We see it all the time. A company was once booming. In past years, revenue growth ranged from 20-30%. The market was expanding, the product was superior, and money was raining from the skies. The sales force was literally ‘shooting fish in a barrel.’ Top-line growth was almost too easy.
Then they missed the goal for a quarter. “Oops, it was just a seasonal hiccup”, the VP of Sales said. “We should be back on track soon.” And then another quarter miss. “We need to do better with our forecast”, cried the CFO and mandatory forecast calls were put into place. And the trend continues until the company misses the number for the year. The VP of Sales was replaced. A new guy was brought in ‘to get us back to profitable revenue growth.’
Sound familiar? A key reason the company missed was the lack of awareness that the market was changing. And a changing market requires a different Go-to-Market (GTM) approach.
We believe there are fundamentally three markets a company is in at any given time. And each market requires a different GTM approach:
- Market Exposure: This is where a company is exposing the market to a new product or service. Think Apple iPhone in late 2000’s or Uber in the early 2010’s. In a business-to-business context, this market type is defined by longer sales cycles and intensive awareness marketing. It also requires the patience to land and expand deals and accounts.
- This GTM approach involves fewer sales people but a larger marketing effort. The goal is to work on qualified leads that will close quicker.
- Market Expansion: These markets are expanding rapidly. Double-digit industry growth helps fuel company sales. Think cloud storage (Dropbox, Box, Amazon Web Services) in the mid 2010’s. Shorter sales cycles, higher average sales price, and greater win rates can mask sales productivity issues. In these expansion markets, everyone gets rich, but long-term issues may go unaddressed.
- This GTM approach is about activity… a total land grab. The faster you are to the prospects, the more business you will get. These sales teams need strong sales development reps (SDRs) and a large team of outside reps. Companies in this market must continue the marketing awareness campaigns to drive revenue. There isn’t a lot of process or methodology needed. The goal is to just go get the business as fast as you can.
- Market Share: This is where real sales professionals are separated from the imposters. The market might be growing only 2-4%, or even contracting. Think Staples, Xerox, Hewlett Packard – every deal is a fight to the death. Often, the product and service becomes commoditized. To succeed, companies need to make a revenue growth number higher than the market growth. In frustration, many companies attempt to fuel growth through M&A. Many others simply go bankrupt.
- This GTM is about rigor. A strategic sales methodology, disciplined sales management, and rep performance management are critical. Sales enablement tightly aligned to field and more dynamic commissions plans provide the foundation. Success in this model comes down to superior selling. If you don’t beat the competition, you might not be around to see tomorrow.
Most companies we see need to transition from a Market Expansion to a Market Share GTM. Yet, the majority of sales leaders are blind to this need. They don’t change their GTM strategy. They don’t change their sales methodology. They don't implement more rigorous sales management. Nor do they change the way they lead and manage the business. Their only consistent action we see is to replace people or fiddle with the org chart. Poor performing Sales VPs think these actions are their only lever to ‘right the ship.’
We believe differently. If this happening to you, assess your current GTM. Ask yourself these critical questions:
- Are companies beginning to merge in your industry?
- Are you hiring sales reps from the same companies?
- Has your win rate, average sales cycle, and average sales price declined?
- Are companies in your target industry experiencing lower revenue?
- Have you missed your number lately?
- Are your best sales reps (‘A’ players) leaving?
Seeing this in your business? Reach out to us to learn more about the strategic roadmap for changing your GTM strategy. We would enjoy having a discussion to see if you need the change. It’s better to start sooner than later.