How do you know you’re using the right growth strategy for your market?
I’ve seen many B2B SaaS startups struggle to get traction because they’re using the wrong go-to-market (GTM) strategy. This can waste capital, sales opportunities, and most importantly, time and can result in your team working incredibly hard to achieve only mediocre results while your competition gains ground on you.
But how can you know what strategy is best for your company?
Through our work with 70+ SaaS startups, we’ve found that it is critical to answer a simple question when creating your GTM strategy: how mature is your market?
The answer to this question may seem obvious, but it has significant implications that are often overlooked by many SaaS companies. Specifically, if you want to gain traction & grow in your market, you need to make sure that your GTM approach matches your market’s maturity.
Below, I’ll outline how to identify the two main market maturity stages, their challenges and opportunities, and what your GTM strategy should be for each. With this information, you’ll have a great indication of how successful your current GTM approach will be and what levers to pull to improve your growth within your market.
Immature markets occur to the left of Geoffry Moore’s iconic crossing the chasm model and are closely related to disruption, category creation, and the highly-coveted first-mover advantage. They are often referred to as “blue oceans” and are sought-after because they have little to no competition. If played right, they can be incredibly lucrative, but they also have numerous critical challenges that make it difficult to gain traction and grow.
But how can you really be sure your market is immature? The easiest way to see is if there are no other companies providing the same solution as you (make sure you do some thorough research on this). But as competitors start to enter the market, it can become unclear how mature it is becoming and how to strategize accordingly.
Here are a few other signals you should look for to identify a market as immature.
Now that you’ve identified your market as immature, you have some big opportunities in front of you, if you can take advantage of them. These can lead to rapid and almost limitless growth we like to call T2D3. T2D3 stands for triple triple double double double. This is where you Triple your ARR two years in a row and Double it three years in a row, growing towards $100 million in ARR and the coveted “unicorn” status of Salesforce, Zendesk, Workday, Netsuite, etc.
Here are some specific opportunities that your company can gain by capitalizing on an immature market:
It’s very important to note that you shouldn’t expect to waltz into an immature market and instantly see exponential growth. Immature markets have some significant challenges that require your company to think outside the box, be agile, and become customer-obsessed. If you don’t, your company can easily become stuck in a cycle of mediocre growth with no clear way out, while other competitors gain ground on you.
Here are some examples of challenges that can strangle growth if they aren’t dealt with appropriately:
Moving in an immature market means you’ll have to “make” it before you reap the benefits. This is because young markets have no proven GTM model in place. You’ll have to do the heavy lifting of finding the right type of customers, convincing them that they have a real problem, and that your solution is worth spending their time and money on.
One common misconception with immature markets is that entrepreneurs often expect prospects to immediately come to them and magically find their solution. If you’re lucky enough to find a market that has strong problem awareness with no legitimate solution you’ll be able to use inbound marketing to quickly prospects’ attention and convert them into loyal customers. However, if your audience isn’t “problem aware” (which is often the case when you’re the first mover), you’ll likely have to go out and find prospects through events, account-based marketing, outbound sales, and interruptive ads. (For more information on problem-awareness and marketing appropriately to customers, based on their awareness, listen to this podcast episode.)
This is hard work and shouldn’t be taken lightly. When you’re starting a market, expect to do a lot of testing as you get going, to make sure you have the right ICP and that your product resonates with your target audience. But if you can move quickly and establish a base of loyal customers, you will set the bar for that market and will be in a great position for T2D3 growth and the coveted “unicorn” status.
Here are a few tactics you can use to “make the market” and establish yourself as the leader:
Mature markets exist to the right of Geoffry Moore’s chasm model, particularly in the early and late majority market segments. These markets typically have a clear group of competitors, a market leader, and an audience that is segmented into different demographics and firmographics. These markets are also competitive, with many companies vying for the same market share, which can make it easy for your company to get lost in the noise if isn’t differentiated from the competition. However, if you find the right market segment, you can quickly steal market share with customers whose needs aren’t met by legacy solutions.
Mature markets are typically much easier to spot than immature ones. Once a market has become established, there is typically a flurry of activity of new entrants, sales and marketing spend, and product development to race to the top. Eventually, “feature parity” becomes the norm for the market, as lagging entrants catch up to the first mover. As this continues, market incumbents spend more and more on their Go-to-Market strategies, hoping to set up “moats” that will keep new entrants from disrupting their business models. This results in very crowded markets.
Below are a few conditions to look for when determining if your market is mature:
As crowded as established markets are, the right ones can be ripe for disruption. If you can successfully enter a mature market and build your solution around an unmet customer need, you can rapidly steal market share from incumbents and set a new standard for the industry. Plus, because mature markets are already solidified, the GTM testing has been done for your company and you’ll have a much better idea of who to target with what marketing tactics to grow your company. If you can create the right foothold for your company, you’ll be able to capture pent-up market demand and launch your company’s growth into high gear.
Here are a few factors that make mature markets appealing for entry and growth.
The biggest issue with mature markets is how competitive they are. As a result, coming in with a standard position and GTM strategy will be a recipe for slow, frustrating growth, because you’ll easily be lost in the chaos created by your competitors. As feature parity increases, companies’ positioning and messaging become more and more similar, which can make it increasingly difficult to stand out. Many companies that are lured into mature markets, enter without fully understanding the product requirements for success or without understanding what their customers really want. In doing so, they fight very hard to reach the middle of the pack but are unable to rise to the top, resulting in increased spending with diminishing returns and slow growth.
Here are a few specific issues you may have when executing a GTM strategy for a mature market:
Because mature markets are often so competitive, if you’re using the same GTM tactics as everyone else, you’ll be setting your company up for failure. Gaining market share quickly becomes a zero-sum game. And it’s really easy to get lost in the noise of the market, particularly as products become more and more similar.
If you want to avoid the fate of so many competitors, you’ll need to be bold and shake the market up. Take a unique position and stand out from the crowd. You’ll also need to have laser focus on a small portion of the market, and make it your company’s mission to serve that segment better than anyone else. This will require a lot of focus and will mean that you have to stay disciplined, often saying “no” to strategies that may be viable in the short term, so that you can achieve your long-term vision.
If you’re able to find the right market segment and properly differentiate yourself, you’ll be able to grow quickly, while leaving frustrated competitors in the dust. Your target customer base is also most likely product aware and solution aware, which will minimize your sales cycles and let you get more revenue in the door, faster. Finally, you’ll be able to create a beachhead that you can use to enter the market, with minimal competition. From there, you can expand to other, similar industries with a differentiated product and position, allowing you to increasingly gain momentum and market share, taking on (and beating) incumbent companies, even as a new entrant.
Below are a few GTM elements you can add to your strategy to help you gain a strong foothold in your market and prime your company for exponential growth:
Now you know how to identify your market’s maturity level, the risks and opportunities it has, and what go-to-market strategy elements will help you capitalize on that market. Go build that GTM strategy the right way so that you can separate yourself from the competition and unlock your company’s growth potential.
Here are three steps to get you going:
Now get out there and grow!
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