Updating your Go-to-Market Strategy ensures long-term Product-Market fit
A Go-to-Market Strategy is, by definition, multi-disciplinary. Creating it requires the combined skills of experts from multiple departments or teams. Each of the individual components requires deep insights and disciplined effort. The value of this huge collaborative effort lies in the Product-Market Fit – an effective match between a Buyer’s need and a Vendor’s solution. Completing the component parts that make up a Go-to-Market strategy is a major achievement and cause for celebration. “We nailed it down, we got it right. Job well done,” we say. And then we add: “Now we can get on with all the other stuff that needs doing”.
Markets are dynamic and constantly changing
The first Big Problem – and this is true for all industries and across all sizes of company – is that the moment a Go-to-Market Strategy is defined, it starts going out of date. Yes, it describes and documents how the company will achieve Product/Market Fit. Yes, it documents the product and the market; the producer and the buyer; issues both internal (the value propotition, the product roadmap) and external (the market, the competition). But it is also a static snapshot, a view at a specific point in time. The Go-to-Market Strategy is a statement of how things are now. And that ‘now’ quickly becomes ‘then’.
Even positive changes can make the original premises of the Go-to-Market Strategy irrelevant. As market penetration increases, the sales team needs to address new segments. A decision to sell via (say) direct sales, though initially cost-effective, might later turn out to be inefficient. As a result, Sales must review distribution channel choices to select the most economic. When product adoption matures, the original value proposition may lose relevance. Consequently, messaging loses impact. The transition in the product adoption lifecycle, from innovators to early mass market, for example, invariably means the Marketing must create new and quite different messaging.
Your Go-to-Market Strategy is becoming out of date …
Once a Go-to-Market Strategy ceases to be a work-in-progress, it is at the mercy of natural forces. Everything else is moving ahead, going forward … and leaving the GTM Strategy behind. Customer needs and behaviour evolve. The validity of our claims to differentiation weaken. The identity of competitors, the relative strength of their offerings – these wax or wane. Advances in materials or technology impact production processes. Variations in pricing shift expectations of profitability. Factors like regulatory issues or terms of trade create external frictions.
The product roadmap documents the evolution of new features and functions. But that plan alone is not enough to maintain Product-Market Fit. Marketing must now update the value proposition and messaging. More examples: Corporate business objectives themselves shift over time. Experienced staff move into new roles, so new staff take over and must learn the ropes. Everything is changing, in different directions. All the time. And at different velocities.
Mind the Gap
Reality progresses while the Strategy stands still. At first the extent of the gap is hardly noticeable. We’re simply too busy to notice that, little by little, the individual premises of the Strategy are less valid. Foundational Truths are undermined. Points of Differentiation become Tick Box items. Key Sales arguments become mere generalisations. High-tech specs become Table Stakes.
And the company is slow to respond to change because the Go-to-Market Strategy doesn’t include any control systems. There’s no alarm light to show when product-market fit drifts from ‘tight’, to ‘loose’ to ‘getting sloppy’. There’s no warning bell to indicate when corrective action must be taken.
… how quickly will your GTM become obsolete?
As the Market moves on, a static Go-to-Market Strategy gets left behind. Even when there is awareness that something, somewhere, needs to be fixed it can be difficult just to organise a review. A meeting that brings all the contributors together into the same room on the same day, should be easy. In practice, it often isn’t. Each of the teams contributing to the Go-to-Market Strategy has their own objectives and key deliverables, their own priorities.
One thing is certain: as awareness of change in the marketplace diminishes, the longer are the time gaps between reviews. The less frequent the updates to the Strategy, the faster the former Product-Market Fit accelerates from gap to chasm.
How do you know if your Go-to-Market strategy is off-target?
There are several places to look for evidence that indicates the Product-Market Fit needs attention:
- Product / brand recognition and recall – low or negative.
- Advertising costs – higher than expected, because of low response and conversion rates.
- Customer Acquisition Cost – upward trend / higher then projected.
- Customer churn – low rate for repeat purchases.
- Customer Lifetime Value – decreasing trend / lower than projected.
- Market adoption – the market has transitioned through key thresholds (2.5%, 16%, 50%, 84%) but the positioning, value proposition or messaging are unchanged.
- Market share – revenue growth lags behind the market; growth is slower than competitors.
- Actual sales performance – increasing divergence from baseline or target.
Where to finds the signs of Product/Market Gap
In B2B high-tech categories, the first signs of a disconnect in the Product/Market Fit will appear in the effectiveness of marketing messages. For example: low response rates to PPC and direct marketing techniques. A decline in quantities through the Funnel. Slower conversions from Nurturing, through Lead, to Opportunity.
The Sales Pipeline also acts as a feedback mechanism that signals how the market reacts to positioning, the value proposition and messaging. Indicators of a widening gap might include: more frequent bid rejections. A tougher fight for fewer wins. And feedback from the Sales team that decision cycles are becoming longer. That is most definitely a warning signal. Why? Because the Customer always informs the successful supplier before they get around to telling the others “thanks, but on this occasion, we have chosen a different solution”.
For niche products with low volumes, or investment goods with infrequent sales, it is harder to read those feedback signals accurately. When the sales cycle takes three to six quarters, any mis-match in Product-Market Fit is slow to appear. If the first indication that the Go-to-Market strategy needs correcting is a slowdown in revenues, then it will probably take several quarters for the Updates to take effect and for Sales to return to targetted levels.
It’s much better to keep the GTM up to date.
Since Change is inevitable, periodic Updating of any Go-to-Market Strategy is essential. It’s easy to overlook, but once highlighted, we know instinctively that this makes sense. And this brings us to the second Big Problem: how to manage that Update process effectively.
Active management of the GTM demands a conscious effort to bring together staff resources across different disciplines and even internal structures. In many companies, the R&D or production functions take responsibuility for product management. Planning or strategy groups manage the Business Development role. Marketing and sales often form a function of their own. The simple fact is, Go-to-Market is multi-disciplinary effort.
We cannot afford to take effective collaboration between teams for granted – and this in turn raises the issue of authority. Even when responsibility for the GTM Strategy is clearly stated, there’s a simple question that must be answered. Does the GTM Owner actually have the authority to call together members from other Teams? That’s what’s required to review the current status, identify issues and resolve them. To be effective, this authority needs clearly stated with support from an executive sponsor, who has already discussed and agreed the issue with the executives who lead the other functions involved.
Empowering the Owner of the Go-to-Market Strategy
For the GTM Owner, one of the characteristics of the role is the need to rise above the priorities of their own special skillset or department. As the co-ordinator of a mutli-disciplinary team, GTM requires a broad approach. One that reviews all aspects, ensures all voices are heard. Priority issues must be identified and addressed by the right combination of skills, to achieve business objectives.
In my experience of working on GTM strategies, actual practice is very different. Updating is usually infrequent, piecemeal and ad-hoc. The squeaky wheel gets greased. The management philosophy is “if it doesn’t squeak, then it must be OK”. This imay be pragmatic, but lacks rigour and discipline. All too often, there are squeaks all over the place. Yet they go unreported and untreated, simply because there is no systematic process for comprehensive, periodic review.
When Product/Market Fit becomes a yawning gap, the long-term consequence is a loss of sales revenue for the category or product. And it tends to be a trend that accelerates in the wrong direction. Perhaps we narrowly fail to hit a stretch target. Then perhaps it’s a “zero-growth year” (which, if we’re honest, given price inflation and shrinking market share, is in reality a lost opportunity). Sooner rather than later, the result is an undeniable decline in product revenues.
Verify for yourself
If your category or product demonstrates any of the Marketing or Sales characteristics described above, you might want to check when the Go-to-Market Strategy was last updated.
If the positioning, value proposition and messaging are essentially the same as they were two years ago, it’s quite possible the market has moved on. What was once a tight fit has become a gap.
For support and advice on G2M Strategies, contact Andrew Sanderson at Ansaco.