So you’re a founder and you’ve established product market fit, surveyed the competitive landscape and have an idea of your ideal buyers, you need to start thinking about different go-to-market strategies. From this point of understanding, it should become clear what role marketing, sales and product play in relation to that buyer, and in relation to each other.
Just to recap, Go-to-market strategies focus on:
- Your ICP (ideal customer profile)
- Why your ICP will buy your product, rather than a competitor’s
- What is preventing someone from buying your product
In this article we’ve tried to catalogue the different options available to you and how to select implementing a product-led growth strategy right that fits your business.Every go-to-market strategy will be unique — tailored to your product, business, team and identified ideal buyers. But, there are three broad types of go-to-market strategies that will help you identify the best way to approach the market:
- Differentiated,
- dominant and
- disruptive.
So let’s get into the detail of who uses different strategies and how to select and apply them to your business.
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Section 1:
Dominant growth strategy
The dominant growth strategy is suited to businesses with a product that offers greater value than any of its competition. This can be from a total value standpoint, or simply better value for money — undercutting that market.
There are many examples of companies that offer a dominant growth strategy includingAWS, Xero, Salesforce and Zendesk all operate to some success.
You should choose a dominant growth strategy if the market is full of solutions that are more expensive and worse than yours. If there is simply a demand within your target audience for lower price points, a dominant growth strategy might also be the right choice. However, this situation also opens the door to a disruptive growth strategy — detailed below.
The defining feature of a dominant growth strategy is widespread appeal in a market that you can compete for on every level. Your product has to deliver a complete package that effectively answers a large number of customer demands. It means outcompeting competitors on a product level and pricing.
A large part of offering customers low prices is to keep your own costs low. This makes freemium and free trials (partnered with inbound marketing and content-driven strategies) critical tools in this type of go-to-market strategy. Conventional sales tactics will likely cost too much, preventing you from keeping customer prices low enough to deliver the kind of added value needed to dominate the market.
That can seem simple enough. But, it is critical to make sure that your annual contract value (ACV) is high enough to support a sales-led approach. The use of freemium requires giving your product away for free. If you are operating in a niche market, this could backfire, resulting in too few conversions from freemium users to paying customers to actually sustain your business. Having a large base of potential users makes this strategy much easier — although it is not essential to a successful dominant growth strategy.
Section 2:
Differentiated growth strategy
The differentiated growth strategy is defined by specialisation. It is often the go-to strategy for businesses entering a market with well established, big competitors that dominate the industry. If your product is already a specialised tool, aim to improve a specific subsection of your wider market — this is the obvious go-to-market strategy choice. It can also be your route to success if you simply have a quality product, but cannot undercut and dominate the entire industry as is required of a dominant growth strategy. In both cases, your success with a differentiated growth strategy comes down to messaging.
For example HubSpot operates using this model. They have created a product that fits the message and a message that differentiates their product away from competitors like Marketo.
By finding an underserved niche in the market, and creating and targeting a product that narrowly focuses on those specific needs, small businesses can take away part of dominant businesses’ market share.
Typically, this strategy revolves around delivering a product that does a much better job than the competition at serving the needs of your niche, and then charges a lot more. This works because prospects are willing to pay more for a solution that gets the job done.
The heavy specialisation of products suited to the differentiated growth strategy means that it can be hard to use a freemium sales model. Just like it can be challenging to deploy a freemium-led dominant growth strategy when serving a small market, the inherently small nature of specialist markets forces businesses to choose more targeted approaches to sales. It might cost more per customer, but you do not undercut yourself by serving a high proportion of your own customer base for free.
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The reliance on delivering a specialised outcome also makes it difficult to create a compelling freemium offering that both avoids giving everything away for free but also delivers enough to tantalise customers into wanting the full experience.
With that said, avoiding a freemium approach is not a universal rule to a differentiated growth strategy. Free trials or demos allow you to show off the amazing special features you have created with your specific customers in mind. Just make sure that you are serving underserved customers.
Section 3:
Disruptive growth strategy
The disruptive growth strategy is defined by affordable simplicity. The basics revolve around offering an over-served market a less specialised and cheaper product that still gets the job done.This might seem counterintuitive, because you’re effectively offering a less valuable product. However, you are disrupting the status quo by offering a product that better serves a subsection of that market and by widening the market itself.
Effectively, this is the parallel and opposite approach to a differentiated growth strategy. Rather than outperforming the dominant players in the market in one specialist area, you are appealing to customers that don’t need the specialist tools already offered by the dominant players and enabling them to pay less. Not only will this allow you to steal existing customers in this space, it will likely allow you to widen the market itself and capture those new entrants yourself. You will attract users who either don’t use the dominant products to their full capacity or have always been excluded from the market by costs.
For example: Canva and Freshdesk both operate using this strategy.
The key to a disruptive growth strategy is user-friendliness. For prospects to switch from more complex, existing solutions, they expect a simple transition to a system that it is easy to use.
Combined with the need to keep costs down, this makes freemium a great choice for a disruptive strategy. The ability to trial products for free makes it as easy as possible to eventually make a paid transition. However, because you are already going after customers who don’t care about features and want a cheaper service, you need to make sure that your freemium product is not so good that it simply draws dominant business customers away to a free solution.
Again, it is also important to make sure that your market is large enough to support a freemium model. Looking at your competitors is a good way to gauge market size. Following that, make sure you have the resources to support freemium. For smaller markets and enterprise-focused products, free trials still have a space in disruptive growth strategies.