To address the question, why is executing go to market strategy so hard, the backdrop for this story needs to be set. First, there are over 800 software companies with annual revenues over $1B, over 3,500 have annual revenue over $100M and almost 40,000 have annual revenue over $10M. Now, assume each has a Sales and Marketing function and each organization sends emails, makes cold calls, tweets, conducts Facebook contests, creates LinkedIn groups and discussions, attends trade-shows, holds executive events, pitches analysts and has meetings with prospects. In this context, if a Venn diagram was pulled out, do you think there might be some overlap in the messaging from a a prospects point of view?
Go to Market Strategy – Right Time
In general, research indicates that approximately 3-5% of any market is ready, willing and able to buy at any particular point in time. Granted, there are exceptions to the general rule but they are few and far between. Apple, Tesla and whatever appears on the cover of InStyle for women or GQ for men may break this general rule. However, let’s set the stage for a complex sale in a B2B market with a price tag in the several hundred thousand dollar (and up) price range. Next, let’s look at the technology adoption curve that was developed in the 1960s by Everett Rogers and is still relevant today.
As the technology adoption curve illustrates, adoption in a market increase over time. When the penetration rate of each stage is multiplied by the total available, served and target market numbers are relatively large. However, there are a few things that reduce the value of those numbers. For instance, companies have choices — they can choose to do nothing, develop a product in-house, or use an alternative that one’s company may deem inappropriate. Or, maybe they already bought a solution and they are in the middle of a four-year deal so they are out of the market. In addition, companies may not be able to purchase due to a merger, a downsizing effort, lack of budget, a reorganization, or the hiring of a new executive. When all of this is factored in, it is easier to digest that on average, five out of every 100 companies in a served market may be making a purchase. Now, smart companies will do their homework before approaching the prospect and will not target a vanilla or generic basket and thus avoid the 1 in 20 hit rate. organizations with an effective go to market strategy will do their homework and have sales and marketing synchronized to filter the served market down so that the propensity of the prospect database is greater than 5%. With the proper account intelligence the sales organization can be focused on fish in a barrel as opposed to the sea. And, it is important to note that a market is dynamic so each quarter, and definitely each year, companies may move in and out of the high propensity to purchase segment.
Go to Market Strategy – Right Message
Before an organization can develop a unique, relevant, compelling message that will resonate with the target audience, an organization has to determine at what level they will compete at:
- The product level (speeds and feeds)
- The competitive level – keeping up with the Jones’ (fear, uncertainty and doubt)
- The solution level (solution selling)
- The value level – decrease expenses, increase profitability, revenue, productivity or customer satisfaction (value based selling)
- The unknown level – addressing an unknown business problem (the challeneger sale)
Go to Market Strategy – Existing Problem or an Unknown Problem
If an organization has an existing problem, chances are that there is a budget in place and an RFI and RFP have been developed. Your organization may have been in the account early and helped shape the RFI and RFP. Otherwise, your company was late to the party and it will be necessary to play the game based on someone else’s rules which typically results in your organization showing up as column fodder. There is a more assertive play and that is to challenge of reset the RFP. Here, the focus is to point out that the RFP is missing key information and that the RFP needs to be rethought from the top down and that provides the opportunity to reset the RFP.
On the other end of the spectrum, an organization may have insights into the market, technology, competitors, workflows and internal operations at the prospects’ organization that can dramatically impact the financials of the business. Often times, new insights are brought to the prospect that the prospect was unable to see–the forest from the trees analogy. In this scenario, a target account focus lends itself to this model where the homework (or account intelligence), is performed up front and not left to be uncovered during the traditional business and technical discovery phase of the sales cycle. This is not to say that business and technical discovery will not need to be performed or that no additional knowledge will be extracted during the sales process. It is simply pointing out that account knowledge and insights are table-stakes to get an “at bat” within an organization where no budgeted project exists. The basic concept is to put something on the table that was never conceived of before that has a big bang to the organizations financials–lowers the tide for all other boats.
Why Have Purchase Decisions Become so Complicated
The probability of connecting with the right person is like finding a needle in a haystack. Some organizations follow a chase demand generation strategy that involves building a database of prospects with certain titles. The issue with this tactic is that it places a great amount of importance on knowing the right titles (business card titles vary), the contact information is bad or the demand generation vehicle selected is one that does not resonate with the prospect (prospects may prefer phone or email, or content or face to face)? Or, what if the sales and marketing teams have identified the right title for one company but those titles are different at company 2? Because each organization may have differences in the organization structure and the corresponding titles may vary, there is a good chance that the titles at one organization will not be the same at another. If an organization pursues a star-bursting strategy (land and expand) then this issue can be managed.
All right, as if that is not enough complexity, let’s account for the fact that in a complex sale it’s estimated that over 20 people are involved in the decision making process. Yup, and that may be a conservative number. Use the terminology of choice, but for discussion purposes let’s use Approver, Decision Maker, Recommender, Influencer and Sniper. Each of these groups has a support network of people inside the company and outside the company that directly or indirectly become part of the decision making process. Remember, first-hand experience always prevails, followed by vicarious experience and then everything else. So, it’s critical to understand the buyer behavior model for each persona and to proactively manage it.
Some point to the downsizing of the last decade when a good deal of baby boomers were displaced from their jobs and many became consultants with vast amounts of specific knowledge as to why the purchase process has become so complex. As companies look to make purchases it is relatively easy to find someone who worked at the vendor in question, was a partner of the vendor or has or has access to first-hand knowledge of that vendor. All of this empowers the purchaser. Others point to risk aversion and the desire by executives not to put a seven- digit compensation package at risk, thereby opening the discussion up and looking for unanimous approval from all parties impacted. And, because of SaaS, –the IT and LOB worlds have to both be on board as users, implementers and supporters of the solution as usage and business impact can be tracked, monitored and managed with refreshes to the dashboard and established KPIs for the entire organization to see.
It’s not enough to have a compelling sales conversation with one of the groups included in the buying decision or your internal sponsor . This is true, even if the conversation is with a C-level executive because in many cases even they will have to seek a higher level approval—the board. What is critical is that the sales team empowers the prospect with the content, knowledge and insights that they will need in order to carry the torch forward. In other words, the goal is not to win the battle with the group present in the room or on the phone –the focus needs to be on winning the war which means empowering the prospect to sell internally. Let’s be clear, the sales team remains totally engaged with a prospect; however, crucial conversations will occur that the sales rep will not be part of or privy to and it is paramount that the sales rep empowers the prospect with the right information, in the right context and in the right format so that they can sell internally. With that said, the sales rep has to empower the prospect with tangibles and intangibles so that they can effectively sell internally–buyer enablement.
At the end of the day, companies have a limit to the number of applications that can be on-boarded in their organizations in the course of a year. Yes, even SaaS offerings require configuration, customization, integration, training, etc. and there is a limit to how much new technology any one organization can successfully digest. And, there is only so much funding allocated for capital expenses and operating expenses. However, if a sales rep can uncover significant unknown needs and put together a relevant and compelling argument that impacts the bottom line like no other initiative on the desk of the C-level executive, then there is a good chance of getting a good at bat. Just be sure that you have a relevant, compelling and actionable story to tell at the moment of truth.