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Go-to-Market Strategy is a super important item investors really want to understand, yet most startups don’t really know what the term means.
They struggle to describe their go-to-market strategy in a clear and focused manner.
Investors want to see a well thought through, efficient, go-to-market strategy and initial customer segmentation so they know when they invest, the startup will be focused on early customer segments that they can win most easily using the fewest resources.
Usually, when I ask a startup about their go-to-market strategy I’ll hear an answer like “we’re doing direct sales” or “we’ll do online sales.” That’s not a go-to-market strategy. Those are sales tactics.
Let’s dive in so you know how to tackle this and blow investors away.
By special guest: Steve Barsh from Dreamit Ventures
When it comes to their go-to-market strategy, they need to focus their time, energy, and resources on customer segments where they can get traction and revenue as quickly and efficiently as possible.
For that, you need a well thought through GTM/S that includes great customer targeting criteria. In order to determine your criteria, I want you to think about your go-to-market strategy like you’re going fishing.
Why? Because I love to fish and more importantly... I love to CATCH fish. Oh, and fishing makes a great analogy!
In fishing, you want to “fish where the fish are.” You want to get fish in your boat. When you go out you should ask yourself this question... “What am I fishing for and most importantly, WHY?”
For example, are you going big game fishing for tuna far offshore? “Why?” Is it that you want to catch a really big fish? You love the “fight.” It’s exciting. If so, you’ll have to be ok with the fact that you may catch nothing.
There are few tuna out there in the ocean. They’re 100 miles offshore and often far between one another. Your boat may run out of gas before you catch even a single tuna. But if you do hook in, whoa, it’s going to be huge.
So your criteria as to “why?” is as follows -- you want big fish, you love a big fight, it’s exciting, and you don’t care if you catch nothing. So that’s the targeting criteria that you have to be comfortable with.
This is what’s called a trophy-focused strategy. We see that a lot. Startups try to put a “logo wall” in their pitch deck filled with “trophy fish/logos”. But those trophy fish are hard to find, hook, and catch. The “sales cycle” for these trophy fish is super long and it’s really hit or miss. It’s the classic 12-18 months sales cycle which is REALLY hard to pull off if you have only 18 months of runway. AKA your boat runs out of gas before you catch your tuna!
How about going for a different type of fish that are “in the bay.” Close to shore. Easy to catch. Easy to boat. They’re not as big, cool, and sexy as tuna, but you know what… you’re eating fish and not spending as much time, fuel, and resources. So now my criteria may be: close to shore, easy to catch, smaller size, higher quantity, and less resource-intensive. Hey - and speaking of resources… that boat and gas… I may need no gas at all -- I could just “bootstrap” my fishing trip and fish off of the dock. It’s not cool. It’s not sexy. But you know what, I’m catching fish. Kind of like… closing customers.
So my question for you is this:
If you think about customers like fish… What are YOU fishing for? Why those customers? What characteristics do those customers have that are so appealing?
The easiest way to figure that out, build your initial customer segment litmus test. When you “dip your litmus paper in,” this test has specific characteristics that help you identify the early customer types you should be going after. This helps you form the core of your initial go-to-market strategy.
I know I’m looking at a great customer if they exhibit... what characteristics?
So maybe it’s things like…
- The problem you solve takes away a searing pain point and fits exceptionally well with this target customer segment.
- These early customers will close more quickly as the buyer is usually the decision-maker.
- Maybe there is a geographic component…
All of our customers will be within driving distance. That way we can get to them easily, have face-to-face interactions, get direct feedback, build strong relationships, and “stay close.”
- Maybe it’s that...Your price point aligns perfectly with their typical budgets and spending patterns.
Overall, think about the markets, customers, and segments where you can “push sand down a hill, not up!” These are segments where your targeting criteria are ridiculously well aligned and you can close customers and build revenue quickly through shorter sales cycles, faster adoption, and stronger growth.
With this litmus test, you should be able to create a coherent go to market strategy that makes it clear to investors that your startup will be focused on early customer segments that you can win efficiently.
And this approach is not for just your initial go-to-market strategy -- sometimes called a “beachhead strategy.” You can repeat this process to identify your follow-on markets in priority order. This way, when you speak to investors you can describe how your customer segments and the market will evolve over time… while at the same time discussing the marketing and sales tactics you’ll employ to execute your go-to-market strategy.
Remember, if your strategy is not finely tuned for all the right reasons, the tactics will be a waste of time. You’ll burn up all your fuel trying to catch the wrong fish.