You’ve come up with an innovative business idea, determined product-market fit, and are eager to get your product into the world. Yet, a successful launch requires a carefully crafted go-to-market strategy.
Before delving into how to create a go-to-market strategy for your venture, here’s a primer to contextualize its importance within your business model.
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A go-to-market (GTM) strategy is a detailed plan of how your startup will reach its target customers effectively and efficiently—where effectiveness depends on how rapidly you reach and convert customers and efficiency on how profitable your efforts are. Typically, a GTM strategy includes a mix of direct and indirect channels to educate, support, and distribute your product to customers.
GTM strategy is just one component of the eight-pronged business model described in the online course Launching Tech Ventures, taught by Harvard Business School Senior Lecturer Jeffrey Bussgang. HBS Professor Thomas Eisenmann coined the Diamond-Square framework to visualize the eight components, which first describes internal, operational facets:
- Customer value proposition (CVP): How will your venture deliver value?
- Go-to-market (GTM) strategy: How will your venture reach customers?
- Profit formula (PF): How will you make money?
- Technology and operations management (T&O): How will you create and maintain the product?
The remaining four facets are external in nature and represent your business’s stakeholders and resources:
- Founders: Are they a strong fit for the opportunity and business model?
- Team: Do they complement one another? Can you fill any gaps?
- Investors: Who have you assembled to finance your business? Are you all aligned?
- Partners: Who have you selected to aid in your execution? How will they help?
“As an entrepreneur, the onus is on you to construct each element of your startup business model through a process of search and discovery,” Bussgang says in Launching Tech Ventures. “In parallel, you must evaluate those elements to ensure that you’re building a sustainable, valuable company. To do so, each business model element must be aligned.”
Before crafting your GTM strategy, determine your customer value proposition. If you haven’t yet established that your product fulfills a customer need or job to be done, conduct experiments and market research before diving into its GTM strategy.
While CVP, GTM strategy, and PF don’t need to be discrete steps, each sets the stage to build your business model’s next facet. The experiments you run to determine CVP will inform your GTM strategy, which can then lay the foundation for selecting a PF.
While all intertwine, this article focuses on developing your tech venture’s go-to-market strategy. Here are four vital steps.
Related: 5 Skills Needed to Launch a Successful Tech Business
4 Steps to Develop a Go-to-Market Strategy
1. Consider Key Facets
In every strong GTM strategy, there are three key facets to consider:
- Distribution channels
- Product messaging and marketing tactics
- Estimated customer acquisition cost (CAC)
These will help determine how you reach your predefined target audience and convert them into customers with financial efficiency.
Distribution Channels
Critical to your GTM strategy is how you plan to deliver your product to the end user. For instance, if you created an app that helps people track their mental health and receive resources, you can either make it downloadable by the end user or distribute it via a third party, such as an employer, insurance company, or health care professional.
Bussgang recommends a mix of both direct and indirect channels. While pursuing multiple channels immediately upon launch may not be the best choice, decide which will be most cost-effective and align with your company’s values. Consider others as part of your plan for scaling in the future.
Product Messaging and Marketing Tactics
What language and strategies will you employ to meet your customers where they are and educate them about your product?
Product messaging encompasses every piece of information your target audience receives about your product, from introduction to user experience. If more than one person is on your team, ensure everyone is aligned on how to write and speak about the product.
Marketing tactics can include paid ads, physical signage, blog content, and partnerships with social media influencers. While all have benefits, select a few to include in your GTM strategy and the metrics you want to track.
Estimated Customer Acquisition Cost (CAC)
Customer acquisition cost (CAC) is the combined sales and marketing costs for your product, divided by the number of customers acquired over a given period.
It’s crucial to estimate CAC when crafting your GTM strategy to make decisions that yield the lowest number possible.
For instance, you may decide to test a specific channel and set of marketing and sales tactics for one year following your product’s launch. To estimate CAC, calculate the cost of all sales and marketing efforts for that year—including employees’ salaries—and divide it by the number of customers you realistically hope to gain.
You can use the CAC formula to decide how many customers you need to make your marketing and sales spend worth it, tweaking different parts to find an estimate you’re satisfied with.
2. Run Experiments
In Launching Tech Ventures, Bussgang refers to startups as “experimentation machines,” and for good reason. Early on, your goal as an entrepreneur should be to learn as much as possible in each stage of developing your business model so you can iterate on and launch the best version of your product.
Just as you should have run experiments when determining your customer value proposition, you also must do so for your GTM strategy. Your experiments should follow the scientific method and be designed to prove or disprove your hypotheses about planned distribution channels, product messaging and marketing tactics, and customer acquisition cost.
Experimentation comprises four steps:
- Hypothesis generation: Consider the business questions you have about your GTM strategy’s three key facets, and turn them into prediction statements, or hypotheses. A hypothesis about your mental health app’s distribution channel could be: “The most cost-effective way to reach customers is to partner with human resources departments that will distribute the app as an employee benefit.”
- Develop tests: Once you have your hypotheses, develop tests to prove or disprove them. With your mental health app, the test could include providing a beta version to human resources teams and asking how they’d promote it to employees. You can also enlist volunteers to get the end user perspective, asking how they’d respond if their employer promoted the app.
- Prioritize tests: While you likely have several questions at this stage, you must prioritize which tests to run first. Think about which could yield the greatest monetary value and help you better understand your customer and how they’d prefer to engage with your product.
- Run tests: Finally, conduct tests. This stage involves collecting and analyzing data to prove or disprove your hypotheses.
Repeat the hypothesis testing process for each prediction about your GTM strategy. As you learn, your hypotheses will become more specific, leading to detailed insights that can inform your plan.
3. Determine When to Scale Sales and Marketing Teams
A vital part of your GTM strategy is determining when to scale your sales and marketing teams. In Launching Tech Ventures, Bussgang describes the sales learning curve framework, coined by longtime tech executive Mark Leslie and adapted by HBS for startups.
The sales learning curve has three phases:
- Initiation: Typically, tech startups begin with the founder selling the product, called “founder selling.” This phase isn’t scalable and comes with high costs. The focus is learning as much as possible about selling your product.
- Transition: In this phase, a repeatable sales process takes shape, and you hire your first sales representative. They should be agile and able to translate learnings from the initiation phase into a scalable playbook.
- Execution: In the final phase, you bring a larger sales team on board, including an executive responsible for managing and enhancing efforts. This phase focuses on optimizing for the lowest CAC possible while maintaining high-quality customer relationships.
When creating your GTM strategy, it’s vital to consider the timing of progressing from one stage to the next. In Launching Tech Ventures, Bussgang stresses the importance of learning all you can during the initiation phase.
“A founder’s goal during the first phase is to learn how to sell and obtain feedback on how prospective and real customers are experiencing the product,” Bussgang says. “At this point in the process, it doesn’t matter how efficient your sales efforts are. Instead, it matters how much you’re learning.”
4. Aggregate Learnings into Actionable Strategy
Finally, create your go-to-market strategy by aggregating insights gleaned from experimentation and selecting metrics to track their success. Keep in mind: Your final GTM strategy is an experiment in itself. As you execute it post-launch, you’ll gain insights into what does and doesn’t work to inform your strategy moving forward.
“During these early days, it’s important to maximize learning rather than maximize metrics,” Bussgang says in the course. “Yes, there are important metrics to focus on to test product-market fit, but don’t rush to scale it until you nail it.”
Sharpen Your Entrepreneurial Skills
Launching a tech venture comes with risk, but it doesn’t need to be scary. Entrepreneurial skills are just like any others—you can develop and strengthen them through education and practice.
Luckily, your startup doesn’t exist in a vacuum. Take advantage of other tech founders’ wisdom and insights from navigating the same process.
Online courses like Launching Tech Ventures not only provide stories told by real-world tech entrepreneurs but also the tools and frameworks to enable you to craft a go-to-market strategy that sets your business up for success.
Are you interested in building the skills to launch a viable, valuable tech startup? Explore Launching Tech Ventures—one of our online entrepreneurship and innovation courses—and download our free guide on how to get started on your entrepreneurial journey.
