In his SaaSiest 2023 presentation, “Choosing the Right Go-To-Market Channels,” Fredrik Skantze, CEO and founder of Funnel.io, took us through a framework for determining how to build a growth model that’s most suitable for your business based on your company’s maturity, revenue targets, team, and interests. (Fun fact: Fredrik was also our very first guest on the SaaS Nordic podcast!)
- There are two places where you really have to think about go-to-market channels: 1) when you build your original growth engine, and 2) when you scale up and go big.
- A good initial go-to-market channel should take you to $10MM-$20MM in ARR.
- To grow beyond $20MM in ARR, you’ll need to add more go-to-market channels
- Use proven tactics for your chosen go-to-market motion (product-led, sales-led, or marketing-led).
- When you have exhausted a specific sales motion, you can consider adding or moving to a different go-to-market motion. But realize it takes time and effort, like finding product-market fit again.
Build your initial growth model to get to $10MM-20MM in ARR
Once you’ve found your product/market fit, it’s time to build your growth model and, specifically, to start thinking about your go-to-market channels. You need to find a go-to-market channel that works – first in your local market, then in a large market. You will be done building this initial growth model when you have achieved four things:
- Scalable go-to-market processes
- Go-to-market metrics that work
- Positioning that resonates with your customers
- No reliance on the founders going out and selling to reach goals
Then it’s time to scale up by doing more of what you already do well. This is not the time to tinker with the go-to-market model and add more go-to-market channels. This is about doubling and tripling down on the things that actually work. And this should take you all the way up to $10MM-20MM in ARR.
Diversify your go-to-market channels to get to $100MM-200MM in ARR
Once you get to $10MM-20MM in ARR, sales metrics start to decline and growth starts to stall for many SaaS companies. To get to $100MM-200MM in ARR, you need to diversify your go-to-market channels and build a new engine that’s going to take you all the way.
So if we recap this journey from starting your SaaS company to going really big, there are two places where you should focus on go-to-market channels. The first is when you’re originally finding your growth model, and the second is when you want to go really, really large.
The three primary go-to-market motions
To determine your strategy, it helps to distinguish between go-to-market motions and go-to-market tactics. Go-to-market motions are the fundamentals of how you set up your go-to-market strategy. For SaaS companies, there are three go-to-market motions.
- Product-led, where you have a self-service signup and a free plan or a free trial. In its purest form, you’re targeting SMBs with the goal of getting tens of thousands of paying customers.
- Marketing-led, where the leads come from the inbound, but you have an inside sales team that closes them. This is the best way to target the mid-market with a goal of getting thousands of customers over time.
- Sales-led, where you have a sales team that sources and closes million-dollar deals with a goal of getting hundreds of those enterprise customers to get to $100-$200 million in ARR.
Major go-to-market tactics for each motion
For each of these motions, there is a set of established go-to-market tactics that are proven to work for them. You might have to try different tactics within the go-to-market motion you select, but then settle on one that allows you to grow. When it comes to diversifying your go-to-market model, it’s easiest to pick additional tactics that are already proven to work for your motion.
Be careful about mixing tactics and motions
It’s easy to be tempted by new things (like channels and tactics). However, not all tactics work for all go-to-market motions.
If you’re product-led, you probably have a lower conversion rate and a low deal size. So while you may be tempted to try out account-based marketing to attract some large customers that pay you a lot of money, the economics are not going to work because ABM is a very expensive way to get very few, very targeted leads in a multi-stakeholder environment.
If you’re sales-led, your sales teams are going to want more leads. You may think, Let’s just increase paid advertising to get more leads. But paid advertising is like fishing with a net. You might catch a big fish, but most likely you’re going to catch lots and lots of small prospects that your sales team will spend lots of time qualifying away, wasting most of your marketing efforts.
Stick with the tactics within your sales motion that are proven.
Adding a new motion is like finding product-market fit again, but it can be transformational
Sometimes adding or changing a sales motion is the right thing to do to get the growth you’re looking for, but it’s a fundamental shift. It takes much more time and is much riskier ᠆ like finding product-market fit again. However, if you get it right, it can be transformational for your growth and can take you to the next echelon of revenue.
HubSpot and Shopify are good examples. HubSpot originally had a marketing-led sales motion through IPO for their marketing software. Then they decided to go after a bigger category – CRM – with a disruptive product-led motion. This was a huge change for them, but they successfully executed this, enabling Hubspot to get to a level of growth that no one thought was possible. In Shopify’s case, they catered to SMBs with a simple e-commerce platform for one website. Their best customers outgrew Shopify, adding more websites or brands, which meant they could no longer use the platform. In 2014, they decided to fork their code and build a separate enterprise edition with multiple brands and websites, enabling Shopify to go after enterprise customers while also serving existing customers. It was a successful strategy that paid off.
Doing what’s right for you
Which sales motion you should pick depends on the capabilities and interests of your team, the product category, and the vertical you’re in. So if you love selling and building complex things for the enterprise, you should probably pick the sales-led go-to-market motion. If you have a technical team that loves products and loves to build consumerized product experiences, you should probably choose a product-led go-to-market motion.
When we started Funnel, we originally went with a product-led motion. But Funnel was too complex to work in a self-service environment. So we tried sales-led and had some initial success in our home market, but we couldn’t get it to scale beyond that. So we then tried a marketing-led go-to-market motion, and that really worked for us. It unlocked our growth and allowed us to scale massively.
Every company is different. You have to find what works for you, what works for your team, and experiment.