One of the first things you need to do when starting to market a B2B SaaS company is define your Go-To Market model.
Without having a well thought out Go-To Market model, you’ll struggle to acquire and retain customers at a profitable CAC – LTV ratio and will never be able to grow your SaaS business.
But what makes up your Go-To market strategy and how do you define the right one for your product?
In this post, I’ll talk you through what a Go-To market strategy is and some of the factors you need to take into account when defining the right one for your product.
What is a Go-To market strategy?
By definition, your Go-To Market strategy 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 & content marketing to attract people to their website, where a portion of them will then signup for the product and 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 work with potential customers to convince them of the benefits of the product and close the deal. Their marketing team is using tactics like search engine optimization & content marketing to attract potential customers to the website, and then making various offers (demos, content pieces, etc.) to try to convert these visitors into leads to 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 onsells it to the end user. This intermediary could be a marketing agency who then onsells the software to their clients, or it could be another large business who sells it to their customer base as an add-on to their product or service. Well-known SaaS business who leverage channel sales include Xero & Campaign Monitor.
It’s also not uncommon for SaaS businesses to incorporate more than one of these strategies in their own Go-To Market model.
For instance, Xero uses a touchless acquisition model to acquire customers directly, whilst also working with Accountants (channel) to get them to switch their clients over to the Xero platform.
Similarly, Campaign Monitor actually 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 people that focus on closing bigger deals. They also leverage a channel model by allowing web design & marketing agencies to white-label the product and onsell it to their clients.
How to define your Go-To market model
So how do you decide the right Go-To Market strategy for your SaaS product?
Unfortunately, there is no one-size-fits-all answer. There are however, a number of factors that you can take into account to help you work out the right model for your SaaS business:
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.
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.
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 won’t work for you and you’ll likely need to adopt a Sales-Based or Channel strategy.
How do users typically adopt your product? Is it the kind of product where one employee starts using it, sees the value and adoption organically expands out from there? Or does it need to be a top-down adoption process where a CxO chooses the product, the company is onboarded and then everyone has to start using it? If it’s the former, touchless acquisition can work amazingly, but if the later then it becomes much harder to acquire customers without touching them.
Availability of resellers
Is there an industry or segment of businesses who could potentially sell your product to end users? If so, then Channel 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 leveraged accountants to generate Channel sales. Similarly, in the early days Campaign Monitor 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 opened up Channel sales.
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, who is famous for their no-salespeople go-to market strategy, attribute that decision mainly to the fact they didn’t have any money to build a sales team and so had to find a different way to acquire customers if they were going to build a business.
What kind of company do you want to run? Do you want to have these big sales team selling big deals to enterprises? 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.
What’s interesting about this list of factors that help 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 fail as your cost of acquiring the customer (including the salesperson’s time) 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 sales or support people, 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.
Before you can start designing & building a Growth Engine for your B2B SaaS company, you first need to assess some of the factors mentioned above and decide on the right Go-To Market strategy for your business.