This little piggy went to market,Mother Goose
This little piggy stayed home,
This little piggy had roast beef,
This little piggy had none.
This little piggy went …
Wee, wee, wee,
all the way home!
What is Go to Market?
Go to Market or GTM is a term of art originally used in the enterprise software industry in Silicon Valley. At first glance, you would understandably think the term referred to the activities a company takes to launch its product in the marketplace. The product is done, and then “this little piggy goes to market.”
But as used in Silicon Valley, go to market is better defined as:
The system by which a company transforms its addressable market into its customer base.
Another reasonable definition is:
How we convert a potential customer to a delighted customer.
How we sell stuff.
(But, this last definition fails to emphasize the importance of deliberate management of customer success to ensure long-term value for both customer and supplier.)
GTM is an on-going operating system – an engine – which is developed, refined, and operated over the life of a product to grow revenue. In most settings, the GTM system is the second most important design challenge a new venture faces, closely following the design of the solution itself.
In some (relatively rare) settings the relationship between customer and supplier consists of very few transactions and a limited on-going relationship persists. For instance, one of my former students Ajay Anand founded Rare Carat, a marketplace for diamond engagement rings. Notwithstanding exceptional potential customers like actress Elizabeth Taylor who was married eight times, the modal number of transactions Rare Carat will have with a customer is one. Go to market for Rare Carat is pretty simple – gain awareness, encourage trial of the service, and convert trials to ring purchases.
At the other extreme are enterprise software companies like Salesforce. It may take significant effort to acquire a customer, but once acquired, that customer is likely to remain a source of revenue for many years.
Here are some of the activities that comprise the GTM system in many organizations:
- Creating awareness of the company’s solution.
- Encouraging consideration and trial.
- Supporting selection of the company’s solution.
- Pricing the solution for a specific customer.
- Delivering the solution, including associated hardware, software, and integration with the customer’s existing operations and activities.
- Training the customer and ensuring effective adoption of the solution.
- Up-selling and cross-selling additional solutions.
Scaling a business requires efficient processes that can be reliably replicated. Just as an industrial process like making automobile tires could not possibly be scaled efficiently without a codified process, so a GTM System can not be scaled if not codified.
Two Basic Types of GTM Systems – Product-Led Growith (PLG) and Customer-Led Growth (CLG)
Although every GTM system is different to meet the specific needs of a company, two basic types of GTM systems are common: Product-Led Growth (PLG) and Sales-Led Growth (SLG).
Key Characteristics of Product-Led Growth (PLG)
An example of PLG is the video conferencing tool Zoom. Product situations for which PLG may be effective include:
- The customer can deploy the product without assistance.
- There is a practical mechanism for a potential customer to try the product at low or no cost.
- The product is intrinsically viral (e.g., visible in use, sharing is integral to use of the product, novel and interesting).
- The effort and time required by the customer from the adoption decision to realization of significant value is low.
Key Characteristics of Sales-Led Growth (SLG)
An example of SLG is the human-resource management enterprise software product Workday. Product situations for which PLG may be effective include:
- The product requires a significant effort to provision and set up.
- The product lacks intrinsic virality (e.g., not readily visible by others; not intrinsically interesting or novel; sharing or connecting with others not an organic element of the use of the product).
- The effort and time required by the customer from the adoption decision to realization of significant value is high, often USD millions over years.
The GTM Canvas
You can represent the GTM system with a GTM Canvas, a template which works for most settings. Here is a GTM Canvas as a Google Sheet. This is the GTM Canvas for the now familiar MakerStock example.
The Customer Journey
The backbone of the GTM System is the customer journey. To fill out the GTM Canvas, start with the customer journey.
The journey starts with the customer’s job to be done. The journey is complete when the customer is committed and delighted to be using your solution to do the job.
All customer journey’s include at least these touch points:
- Awareness of the company’s solution.
- Consideration of the solution relative to competitive alternatives.
- Decision to try or adopt.
The development of key performance indicators (KPIs) for the GTM system begins with a metric for the desired result. For example, for MakerStock, the desired result is a satisfied customer, defined as:
MakerStock is the primary supplier of panel goods for the lab. The lab is purchasing in regular intervals with order sizes of at least USD 800. The institution has set up an account and is paying via bank transfer or check (to avoid credit card fees). We know the lab manager’s name and preferred mode of contact and have interacted one-on-one. The lab manager is highly satisfied with MakerStock’s services and would recommend MakerStock to others.
The KPIs for this desired result are the number of satisfied customers, the number of new satisfied customers obtained this week, and the average net promoter score (NPS) of satisfied customers.
KPIs should also reflect the state of the intermediate phases in the customer journey. For example, how many potential customers received a quote this week, and how many potential customers have received a quote within 60 days but have not placed an order.
Finally, KPIs should also reflect key actions that serve as inputs to the GTM system. For instance, how many outbound email inquiries to potential customers were made this week.
Process for Designing GTM System
Ideally you will have just one GTM system, but will probably eventually have to create variants for very different segments. For each segment, proceed as follows.
- Define the focal market (usually the beachhead market for a start-up) and the job to be done.
- Define a goal state for the customer. Success is usually a delighted customer for whom your product is accepted as an integral element of how they do the job.
- Map the phases in the customer journey, from “potential customer” to “delighted customer.”
- Create the playbook for the transitions between phases using design thinking, experimentation, analytics, and iterative refinement.
- Establish ownership of each playbook and the handoffs between functions (e.g., sales to customer success).
- Select KPIs for the most significant elements of the GTM system, for both results and key process steps.
- Once you believe your GTM system is approximately right, consider the GTM as a process flow and work out yields and flow rates to deliver desired growth targets. This step is useful for testing the feasibility of efficiently acquiring customers and for establishing budgets for sales and marketing efforts.
Two complications are common in creating GTM systems: (1) platform and marketplace products and (2) multiple segments with multiple channels.
Platforms and marketplaces
Platforms and marketplaces are sometimes called two-sided markets because they bring together suppliers of goods and services with consumers of those goods and services. The solution serves two very distinct types of customers and users. Some sales and marketing activities, such as general brand awareness, may serve both sides of the market. However, almost certainly, two very different GTM systems are required for two very different segments. The GTM systems can be conceived of independently. However, in operating the GTM systems, the two sides of the market must be kept is approximate balance — and so those responsible for the two GTM systems must coordinate with each other, and resources may need to be allocated dynamically across the two systems in order to keep supply and demand in equilibrium.
Good advice in general for new ventures is to focus on one beachhead market. In that case, the company will have just one GTM system. Inevitably some distinct market segment will emerge. Sometimes that segment can be accommodated with a variation on one or more steps within a single GTM. For instance, for MakerStock, the GTM system is designed for universities, but when a high school emerges as a potential customer, the GTM system can pretty easily accommodate it with some minor differences (e.g., awareness of summer shut down dates, central school district billing systems, higher price sensitivity).
Sometimes a new market segment is so different that it requires that the GTM system be forked. For instance, the do-it-yourself (DIY) consumer segment became important to MakerStock during the 2020, the year the Covid19 pandemic was most severe. At that time, the university GTM system was simply not relevant. Keyword advertising was the key mechanism for gaining awareness and trial for the DIY segment. The sales and marketing playbook for the DIY segment is so different from that of the university lab segment, that MakerStock created an entirely separate GTM system for that segment.
Complete a GTM Canvas for your new venture. Again, here is a template for the MakerStock example. (You will of course need to “make a copy” or “save as” in order to create your own version.) You need not use Google Sheets if you prefer some other tool (e.g., Miro).
Craft a one-slide description of your GTM system for the purposes of your pitch deck.
A pretty good free web-based “book” on GTM.https://unlock.survivaltothrival.com/