go-to-market strategy (GTM strategy)
A go-to-market strategy (GTM strategy) is an action plan that specifies how a company will reach target customers and achieve competitive advantage. The purpose of a GTM strategy is to provide a blueprint for delivering a product or service to the end customer, taking into account such factors as pricing and distribution. A GTM strategy is somewhat similar to a business plan, although the latter is broader in scope and considers additional factors like funding.
Organizations can use a go-to-market strategy for a range of events, including launching new products or services, introducing a current product to a new market and even relaunching the company or brand. The GTM strategy will help a business clarify why it's launching the product, understand who the product is for, and create a plan to engage with the customer and convince them to buy the product or service.
What's the purpose of a go-to-market strategy?
When effectively executed, the GTM strategy will align all stakeholders and establish a timeline to ensure each stakeholder meets the defined milestones and outcomes, creating an attainable path to market success.
Overall, go-to-market strategies are used to create the following benefits within an organization:
- A clearly defined plan and direction for all stakeholders.
- Reduced time to market for products and services.
- Increased chances of a successful product or service launch.
- Decreased likelihood of extra costs generated by failed product or service launches.
- Enhanced ability to react to changes and customer desires.
- Improved management of challenges.
- An established path for growth.
- Ensured creation of an effective customer experience.
- Guaranteed regulatory compliance.
While go-to-market strategies are often associated with product launches, they can also be used to describe the specific steps a company needs to take in order to guide customer interactions for established products.
To create an effective GTM strategy, organizations must possess an understanding of the work environment and the target market. New and existing workflows should be clearly defined and a system should be established to manage the GTM strategy.
A go-to-market strategy often includes five core components:
- Market definition: Which markets will be targeted to sell the product or service?
- Customers: Who is the target audience within these markets?
- Distribution model: How will the product or service be delivered to the customer?
- Product messaging and positioning: What is being sold and what is its unique value or primary difference when compared to other products or services in the market?
- Price: How much should the product or service cost for each customer group?
The market definition identifies the specific markets -- or groups of people that have the ability and willingness to pay -- for a specific product or service. The markets should be specific and clearly defined, but they should also involve a large enough audience to meet the income and profit objectives of the product or service. If multiple markets are being targeted, then one should be prioritized over the others and this primary target should be clearly communicated.
The customers component takes the information and research gathered to define the market and uses it to increase specificity and determine the target audience for the product or service. The company will need to decide whether it has existing customers that might be sales prospects or whether it needs to seek an entirely new set of target customers. The company developing a GTM strategy and improving its customer acquisition process should also focus on who the buyer will be. For example, in a business-to-business (B2B) GTM strategy, the buyer could be the IT manager, a line-of-business (LOB) manager or a member of the C-suite.
Customer segmentation is a common practice used to divide a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests and spending habits. Buyer personas should also be established to help a company understand how to market and sell to these various customer segments and to identify who the best-fit customers are for the product or service.
The distribution model component defines the channels or the paths taken by the product or service to reach the end customer. Indirect channels often become a part of a product vendor's go-to-market plan. An indirect channel of distribution involves the product passing through extra steps between the manufacturer and the customer. For example, a product in an indirect channel may pass from the manufacturer to a distributor and then the wholesaler before it reaches the retail store.
Some questions to ask when defining channels include:
- How will customers go about buying the product or service?
- How and where will the product or service be distributed?
- If it's a physical product that will be distributed in a store, how will it get there?
- If it's a software product, how will the customer download it?
- Is the product or service on the organization's e-commerce site or is it sold online through a third party?
The product messaging and positioning component involves defining what the product or service is, what it does, how the target client will be made aware of the product and how leads will be generated, from both the current customer base and within the defined markets. The product message should answer how the offer addresses a specific need within the market and why customers should believe that it fulfills the need. A value proposition should be created that reveals how customers will receive more from the product or service than the monetary value paid for it and any additional costs. The product or service should also be differentiated from the others on the market to ensure it provides a unique value.
The final component, price, should not be based on the costs of manufacturing or developing the product or service. Instead, the price should support the value proposition and market position of the product or service.
Building a GTM strategy
The objectives of a go-to-market strategy include:
- Creating awareness of a specific product or service.
- Generating leads and converting leads into customers.
- Maximizing market share by entering new markets, increasing customer engagement and outperforming competitors.
- Protecting the current market share against competitors.
- Strengthening brand positioning.
- Reducing costs and optimize profits.
To fulfill these objectives, creation of an effective GTM strategy should include:
- Identifying buyer personas.
- Creating a value matrix.
- Defining the marketing strategy.
- Understanding the buyer's journey.
- Selecting a sales strategy.
- Syncing with support.
- Understanding where the product sits in the overall roadmap.
- Defining the success metrics.
- Determining ongoing budget and resource needs.
Identifying buyer personas. The first step to writing a GTM strategy is identifying buyer personas. This process includes identifying the target markets as well as the customer base and building an understanding of how to reach target clients and use the gathered information to achieve long-term goals.
Creating a value matrix. Next, a value matrix is created that maps the product or service across business needs and defines the criteria by which to judge the success of the offering. The value matrix is used to communicate the purpose and reason for the product or service to all stakeholders, including the specific customer need that is being fulfilled by each feature or process.
Defining the marketing strategy. When defining the marketing strategy, organizations determine their product or service's place within the market and set a plan to raise product awareness within the target market. This step may include testing different advertising methods for the target audience across various marketing platforms. Overall, the marketing strategy should include:
- Lead generation
- Additional content
- A marketing website
Understanding the buyer's journey. After defining the marketing strategy, organizations must gain an understanding of the buyer's journey. The buyer's journey is the process each buyer goes through that ultimately leads to them purchasing the product or service. The buyer's journey consists of the awareness stage, consideration stage and decision stage. Companies should identify the potential journeys taken through the buying process from both the organization's and customer's perspectives.
Specifying the sales strategy. This step consists of creating a plan that will introduce the product or service to the market. Some elements to include in the sales process include:
- Training support -- How to train the sales team so they have enough knowledge to confidently sell the product or service.
- Tools and resources -- This includes anything needed by the sales team to identify, engage with and sell to customers as well as manage these relationships and demonstrate the product or service.
- Client acquisition -- Identify the best approach for finding customers.
Syncing with support. Next, organizations must align their sales and support teams to determine how assistance will be provided to customers with questions or issues. This step includes determining:
- the tools needed to build and manage relationships with customers, such as customer relationship management (CRM);
- all onboarding and support processes involved in helping users understand how to use the product or service;
- retention strategies that will be used to ensure customers remain loyal to the company; and
- how to measure satisfaction and determine if the product and associate support is successful.
Understanding where the product fits in the overall roadmap. This step involves determining the priority that the specific product or service takes over others within the company. This also includes identifying whether the product needs continued attention once released to the market or if the teams will move on to a new project. Identifying how the product fits into the overall roadmap involves understanding the priority for the development team, addressing how market feedback will be handled, and identifying how stakeholders will stay notified of project progression.
Determining the success metrics. In this step, an organization must identify the primary purpose of the product or service and define how its success will be measured. The metrics used to measure success should be meaningful, measurable, motivational and easy to track.
Determining ongoing budget and resource needs. Once all the previous steps have been completed, the company must identify any ongoing budget and resource needs that will continue after the product or service has entered the market. This includes time and money spent on maintenance of the product or service as well as any other factors that will impact the day to day lives of stakeholders.
A change in an IT provider's overall strategic direction will often prompt a change in its go-to-market strategy. New products or product strategies may also influence go-to-market approaches. Furthermore, a rethinking of services can also trigger a new go-to-market model. This has been seen with companies such as:
- Microsoft -- They announced a vertical industry go-to-market strategy in 2017 to accommodate customers undergoing digital transformation and seeking vendors with more insight into their specific businesses. Microsoft's industry initiative focuses on vertical markets, including financial services, retail, manufacturing, government, education and healthcare.
- Violin Memory -- Their shift from niche storage player to primary storage provider meant the company would be pursuing a broader array of customer segments. That change influenced the company's decision to pursue channel partners as its go-to-market strategy. Vendors may call on channel partners to improve market penetration and boost brand recognition.
- Anaplan -- The cloud-based financial planning platform provider decided to offload services that it had been providing on its own. The company altered its go-to-market plan to deliver services through channel partners.
Additionally, service-oriented channel partners, such as cloud service providers (CSPs) and managed service providers (MSPs), may also devise GTM strategies. Their plans may include targeting vertical markets, customers of a particular size or a particular technology platform, such as a specific public cloud or software as a service (SaaS) offering.