.
One to one sales
Once you get to $150k upwards which are enterprise type solutions, you are focused on one to one sales. One to one sales is where you typically have, let’s say, five accounts you’re working on and they’re all whales. It is usually a very intimate relationship and a very long sales process
Where your product or service is in the spectrum of cost of product will dictate the type of strategy you are applying.
After you have understood the strategy you need to apply for your product or service, you need to figure out how to replicate success.
Right now you need to start thinking about who the person you’re generally going to be selling to and focus your strategy on what is going to empower them the most. What’s happened over the last handful of years, is we don’t convince people to buy anymore but sometimes we think we do.
The reality is, if they’re talking to you, they had already considered doing something different. It’s really a buyer centric market. The way you want to think about your go to market is how do I help someone buy versus convince them to buy and companies that do that are very successful.
The Amazons of this world succeed because they make the customer experience so powerful and easy, you need to do that with your go to market approach as well.
While it is an oversimplification, there are only 7 metrics you need to pay attention to in order to diagnose if what you are doing is working efficiently and how to make it more efficient over time.
On the left hand of the diagram you have prospects.
These are people that may or may not even know you exist, that you’d like to do business with. You have to figure out from a marketing standpoint, how to attract these people and get them to engage with your brand in some way such as visiting your website, attending a webinar, responding to an email and more.
The first conversion point is MQL which is a marketing qualified lead. This is a human being that has in some way expressed interest in engaging with you, it doesn’t mean they’re ready to buy but it means they are willing to engage. It could be a Contact Us form, it could be a demo request, it could be they just want to learn more, these can all be considered marketing qualified leads.
The MQL will be called conversion rate one (CR1). The MQL is a qualification metric for the performance of your marketing.
If this rate grows over time, it means you are doing a better job at targeting your customer base, and a better job of converting them to be interested to engage. If you have 1000 people on your email list, and every month 10-30 of them become leads, you now can measure how good you are at engaging them via email.
You need to measure the performance of different channels such as social media platforms.
When you engage with folks, it is important to understand why they engaged with your brand, why they became a customer and how you can find more of these people.
You need to do some deep analysis to define who it is you’re talking to, and how they want to be interacted with, and then marry that into your product or service and all your communications.
The head of sales doesn’t think in a similar way to the head of marketing, or the head of human resources or a CFO or developer, they all think differently and you need to talk differently to those audiences. A technical audience does not want flowery language, they want specifics, they want details, they want examples. A marketer on the other hand thinks about emotional things, they want to be talked to in an emotional language, so you’ have to interact differently.
One of the biggest challenges with most websites is they are self-serving, they don’t talk to the customer, they don’t talk about the customer. They don’t talk about the customers’ problems, they brag about their product and people don’t want to hear that.
Your job is to connect the dots between your audience pain and your solution.
Sales Qualified Lead (SQL)
After you have done some great marketing and increased brand awareness. Your audience is now engaged. The next step can be called two different things, a sales qualified lead or sales accepted lead.
The difference between CR1 and CR2 is now they are willing to engage in the sales process. At this point based on what you’ve said, and shared so far, someone is willing to evaluate your possible solution for their company.
If this rate is doing well then the people you are attracting will also happen to be in the market.