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Welcome to the pivotal transition from having a product that meets market needs (hello, product-market fit!) to shouting about it from the rooftops (or executing your go-to-market strategy). This shift is where startups go from a quiet nod of approval to making some serious noise in the market. And because we know how crucial this stage is, we teamed up with George Stoyanov, Managing Partner at RevBrains, to run a practical workshop for our founders who have started (or are preparing) to scale operations.
The insights and know-how from this workshop can help you too, so let’s dive into the highlights!
Transition dynamics
Think of moving from PMF to GTM like preparing for a marathon. First, you ensure you can run the distance (PMF), and then you move into high gear, accelerating to outpace the competition and cross the finish line ahead of the pack (GTM). This stage is all about understanding your startup’s current position on the track and really getting into the heads of your customers. You’ll be aligning your sales and marketing efforts to not just meet but anticipate the market’s needs. How? By diving into market dynamics, keeping an eagle eye on your competition, and tweaking your approach based on these insights.
As George said, “Usually, first customers come with very high customer acquisition costs because the idea behind product-market fit is not for you to optimize on costs or to optimize by specific growth figures. You have a different goal during that phase – to pinpoint your ICP, to build a product that solves this persona’s problems, and to find out at what price to sell it. But after you reach the PMF stage, your immediate goal is to find out how to scale up in the right way. On the one hand, you should scale confidently without too many ups and downs, and on the other, do so at a cost that is reasonable enough for your business to sustain.”
Watch your step: common pitfalls
In our workshop, George highlighted two sneaky traps to avoid:
- Premature scaling: One of the most significant risks is the temptation to scale prematurely. Rushing to scale can lead to misallocated resources, team burnout, and even risk your product-market fit. Take your time and make sure your go-to-market strategy is solid, operations are efficient, and growth is sustainable before pushing the pedal to the metal.
- Underestimating GTM fit: Failing to recognize the critical role of GTM fit in the startup’s growth trajectory can lead to ineffective sales strategies, wasted marketing efforts, and a longer path to profitability. Prioritizing the development of a strong GTM strategy ensures that your product finds its way to the right customers through the most effective channels.
The journey model in GTM
Crafting a customer journey is a complex but essential process for startups aiming to effectively reach and engage their target market. Here are the five critical steps for developing a journey that resonates with potential customers and drives growth.
- Understand customer and company actions.
- Objective: Identify and document the potential actions customers take during their journey.
- Actions:
- Analyze historical data to understand past customer behaviors.
- Map out generic stages of the customer journey and customize them to fit your business model.
- Establish clear definitions for each stage of the journey (e.g., awareness, consideration).
- Define internal ownership.
- Objective: Allocate responsibilities within your team for different stages of the customer journey.
- Actions:
- Assign team members to oversee specific segments, such as acquisition efforts.
- Ensure alignment between marketing and sales teams to prevent silos and enhance collaboration.
- Set and measure milestones.
- Objective: Identify key milestones within the customer journey and establish metrics for evaluation.
- Actions:
- For each stage of the journey, define at least one key performance indicator (KPI) to measure success.
- Utilize data to monitor progress and identify areas for improvement.
- Optimize your tech stack.
- Objective: Implement and integrate the right technologies to support your GTM strategy.
- Actions:
- Start with a CRM system as the foundation of your tech stack.
- As you scale, incorporate additional tools for business intelligence, marketing automation, and customer health tracking.
- Ensure your tech stack evolves to meet the growing needs of your business, especially beyond the CRM system.
- Beyond the funnel: embrace the bow tie model.
- Objective: Recognize and address the stages of the customer journey that occur post-purchase.
- Actions:
- Shift from a funnel-only perspective to a bow tie model, acknowledging the importance of post-sale customer engagement and retention.
- Label each phase of the journey with specific names (e.g., Leads, MQLs, SQLs) to facilitate tracking and management.
- Continuously analyze volume, conversion, and time metrics to optimize the entire journey.
Metrics for GTM success
First things first. Recognizing the signs of PMF is key before shifting gears to GTM. Indicators such as high customer retention rates, a favorable LTV:CAC ratio (of 3:1 or better), and sales team success in meeting quotas all suggest that your product has achieved market fit and is ready for the next growth phase. But as your startup evolves, so should the metrics you prioritize:
➜ Phase 1 (Achieving PMF): It’s all about product excellence and market resonance. Your focus:
- # of Customers per Period
- Average Sales Price (ARR, TCV, etc.)
- % Discounts & Revenue per Customer
➜ Phase 2 (Proving GTM fit): Time to track all revenue levers: Volume, Value, Conversion, Time:
- Conversion Metrics (e.g. Lead to MQL to Opportunity CVR%)
- Time Metrics (e.g. Sales Cycle Time)
- Volume Metrics (e.g. # Leads/MQLs)
- Value Metrics (ARR/MRR)
- CAC, LTV, Churn
➜ Phase 3 (Scalable growth): Focus on ensuring your growth is efficient and scalable. Metrics to track:
- LTV to CAC Ratio per GTM Motion
- CAC Payback Period
- MRR/ARR Growth
- Lead Velocity
- Gross Revenue Retention (GRR)
➜ Phase 4 (Customer growth & retention): This phase is a testament to your product and GTM’s robustness:
- Gross/Net Revenue Retention
- Productivity Metrics
Parting thoughts
Founders, it is important to view achieving GTM fit as a learning journey. It’s about testing, gathering feedback, and learning continually. Experiment with different sales channels, marketing messages, and pricing strategies to see what clicks with your audience. Deeply understanding your customers’ needs and preferences is vital, so engage with them through surveys, interviews, and user testing to refine your GTM strategy. Achieving GTM fit is about strategic planning, understanding your market, and being agile enough to adapt based on performance metrics and market feedback.
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