Most companies don’t fail because they don’t have a great vision. Most companies don’t fail because they don’t have amazing people and culture. Most companies don’t even fail because their product or service just isn’t all it was cracked up today. According to Sangram Vajre, a recent guest on the Predictable Revenue podcast, most companies fail because of an unsexy side of business that we don’t talk about enough.
Only .04% of companies scale past $10MM in revenue and the thing that sets those companies apart is their GTM process.
TOP OF MIND
Sangram has spent the last 2 years picking up the phone and talking to any expert he could to learn more about what goes right and what goes wrong in companies around that $10MM mark so that he could write a book. He spoke to Brian Halligan, Hubspot Founder and Executive Chairman, Geoffrey Moore, author of Crossing the Chasm, Nick Mehta, CEO of Gainsight, to name a few. Across the board, all the CEOs, executives, and VCs that Sangram interviewed echoed one idea: that GTM is the single most important thing that drives business – but we don’t talk about it that way.
If you ask any employee at a typical company who they think owns GTM they will say the CMO or the CRO. In reality, it should be the CEO. Most companies who make it to the $10MM mark either die or get acquired too early because in this “valley of death” the companies are not focusing on and evolving their GTM process the way they evolve their solutions or their teams. Most of them, at this point, aren’t thinking about GTM at all.
After all the conversations he had with experts in space, Sangram and his co-author Bryan Brown realized that GTM is not a strategy. It has to be thought of like a product. Every day, week, and month, leaders make tradeoffs in their organizations like should we hire another salesperson or give money to marketing? Do we acquire one company or partner with another? Should we open up a new office or add more engineers to the product team to create a scalable ecosystem? All these questions and decisions are part of the ongoing GTM process.
Sangram discovered that there are 4 questions that are consistent, no matter the stage of a business. They make up the MOVE framework.
- Market: Who should we market to?
- Operations: Are our operations effective?
- Velocity: When can we scale?
- Expansion: Where can we grow the most?
The answers at different stages may be different, but this framework creates both simplicity and freedom so you can make sure your GTM matures with your business.
HOW TO TELL IF YOUR GTM IS BROKEN
1. You have heroic salespeople. It doesn’t look like you’ll hit your number but somehow, somehow, your salespeople manage to squeak enough deals over the line before the month closes to hit your number. If you have to rely on heroic acts to hit your target every month, your GTM is broken.
2. You’re closing new customers but they don’t renew. You’re bringing on new clients like it’s nobody’s business because your marketing materials rock and your demos are cool but they don’t stick around beyond their initial contract with you. If your customers didn’t get ROI, they don’t agree that your product does what you sold them, or they don’t believe you delivered value, your GTM is broken.
3. You can’t scale or forecast your business. You can look ahead a quarter with decent accuracy, but as soon as you try to forecast further you have no idea what’s going to happen. If your pipeline and revenue are not predictable, your GTM is broken.
4. Senior leadership talks the big talk but your front lines disagree. When leadership is focused on amazing big picture numbers but your customer success team can see you’re not bringing on good clients or keeping your existing customers happy, your GTM is broken.
If your business is experiencing any of the symptoms of a broken GTM, Sangram maintains that this is your sign to pause, dive deeper into what you’re doing now, figure out what needs to happen next, and get somebody to take the baton and fix it.
START AT THE VERY BEGINNING
One of the other things Sangram and Bryan identified in their book was the 3 stages of a company: problem-market fit, product-market fit, and platform-market fit. Problem-market fit refers to when companies are just starting to figure things out. They’ve identified a problem in the market but don’t know if people will consistently buy. Product-market fit is when you’ve got a repeatable, scalable motion. Most leaders understand that the first chasm is between these 2 stages. Platform-market fit is the next chapter in crossing the chasm. With platform-market fit, you are able to sell more than 1 product and your market expands.
A great example of a company with platform-market fit is Hubspot. It started off targeting agencies and marketers (problem-market fit), then setting on marketing automation (product-market fit), and now it has a flywheel selling to marketing, sales, and customer success. Salesforce has a similar journey. B2C newsletter company Morning Brew also achieved platform market fit. It started as a newsletter for millennials (problem-market fit), within 3-4 years it became a $3MM business with product-market fit, and now it has platform-market fit and publishes newsletters for every industry.
In order to determine the best next steps, leaders must first determine which stage their business is in.
CROSSING EACH CHASM
Most companies don’t fail in the 3 stages, they fail in the transition between them. That’s why these periods are so aptly named “valleys of death.”
When a company doesn’t make it from problem-market fit to product-market fit, the problem is retention. Retention needs to be at least 80% or above (ideally 95%) to be certain you’ve found product-market fit.
When a company doesn’t make it from product-market fit to platform market-fit, it’s because it doesn’t have RevOps. When a company is reaching this stage, typically it has a great product, and great customers, but after about a year with the company, the customers want more. Competitors emerge and start to fight you on pricing and features. As a result, you’re forced to offer more products and services to support your existing customers and to compete in the marketplace. If you build the right products, you’ll be pushed into platform-market fit, but most companies don’t know what to build because they don’t have RevOps. They don’t have a single source of truth that tells them, with data, where to invest to grow. They’re still relying on siloed marketing, sales, and customer success ops teams coming to different conclusions. A lack of RevOps is why some companies stay in product-market fit even past $100MM in revenue.
WHEN TO CALL IN THE BIG GUNS (REVOPS)
When you’re in problem-market fit, it’s too early to bring in RevOps. You’re still trying to figure things out and if you centralize too much it could work against you. But you should be thinking about it because product-market fit could be just around the corner.
As soon as you get to product-market fit, if you want to move to platform-market fit, you need to deploy RevOps. According to Sangram, there can be no more conversations about who moved your cheese (see Spencer Johnson). The executive team needs to focus on one goal dictated by RevOps. RevOps will identify what’s working, what isn’t, and the gaps that need filling. At this point, each leader isn’t the head of their own department first and foremost, but a business leader with a specialty who can help the company attain its goal.
Employing RevOps fundamentally changes the mindset of an organization and, in the move between product and platform-market fit, it is the most important thing (outside of the CEO) in the GTM.
IF THEY COME YOU WILL BUILD IT
Before writing this book, Sangram thought of the GTM org as marketing, sales, and customer success. Geoffrey Moore was quick to point out that he’d got it wrong. Not entirely – just the order. Customer success must come first in every way possible in the transition to platform-market fit. Marc Benioff agrees. Customer success will tell you which customers are good customers, which ones you could use more of, and what your pricing should be. If CS is not part of figuring out your next ICP and the things you should build then you’ve got it wrong.
Most leaders prioritize sales in their GTM. Marketing is a close second, who receives a lot of budget, though it’s cut swiftly after a bad quarter. Sales can have anything they want and can do no wrong as long as they’re hitting their numbers. Customer success, however, rarely has any budget allocated to it and bears the brunt of bad customers and retention issues. When leaders are hoping to learn about their customers, they often turn to Voice of the Customer interviews and set up meetings with the buyers from their top 10 clients. But CS has been talking to those customers every day. Give them a seat at the table early. Sangram asserts that if he had done this in his own company, Terminus, at the $5-10MM revenue mark, they would have avoided much pain and scaled much quicker.
LET’S TALK ABOUT OUTBOUND
The M in the MOVE framework stands for Market, and that’s where a lot of the outbound motion lives. Early-stage companies typically have founder-led or sales-led GTM motions. With problem-market fit, companies leaders are targeting their TAM (total addressable market – anybody with a pulse that will give them a shot). At this point, they are just trying to figure out if the problem is real and how much people will pay for it.
When a company is in product-market fit, leaders don’t go after the TAM anymore. Now they go after segments. Sangram calls it the TRM (total relevant market). These segments can be defined (ie targeting manufacturing companies in the Fortune 500 with 10,000 employees for a product with a $250,000 price tag). Leaders can hire people specialized in these segments and have a small percentage of people testing out new sales strategies, but you know what works, for the most part.
As a company moves into platform-market fit, the focus doesn’t have to be on net new customers anymore. Now you’re focused on customer cohorts. Leaders can identify the top 20% of customers that are paying the most and figure out how to get the other 80% to be like them. The sales team will get net new customers because your brand has grown and you generate great inbound traffic, but this is just a small portion of where the revenue comes from now.
Sangram Vajre and Bryan Brown have spent the last 2 years uncovering what works and what doesn’t in scaling a business to $10MM and beyond. They spoke to the foremost leaders in the GTM space from Geoffrey Moore to Nick Mehta, to Brian Halligan to understand what the 0.4% of companies scaling past $10MM are getting right. They defined the 3 stages of a business, problem-market fit, product-market fit, and platform-market fit. They realized that the oft-forgotten GTM process needs to be prioritized and re-prioritized at every stage of the business. And, financially, they came up with a 4-step framework that suggests questions business leaders should be asking at each stage to make sure that their business makes it across those fateful chasms.
You can order MOVE: The 4-question Go-to-Market Framework by Sangram Vajre and Bryan Brown wherever you get your books and you can download free scorecards, templates, and slides at themovebook.com. 100% of proceeds from book sales in 2021 will be donated to New Story, a company pioneering solutions to end global homelessness.
NO TIME TO READ?
How can you carry on your duties as an entrepreneur to create and develop, if your business is also relying on you to bring in sales?
Considering the relationship, time, and effort a founder/entrepreneur can spend on sales vs. developing their products, building your own SaaS Sales Playbook comes in handy.