The GTM equation for startups

 
Published on 2021-07-15 by John Collins.

Introduction

Startups that are successful grow into larger, second-stage companies that scale up both in terms of revenue, market share, and headcount. The vast majority of startups never reach that second-stage however, due to poor execution on their Go-To Market (GTM) strategy.

Successful companies succeed not because they have the best ideas or technology, but because they have the best GTM execution.

If you have an amazing product with innovative technology, that's great! However, unless you can find users for that product in the market place (Marketing), and can convince those users to pay for your product (Sales), your startup will fail to scale, or may even fail completely.

In this article, I will look at each of the three functions, that make up your GTM team:

Marketing + Sales + Product = GTM team.

If one of those functions fail to deliver, the impact on the other two will be significant enough for the entire GTM team to fail. It is the role of the fourth function, Leadership, to ensure that does not happen.

Success, or failure, is collective.

Marketing

Marketing is all about raising the profile of your company product or service in the marketplace. In a new market, Marketing will even have to create that need. For example, someone had to be convinced to buy the first MP3 player, when everyone else was using CD players. Therefore in simple terms, we can say that Marketing is about creating demand, even when that demand is for a brand new product or service.

In a mature market, where competing similar products or services already exist, Marketing need to raise your profile, and convince the market that your product or service is the best available.

In an immature market, Marketing will need to create demand for a whole new product or service category: this is a lot harder, and requires a very talented Marketing team.

Marketing feeds Sales in two ways:

  1. Marketing gets the prospects to call you. If Marketing creates enough hype, it will encourage people to inquire directly about your product or service.
  2. Marketing gets the prospects to recognize you. For a Sales team, it is much easier to cold-call a prospect if they have already heard about you, via some brand awareness generated from a marketing campaign. In comparison, prospects are much more suspicious of a startup which they never heard of.

In addition to feeding Sales, Marketing can also feed Product:

  1. Feed market requirements, for example the hot trends or buzzwords.
  2. Watch for Product opportunities, for example gaps in the market that are currently not being filled by the competition.

Fundamentally, a Marketing team in a startup must hype, hype, HYPE to build buzz and momentum.

Sales (B2B)

Sales is about filling a need that the prospective user already has. Ideally, the prospect already has a clear understanding of what their need is, a rough idea of what they require, and crucially a budget to spend on the right solution. That is where Sales come it.

Sales need to match the Product they are selling to the right prospect, in a process commonly referred to as qualification.

If it is a bad fit, or the prospect does not have a real budget in place, then they need to be "qualified out" to ensure the GTM team does not waste any further time on it. You want those weak prospects out as soon as possible, show no mercy.

If the qualification smell checks pass, the Sales team need to gather the high-level requirements from the prospect, and match those opportunities to the feature set provided by the Product. In addition, they need to establish credibility and trust with the prospect as early as possible, and retain it, to ensure they feel comfortable at the end of the Sales process to sign a potentially large Purchase Order (PO).

Prospects will not sign a PO if they have any doubts, so it is important that they are reassured throughout, and the Sales team project confidence and professionalism.

Sales act as a bridge between the prospects and customers, and the delivery team in Product, but they must remember who they work for! I have seen some poor Sales people in the past get so close to the customer, they start to side with the customer against their own company, an example where too much empathy can be a bad thing.

Fundamentally, a Sales team need to close, close, CLOSE deals as efficiently as possible. The more they close, the faster the startup scales.

Product

If Sales are filling the needs that prospects have, then Product is providing the filler, specifically the product solutions that fit the market. Product need to release a quality solution, that is relevant to those market needs.

Market needs are changing all of the time of course, so Product needs to be able to innovate quickly enough to not only react to the market, but also to lead the market with compelling features, that are designed within the Research and Development function within Product.

Product fundamentally need to deliver on the promises made by Marketing and Sales, and do so as smoothly as possible. They need to solve any friction around product delivery, which is easier if the product is a SaaS, but more challenging with a bespoke on-premise or on-cloud deployment. Either way, the end user needs to feel minimal pain when interacting with the solution itself, and also the Product team who built it. Aim to delight end users.

Fundamentally, a Product team needs to deliver, deliver, DELIVER product solutions like a well-oiled machine, similar to an assembly line in a factory: requirements come into the beginning of the assembly line, and finished products come off the end in a predictable, timely fashion, with high quality.

Leadership

The Leadership function needs to ensure that those three functions: Marketing, Sales, and Product, are delivering upon their obligations. In addition, each function needs to effectively communicate with each other, and all heading in the same direction. It is the job of Leadership to ensure no communication silos exist, and to ensure that everyone is travelling in the same direction, at the same speed.

All three groups are 33% accountable for the overall success of the startup, and Leadership needs to provide that accountability. If someone is not pulling their weight, Leadership needs to step in to resolve the issue before it affects the overall delivery engines in the organization.

If one of those groups fail to deliver, the other two cannot compensate and overall failure is assured. Leadership cannot allow that to happen!

Conclusion

The main takeaway from this article is that there are interdependent parts of your organization that make up the GTM team, and they feed their output into each other in a circular way:

Marketing cannot build a campaign if they do not understand the product vision, or if it keeps on changing.

Sales need relevant leads from Marketing, and they need a deep understanding of the product domain to be creditable.

Product need feedback from Marketing and Sales, to make the product fit the market better. You may have a great product, but if it does not meet the market needs it will not sell.

Round and round it goes, hence why I presented it as a circle above. If one part of that circle stops delivering their part, the whole thing stops moving. It is the role of Leadership to ensure that never happens.