Potential investors and the community in general use a lot of jargon. One such question commonly asked to entrepreneurs is – “What is your go-to-market plan?” The first time I was asked this questions many years back, I have to confess, I was stumped. First, I couldn’t really understand the question and secondly, we didn’t really have a go-to-market plan!
The questions simply means – how will you acquire customers? How will you reach them in the first place, engage with them and ultimately get them to pay? It’s an over-arching question over sales, marketing and business development of all sorts. Our first go-to-market plan in our first avatar at my previous company GlobalLogic (which eventually was bought for $420M) was very simple – we will build and they will come! That’s what we really thought, that we will build great products and they will throng to us. After burning through a lot of money and almost suffering total shutdown, we learnt that it might not work this way. I have seen many other entrepreneurs have the same go to market, and with similar results.
Here are 3 tips though on what I have seen work:
- Try not to over-engineer, keep money for go-to-market: Many entrepreneurs have no money kept aside for go-to-market. Nearly all the budget is planned for product. If its B2C, I have seen some line item for “Marketing” which is a big blob and if its B2B, sometimes a little allocation towards sales team. My sense is that if there are 3 founders, at least 1 needs to be dedicated to Go to market. Hence, in early stages a company should be spending at least 30% to 50% resources on figuring out and executing the go to market less. Build a little less and sell a little more.
- Don’t go to market, always be in the market: Good startups are always in a deep conversation with their customers. The worst thing you can do is build your product a long way without any customer feedback. Build a little, sell a little, then build some more and then sell some more. Its expensive to build so you have to be sure you are building something that’s right, and only customers can validate that. If you are in B2B, getting beta customers hence is like gold dust. A PPT should be the first version of the product. If you are in B2C, you can isolate the target segment very narrowly to start with and then broaden out.
- The best go to market plan is one that you can execute yourself: Many entrepreneurs lament about their own lack of sales skills and their inability to afford and hire good sales people. They feel this problem will be solved once they are able to hire sales people. Well, in my experience a sales person’s productivity is much lower than an entrepreneur, hence in early stages the entrepreneur has to sell. The passion has to come through for sale to happen. Only once the product has been proven out in the market and the sales process needs to be scaled can you think of bringing in professional sales people.
I was once talking to a seasoned entrepreneur in the US, a far more developed market. I asked him about his latest business. He said we will build whatever we can sell. So he was looking first for a cost-effective go to market plan and then looking to build the product. That’s the last thing about it. If you can acquire customers, but very expensively, then you don’t have a business. Lets say, you have a product which can only be sold through expensive TV ads but your market size doesn’t justify it, then the business is not viable. The economics of a go to market is however a subject for another post.
Authored by:- Mr Rajul Garg, Director at Sunstone Business Schools