Go-to-Market Framework for Startups - Part 1
Even the best ideas are likely to fail
The past 10 months and the global pandemic has changed the world forever. It’s also clear that many “creators” have taken the opportunity during these strange and difficult times to, well, be creative.
It’s often said that an economic downturn is an excellent time to start a business. Whether as a result of redundancy or furloughing, or just having more time on their hands, many have grasped the opportunity to start a business, or are in the process of bringing their idea to life.
A few months into the pandemic and with many of these concepts now becoming a reality, there is one area that needs to be carefully considered and implemented - getting your first customer - and I don’t mean your parents, or uncle, or best friend!. This might sound obvious, but with over 34% of start-ups failing within the first two years and 50% within the first 5 years, the process of “going to market” is equally as important, if not more important, than the idea.
It is one of the most challenging things to get right in any early-stage business and should be focussed on as much during those early stages as building the product itself. Rarely does a product come along that’s so unique and attracts so much demand that users will flock to use it without a decent go-to-market plan and an awful lot of hard work.
This guide is going to help you create an actionable plan for getting those all-important first customers. The “framework” - a term that’s probably used too much, but is pretty accurate in this instance - is going to help you answer a few important questions that will set you in the right direction and give your business or idea the best chance of success.
There are a few other similar, more academic frameworks available, the best of which is Leslie’s Compass. Having applied this to a few of our customers, we’ve adapted and made some additions - here goes.
Is marketing, sales, or somewhere in-between the best fit for my business?
This might seem like an obvious starting point and you might think you need both - which of course is probably the case when you’ve reached the point of achieving a product-market fit. But, being razor focussed at an early stage on where your business fits within the revenue spectrum of marketing vs sales can give you an advantage over your competitors, who might well be trying everything - essentially throwing mud at the wall and hoping some of it sticks.
To understand where your business fits, you should take the time to honestly answer a few questions:
Is my product or service a small or big budget decision for my consumer?
Or, probably more importantly, how much is your customer willing to pay. This is linked to value perception and the benefits your product will offer your customers. If your product commands a low monthly subscription or low revenue per user, you’re not going to be able to justify a full-on sales team. But, if you’re an Enterprise focused software with high revenue per user and significant set-up costs, you’re in the realms of a Sales orientated go-to-market strategy.
What commercial model am I going to use?
How do your customers pay for your products and services? Is your business a pay-for-product, service or transactional business, an eCommerce business selling physical goods, or a coffee shop?
Is your business a subscription (often referred to as Software-as-a-Service) like Netflix or Spotify where you pay a monthly fee to gain access to services or content? Alternatively, do you provide your products or services for a license fee?
As an example, if you’re a subscription-based business, you’ll more than likely need to invest time and money into marketing channels.
What category is my business or service in?
This is a simple question to answer. Does my business sell physical or digital goods online? Does my service require my customers to come to me, or for me to go to them? Does my business have a physical location? Am I able to sell to customers at a local, regional, national, or international level?
The channels you target as part of your go-to-market strategy will vary a lot depending on which sector you identify with.
Are there lots of potential customers looking for my product or service or do you need to find them?
This is where you start to understand the size of the market you can target. Does your product have a broad opportunity? Are you selling a commodity-based product like hand sanitizer, or are you a niche service selling environmentally conscious hand-creams? The broader your product is the more chance there is of someone finding you. On the other hand - excuse the pun - the more niche the product, the more you need to seek out your audience.
By answering this question, you’ll be able to not only identify some of the channels you should target, but broadly how much you can spend to acquire customers.
How much education or training does my consumer need to use my product or service?
Is your offering simple or complex to understand, implement, and use? Does your product require education, detailed onboarding, or installation time to get your users up-and-running?
SalesForce takes time and planning to implement within a business and has created an entire ecosystem of “integration suppliers”, whereas Deliveroo requires you to download an App, add your credit and select your take away of choice. Within 30 minutes you’ll be getting a knock on the door from your friendly delivery driver.
The amount of time it takes for your customers to make a purchase decision will help identify whether you’ll have a hands-off (marketing) or hands-on (sales) focussed go-to-market plan.
After your customer is set-up is there anything else they need?
What does your after-sales service look like, if any? Is your product so simple that you can just leave your customers to it, or do you need to help them make the best use of your product?
This will help you define what happens after a sale and whether you need to invest in content-based support or people-based support and account management.
Is my product or service going to be used by businesses or consumers?
Finally, and probably the easiest and most straightforward, are you selling to businesses or consumers?
So, what do I need to do next?
Once you’ve answered these questions, you should have a clear idea as to whether you’re going to acquire customers through Marketing or Sales and be better able to identify the channels that are likely going to succeed for your business. Part 2 of our guide which goes into more detail on the channels and how you can approach them will be published in the next few weeks.