Developing your go to market strategy by Kris Konrath, Convergent
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Learn about developing your go to market strategy. We’ll take a look at the five key components to developing a go to market strategy including your target market, marketing channels, messaging, pricing & packaging and customer acquisition cost. By Kris Konrath, Marketing Director at Convergent
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Developing your go to market strategy by Kris Konrath, Convergent
- 1. Key Considerations in Developing Your Go To Market Strategy
- 2. No Market Need 42% Ran Out of Cash 29% Not the Right Team 23% Get Outcompeted 19% Pricing/Cost Issues 18% Poor Product 17% Need/Lack Business Model 17% Poor Marketing 14% Ignore Customers 14% Product Timing 13% Lose Focus 13% Team or Investors 13% Pivot Gone Bad 10% Lack of Passion 9% Bad Location 9% No Financing/Investor Support 8% Legal Challenges 8% Don’t Use Network/Advisors 8% Burn Out 8% Failure to Pivot 7%
- 3. 5. KNOW YOUR COST OF ACQUIRING CUSTOMERS 4. ESTABLISH PRICING STRATEGY 3. DEFINE YOUR BRAND MESSAGE 2. KNOW WHERE THEY ARE 1. DEFINE YOUR AUDIENCE Key Steps in Developing Your Go To Market Strategy
- 5. • Biggest, most urgent pain and how well you solve it • Gaps in the market • Segment size • Alignment with your strategy and competencies • Competition DEVELOP YOUR MARKET PROFILE It’s not about who you want. It’s about who wants you. Tip!
- 6. WHERE TO FOCUS? What customers want What your brand does best What your competition does best Win Zone Dumb Zone Risk Zone Losing Zone
- 7. BUYER PERSONA Understand his needs • Objectives • Challenges • Support Needs • Motivation Communication • Industry • Informational • Interaction Types
- 9. IDENTIFY THE RIGHT MARKETING CHANNELS Where they are • Associations • Web sites • Trade shows • Blogs • Influencers • Social media
- 10. Marketing Channel Average ROI Average Effort Average Cost Tier1 Conversion Rate Optimization High High Mid Search Engine Optimization High High Mid Email Marketing High Mid Mid Tier2 Viral Content Campaigns Mid High Low PPC Advertising Mid Low High Affiliate Marketing Mid Mid Mid Tier3 Display Advertising Low Mid High Social Media Marketing Mid High Mid Online Public Relations Low Mid Mid DETERMINING THE RIGHT MIX
- 12. WHAT’S IN A BRAND MESSAGE 1. Target Customer 2. Market Definition 3. Brand Promise 4. Reason to Believe
- 13. BRAND PROMISE What is the most compelling (emotional/rational) benefit to your target customers that your brand can own relative to your competition? WHY HOW WHAT The Golden Circle Simon Sinek
- 14. REASON TO BELIEVE What is the most compelling evidence that your brand delivers on its brand promise?
- 17. PRICING
- 18. PRICING CONSIDERATIONS • Positioning: premium brand vs. value brand • Audience: Broad audience vs. highly targeted audience • Methodology: Cost-based model vs. a market-based model The most common pricing error in startup business plans is pricing too low Tip!
- 19. Maximization (Revenue Growth) - maximize revenue growth in the short term. This is done when there are no clear differences in customers willingness to pay, and when the optimal short term and long term prices are equal. Penetration (Market Share) - price the product at a low price to win dominant market share. Skimming (Profit Maximization) - start with a high price and systematically broaden the product offering to address more of the customer base at lower prices. PRICING STRATEGIES Once you choose your pricing strategy, make sure that your sales, marketing, product and engineering efforts fall in line. Tip!
- 21. WHAT IS CAC? Total Marketing Campaign Cost Wages Associated with Sales & Marketing Cost of Sales & Marketing Tools/Software Any Other Professional Services Used (consultants) Other sales and marketing overhead + + + + Total Customers Acquired Lifetime Value of a Customer (CLV) The Gross Margin expected to make from that customer over the lifetime of your relationship. Gross Margin should take into consideration any support, installation, and servicing costs.
- 22. CAC IN RELATION TO CLV -1:1 = Terrible. Bleeding money 1:1 = Danger! You’re losing money on every transaction 3:1 = Ideal. Thriving business! 4:1 = Great! Get more aggressive
- 23. IMPACTING CAC Social Media Inbound Marketing Free Trials Touchless conversion Strategic partnerships PR High Churn Rates Low Customer Satisfaction Field Sales Outbound Marketing Recurring Revenue Scalable Pricing Cross Sell/Up Sell Product Line Expansion Cost to Acquire a Customer (CAC) Lifetime Value (LTV)
- 24. “Understand your users. That's the key. That's the reason to launch early, to understand your users. Evolving your idea is the embodiment of understanding your users. Understanding your users well will tend to push you toward making something that makes a few people deeply happy. The most important reason for having surprisingly good customer service is that it helps you understand your users. And understanding your users will even ensure your morale, because when everything else is collapsing around you, having just ten users who love you will keep you going.” Paul Graham, Co-Founder of Y Combinator
- 25. THANK YOU “What marketing tools do you feel are a must have?”
Notas do Editor
- Introduction: Hi my name is Kris Konrath To get a sense of who’s in the room, can I get a raise of hands of those in a president/ceo/founder role? What about marketing? B2B, B2C?
- A couple months ago CB Insights conducted 101 post mortem interviews of startups that failed. They found two things: There is rarely just one reason for failure and 2. The reasons are very diverse. They distilled their data into a top 20 list that I think serves as a nice introduction to what we’re going to talk about today. Why? I can point out 4 of the top 10 that have a direct impact on developing a clear go to market strategy. No market need Pricing Poor marketing And ignoring customers So let’s take a look at the components of a successful go to market strategy
- Number 1 is your audience. Knowing who they are and segmenting your market is critical. 2. Knowing where they are, how to reach them. This is going to establish your marketing plan. 3. Developing and defining your brand message. It’s who you are and why they wan to buy from you above anyone else. 4. Pricing. Developing the pricing strategy that matches your objectives and position is key. 5 Understanding the cost of acquiring customers. So let’s start out with your audience.
- Defining your audience is really composed of two parts: market segments and the buyers within those market segments. So let’s start with the first one. Market Segments.
- Selecting the right market sounds simple, but it can be one of the most challenging tasks. A lot of times you feel that selecting just one or two is limiting your addressable market. But in fact, with limited resources and limited funding, you need to have a clear focus on the segment that gives you the best chance to succeed. I’m sure you’re heard of the book Crossing the Chasm by Geoffy Moore. Start on a single beach head or target market. Own it. Then leverage your success to establish another one. So how do you you decide which market? It’s all about matching your benefit to your markets biggest and most urgent pain. Keep in mind, it’s not about who you want, it’s about who wants you.
- Once you have your market selected, you need to understand your buyer. If you’re a B2B company, let’s face it, decisions are still made by people with emotion and needs. Know who they are…the more the better. Understand what their challenges are, and not just as it relates to your offering. Buyer personas are key and you’ll likely need more than one. There are buyers, influencers and product owners. Knowing who you’re dealing with and how to talk to them is paramount.
- Again, rely on your customers, your network, LinkedIn, industry publications and your own market research to find out where these people are. This is important because this is where you’ll be spending marketing dollars to reach them. It’s also about developing the appropriate sales channels.
- Blog, article placement,
- When you’re considering marketing channels, establish benchmarks for success and measure how well you’re doing along the way.
- So now that we know who they are and where they are, let’s talk about your brand message.
- There are really 4 key elements to your brand message. We’ve spent a bit of time on buyers and markets, so let’s jump in to brand promise.
- What’s a brand promise? It’s the most compelling emotional or rational benefit to your target Has anyone heard of the Golden Circle? people don’t buy what you do, they buy why you do it. What: it’s all about what you do, what you create How: Your value proposition Why: Your purpose, your reason for being It’s all about the WHY. It’s not just features and benefits. Once you establish the why, you have to give them a reason to believe.
- A reason to believe can be accomplished through a case study or a testimonial. It can also be standing by your brand promise. A great example of this is Southwest Airlines.
- In the heart of the great recession, gas prices were through the roof, travel was down and many companies like Southwest were scrambling. As Southwest saw many of their competitors introduce bag fees to shore up revenue, they had a monumental decision to make. Stand by their brand promise of being a customer first airline or stick it to their customers and immediately see their revenue increase by $450M by charging for bags. You know the answer.
- They didn’t just make the decision, they embraced it and promoted the hell out of it. Staying true to themselves and their customer paid off. Their load size increased by 5% and their market share increased 1%. That $450M in bag fees that they lost was offset by an increase in $800M. Key point: stick to your brand promise. It’s who you are and it’s why your customers buy from you.
- Pricing is another area where many startups have trouble.
- When you’re evaluating pricing, keep in mind your audience and how you want to position your offering. Are you a premium brand or a value brand? Your pricing should reflect that. The one mistake that many startups make is pricing too low. Run a cost-based model and a market-based model. Look at your competition and how well you compete.
- Here are a couple of pricing strategies to consider: For companies focused on revenue growth, Maximization is optimal. In it you’re negotiating the highest possible price for each sale. A lot of mid market software companies follow this strategy. On the other hand, if market share is important, Penetration is your best bet. Here your offering is priced low to minimize adoption friction and to grown fast. After broad penetration, you move up market. Examples of this are Expensify and Slack. So let’s move from price to cost.
- More specifically, the cost of acquiring customers
- So what is the Cost of Acquiring a Customer? Explain: The key here is that CAC doesn’t mean a whole lot unless you know the lifetime value of each customer. The relationship between is critical. So what’s the relationship look like?
- The rule of thumb is if your cost of acquiring a customer is 3X your CLV, you’re in great shape. At a 1 to 1 level, you’re still losing money and below that it gets pretty grim. If you’re at a 4X level, congratulations! You’re doing great. However, consider reinvesting to get to a 3X level. So what can you do to impact the relationship?
- So I’ll leave you with this quote from Paul Graham, founder of Y Combinator. Kind of like a 3 month, on-site Venture Atlanta boot camp. Twice a year we invest a small amount of money ($120k) in a large number of startups (most recently 107). The startups move to Silicon Valley for 3 months, during which we work intensively with them to get the company into the best possible shape and refine their pitch to investors. Each cycle culminates in Demo Day, when the startups present their companies to a carefully selected, invite-only audience. But YC doesn’t end on Demo Day. We and the YC alumni network continue to help founders for the life of their company, and beyond.
- Understand your users. That's the key. The essential task in a startup is to create wealth; the dimension of wealth you have most control over is how much you improve users' lives; and the hardest part of that is knowing what to make for them. Once you know what to make, it's mere effort to make it, and most decent hackers are capable of that. Understanding your users is part of half the principles in this list. That's the reason to launch early, to understand your users. Evolving your idea is the embodiment of understanding your users. Understanding your users well will tend to push you toward making something that makes a few people deeply happy. The most important reason for having surprisingly good customer service is that it helps you understand your users. And understanding your users will even ensure your morale, because when everything else is collapsing around you, having just ten users who love you will keep you goin