As a startup founder, it’s crucial to recognize the intricate relationship between your product development and go-to-market (GTM) strategy. Developing and testing your GTM strategy in parallel with your product creates a strong foundation for success. In this article, we’ll explore why aligning these two aspects of your business is essential for founders and new product developers. 

Overview of B2B Go-to-Market Motions:

 

      • Enterprise, no POC: This motion involves a direct sales team that drives and captures demand through sales and marketing programs. It requires a high Average Selling Price (ASP) of at least $120,000, with a preference for $250,000 or more, and multi-year contracts to justify the high acquisition cost. Churn is typically low, but growth forecasts can be unpredictable, driven by large deals. Workday is an exceptional example of this approach.

      • Enterprise with POC/sandbox: Similar to the enterprise motion, this approach includes the added cost of ensuring customer success and adoption before the purchase. It must scale effectively with clear success criteria, timelines, and pricing transparency. Ideally, your POC is easy to set up and start using to minimize your costs and expedite time to delight. Salesforce.com leverages this approach with smaller accounts, which can be highly effective with enterprise customers. Salesforce.com integrates paid service offerings for larger accounts to ensure successful configuration, customization, and adoption.

      • Free trial period: Prospects can sign up and use the entire product for a limited time (days or weeks) before converting to a paid subscription. The product is often priced per user at a rate the user can afford and expense. The product must be easy to use and compelling to try while delivering a delightful experience. This motion can lead to high churn and support costs if users struggle with the product. AirTable and Wrike are examples that thrive with this approach.

      • Free trial with product-led growth: In this motion, the product becomes measurably better or more valuable as more people acquire licenses, as seen with Slack, Mural, or Figma. It can result in high churn, high support costs, and potential resistance from IT and security teams, but it can also be very sticky and efficient. Elegant solutions allow several unpaid visitors or collaborators alongside paid users, allowing product usage to do much of the sales and marketing effort.

      • Freemium: Companies like Canva, Evernote, and GitHub offer limited but valuable capabilities that buyers can use for free indefinitely. Upsells involve offering more capabilities, enhanced security, and increased collaboration features. This model requires data discipline to identify which users to engage and when to drive conversion to a paid license.

      • Partner-led growth: This model deeply integrates your solution with an existing ecosystem to fill a significant gap many of its customers feel. Standing out in a partner ecosystem can require specialized business development contracts, strong referrals, and marketing campaigns in the ecosystem. The AppExchanges on Salesforce.com and Shopify feature many companies, such as LoopReturns, that leverage this approach. Often, partner-led growth is coupled with POC, free-trial, or freemium models. Partner companies must establish a large customer base and defensible offering to minimize the possibilities of the host (Salesforce, Shopify) building or buying the functionality for their platforms.

Key Reasons to Align Initial Product Development and Prospective Go-To-Market Strategy:

Focusing all your energy on creating your minimum viable product and securing the first few customers to use your product through founder-led sales is normal and appropriate. That is necessary but insufficient to maximize your probability of success. The transition from founder-led sales to a repeatable, scalable, go-to-market motion is perilous, and concurrently designing and testing go-to-market is the optimal risk minimization strategy. The benefits of strategizing, testing, and building your go-to-market into your product are numerous:

Reason 1: Truly Meaningful Differentiators

Crafting a compelling GTM strategy requires profoundly understanding your target market and your product’s exceptional value. By building these differentiators into your product from the outset, you can ensure that your solution stands out from the competition over the long term and resonates with your ideal customers.

Reason 2: Validate before Scaling

Critically testing your GTM motion and offering is essential before investing in a full-scale commercial team. This approach allows you to validate your assumptions, refine your strategy, and create a commercial team tailored to your market and motion. Doing so can save valuable time, money, and resources while increasing your chances of success. It will both decrease your dependencies on super-reps and expedite the transition from founder-led sales to scalable sales.

    Reason 3: Value Capture

    Understanding your solution’s value to customers is crucial for setting goals, incentives, and budgets for your commercial operations. By testing your value proposition and positioning early on, you can gain insights into the potential revenue your product can generate. This information will guide your decision-making process and ensure that you allocate resources effectively, as commercial operations often consume a significant portion of a startup’s resources.

    Reason 4: Customer Driven Funding aka Revenue

    Ultimately, your product and GTM strategy will be tested by your ability to acquire paying customers. Users are not enough; you need customers willing to invest their money and reputation in your solution. By focusing on customer acquisition and retention from the early stages of your product development, you can validate your offering and lay the groundwork for scale.

    The winning strategy

    Aligning your product development and GTM strategy is a critical factor in the success of your venture. By understanding the different B2B go-to-market motions and their implications, building unique differentiators, testing your GTM motion, understanding your value capture potential, and validating your offering with paying customers, you create a strong foundation for growth. There will always be discoveries and setbacks as you bring your solution to market, and the process of creating go-to-market hypotheses and actively testing them creates a minimum repeatable motion that can be adapted quickly and significantly less expensively. Remember, the most successful startups seamlessly integrate their product and GTM strategies, ensuring they deliver value to their target market while generating sustainable revenue at a scalable cost.

    A version of this article can be found on LinkedIn.