The Foolproof Method To Developing a SaaS Go-To-Market Strategy

Masha Panchenko

When you find yourself lost in the middle of a dozen go-to-market strategies, templates, and matrixes, there is a chance you end up adopting one of the competitor’s more successful strategies and try to follow a beaten path. Sadly, this method does not work for all businesses.

As a SaaS design agency, we work a lot with the products that are about to be launched. We’ve seen great strategies, too vague, too ambitious, and simply unrealistic. An impractical go-to-market strategy might result in unpleasant outcomes for your business. That's why taking some time to analyze and tailor a working SaaS go-to-market strategy will make your life a lot easier.

Things you should know to build a winning go-to-market strategy (gtm)

If you’ve come all the way to developing a go-to-market strategy for your product, you already know your product strength well. Here is a list of things you need to keep in mind when you start working on the gtm:

·  Job-to-be-done of the product

·  Key features that make it different from the competitors

·  The aha moment (that “enlightenment” when customers understand the value of your product)

·  Key metrics. The most basic are average revenue per account (ARPA), lifetime value (LTV), annual contract value (ACV), and customer acquisition cost (CAC). You should pick the ones relevant to your business.

·  Your goals (revenue, market share, etc)

Once you are done with these, you can get to the next step and start defining your market. There are quite a few methods and templates to do this, we suggest starting with this simple model.

Marketing for flies and elephants. Five ways to build a $100 million business

Chances are you have already seen this graph before, but we couldn’t help showing it here because it is just great.

Image credit: Christopher Janz

The flies-elephants model was developed by Christopher Janz from Point Nine Capital. In short, it means that to get to your perfect goal (that for a typical ambitious SaaS startup would be a beautiful number of $100mln of annual revenue), you need to go either for 1000 big clients (elephants), that will bring you this lump sum, or 10,000,000 small clients (flies), each one paying $10 for your product. Easy, right?

So, what do we learn from this graph (Except for the fact that cute graphs have better chances to go viral)?

1. You can’t hunt elephants with the methods that work with rabbits. Thinking of your market as “one elephant, few deers and an occasional rabbit” at the stage of creating the go-to-market strategy is wrong (even though later you might come to that result). Focus on one thing and how you can get clients of the same size.

2. To hunt large amounts of smaller clients, you need a product with viral potential, social network elements, engaging and easy to recommend and try (WhatsApp, Instagram). The bigger the client, the more you should rely on outbound marketing and experienced sales team.

And, of course, don’t forget to multiply the number of users if your product pricing model is freemium.

3 Steps to developing a successful SaaS go-to-market strategy

WHERE do you sell? Define your market

Image credit: The Awkward Yeti

Addressing the market that is too big is one of the most common mistakes of SaaS marketing. Remember the old quote attributed to Winston Churchill (or Dalai Lama in other cases), saying “you can’t be liked by everyone”? It works just the same in marketing. You have to pick a particular segment of the market to target all your marketing, sales, content, and product.

Yes, there are products so widespread that it seems like almost everyone is using them. However, if you look back in the times when they were not as popular, you’ll find out that they used to have a specific target. Only after gaining that initial success with a limited group of clients, they could grow to become viral.

In a perfect situation, you would know exactly what your niche is. What should you do if that is not the case? First, define those segments. Second, find out what your competitors are in each of them. Third, analyze their buying capacities and specific preferences.

If you are targeting more than one segment of market, make sure that your marketing is varied to fit each of them. When we design landing pages for our clients, we make sure that each segment is having the most appropriate content to ensure maximum conversion.

After thorough analysis, think of what you can do to alternate your product, marketing strategy, or pricing to serve your chosen market better than competitors. You can run a focus group with potential clients to find out what their real needs are.

HOW do you sell? Define pricing model

When you know who your customers are, you can decide on the best pricing to fit their expectations and reach your goal according to the $100mln strategy.

Nowadays when so many SaaS businesses go for freemium pricing models, the stumbling block is the amount of product they give away for free. When the free version is too good, users don’t have enough motivation to pay for the premium. If premium is the only way and the free version has barely any features, users don’t feel the tangible benefits of the product. Finding the golden mean is tricky. Here are some tricks to mastering freemium pricing.

Freemium and free trials are the pricing models that first come to mind when we think about SaaS. Yet, there are many nuances to this. When you analyze your other products and want to get your competitive advantage in pricing, lowering the price seems to be the easiest solution. Of course, low prices often come with side effects. Before making that decision, consider what will make up for it: longer subscriptions, bigger market?

The alternative to lowering prices can be just a different pricing model. What if you introduce a tiered model, offer additional features, or go for the usage-based model? There are more options beyond the basic freemium and free trial. Learn more in our article on SaaS pricing strategies (and these are only some of the possible options).

WHAT do you sell? Product-led go-to-market strategy

Along with the traditional ways of marketing relying heavily on direct sales and marketing, product-led strategy is gaining more and more popularity among both startups and established companies. Nowadays, the product-led strategy is a signature way of marketing for SaaS. It means that the product itself is the main tool of user acquisition.

The principle is simple: instead of communicating the benefits of the product and convincing clients through the efforts of the sales and marketing team, you let users try it for free and the product sales itself. For the success of this strategy, the product has to be awesome, of course.

Naturally, this strategy is closely connected with free trials and freemium models. Old school demo versions promoted by the sales team won’t do the job.

The benefits of the product-led strategy:

·  The product can scale rapidly, with no geographical limits. For example, if you rely on a sales team to promote the product, you would need to expand the team if you want to get more clients. And if you wish to conquer new markets in other parts of the world, you would need teams speaking different languages and living in different time zones.

·  Marketing expenses are lower. With product-led strategy, users often need just a recommendation and a little trial to make a purchase.

·  Fast sales cycle. We don’t want to underestimate the sales team, but the fact is that the average time of closing a deal is much shorter when the users can try the product themselves and make decisions based on that.

There is a lot more about product-led growth. Read our article on Product-Led Growth to learn how to adopt this strategy for your SaaS business.

The jobs-to-be-done growth strategy matrix

Now that you understand what are the key variables of your product go-to-market strategy, it’s time to see how they work all together. Here is a matrix developed by Tony Ulwick, the author of the “jobs-to-be-done” theory.

Image credit: jobs-to-be-done.com View full-size

The main idea is rather simple:

new products and services win in the marketplace if they help customers get a job done better and/or more cheaply

The variables are defined in comparison to the competing products. You have to place your product on the matrix based on the price and whether it gets-the-job-done better or worse than the competitors.

In this case, “worse” is not necessarily a negative characteristic. The more realist you are, the better would be your choice of strategy. 

Also, note that the price difference has to be significant compared to the others. If the difference is not big, look at the center of the matrix.

Ok, let’s break down the differences between each of the strategies.

1. Dominant strategy. A great option if you managed to make something that is both great and cheap. Perfect fit for the freemium pricing model. Before adopting it, make sure that the market is big enough and the conversion rates are high enough to reach your goal.

2. Differentiated strategy. When your product is more expensive than the competitor’s, but has more features and is more specific. For it to work, you need to define the segment of underserved clients whose needs are not met by your competitors. That is the segment that you can “steal” (again, make sure it is big enough).

3. Disruptive strategy. When the price is less than the competitor’s, but the features of the product are more limited. It is efficient with overserved customers who would be glad to switch to a cheaper and possibly easier-to-use alternative (think of people who use Photoshop just to change the contrast and brightness of their photos and can do the same faster and cheaper with a simpler photo editor).

4. Discrete strategy. This one might be a bit harder to understand, because who would pay more to get their jobs done worse? Well, there are cases of that, too, such as payday-lending services. The target market here are those people who have no access to the alternatives. Traditionally there are not that many solutions using this strategy, but the competition is lower, as well.

5. Sustaining strategy. The case with the products that have tiny differences from their competitors. It is a common situation, which suggests two options: trying experimental methods of inbound marketing, creating original content or even a brand ideology, or copying the strategies of the competitors. In the beginning, we said it is not the best option, but actually, it can work well if you have done all the analysis and chose it consciously.

Go-to-market strategy for B2B SaaS companies

From the five strategies described above, as a B2B SaaS company, you should probably consider one of the first three. The general rule is the following: however disruptive, innovative, and daring your product may be, with B2B you should always stick more to the conventional methods of marketing.

The B2B field is where good old sales systems still work great, even for SaaS, especially when your target is a big business. To work effectively with big companies, having a good sales team is crucial.

When working with large enterprises, you have to take into account large periods of deal closing, which might be up to 12 months or more in some cases. 6-9 months is fast for a big company. For a SaaS, it means that the product might have gone through a few changes and updates during that process.

For SaaS startups, it is harder to get large enterprises at the beginning, as they prefer using more reputable products. Hunting elephants is tough when you are not a giant yet, so go for it only if you have connections or a star sales team.

To Sum Up

There are way more secrets of SaaS marketing strategy that you should consider when developing your product, but for the go-to-market strategy, the golden rule is to keep it short and simple.

Start with the key metrics, target market, pricing, and main direction of the strategy, and leave the details to your marketing and sales team. Because you still need a marketing and sales team, even in the era of product-led growth strategy.

We hope this article made it all a bit clearer for you. In our other article about SaaS companies and their products, we've analyzed some companies with a great go-to-market strategy and what made their products shine. Go check it out to learn from the best.

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