Creating a growth and value mindset in teams across a company is not an easy task. But doing so allows a company to scale both value for customers and revenue for the company at a rate above its peers. When SaaS companies ask my help with go-to-market strategy to drive growth and revenue – this revised view of their customers, their competitors and their business, has to come before they can act differently. The research, analysis and design of a value driven go-to-market strategy not only drives revenue in the short term, but is a vehicle to drive new thinking and execution aligned with how customers use and adopt the solution over time.
There are three important dimensions of a business model to assess and define in order to get to a go-to-market strategy that drives expansion and adoption.
- Customer segmentation (for the purpose of understanding $ impact and then to make offering/pricing decisions)
- Customer solution adoption path
- Competitive differentiation
The first is customer segmentation for the purpose of defining value and economic impact and then defining the pricing structure, metric, etc. that aligns with how different customers utilize and get value from the solution. We examine customer needs as well as customer usage patterns and customer data, and we look for a segmentation that relates to either how they use the solution differently and/or how they accrue value (economic value) differently. I’ll do a subsequent post on examples of different types of segmentation and targeting and how they relate to different go-to-market and monetization models. For now one example: One of our clients core solutions delivered leads to their customers. Some % of those leads turned into closed business and there was a dollar amount tied to those leads. It varied considerably by customer business model (which was self-defined and visible) and by geography, so in order to better align the offering with the value, those underlying drivers became the foundation of the pricing model. By understanding those differences and designing to them we helped them develop a pricing strategy and structure that decreased time to close business and increased revenue for some segments by 20%.
The second is customer adoption path. I look at existing usage data and interview a spectrum of customers and support staff to map out adoption paths of distinct customers over time. From this we identify:
- critical barriers to adoption
- typical/ideal solution adoption paths
- how use cases and value build over time
Then we construct an offering model that supports that adoption path and allows for logical entry points, but helps build revenue (up-sell and cross-sell) over time. This eases the sales process by aligning the offers with different sales channels and also offering customers choices that fit for them. It also serves to reinforce the best-practices of solution adoption that a SaaS company wants customers to follow. One of my clients in the e-learning space wanted to get more adoption of their application across an organization so they shifted their pricing metric from authors to learners/employees and let the # of authors/reviewers be unlimited. This better aligned their solution with the value and outcome for clients – training for large #’s of employees and suppliers, and allowed them to gain greater expansion within accounts, while competing more favorably in certain segments of the market.
The third is competitive differentiation in the marketplace. At its core, a strategic competitive advantage is about how a company executes on something they do or deliver in a way that creates distinct value for customers and is also difficult for competitors to replicate. For example: a SaaS company has a product that developers evangelize, that is so transparent for them to use, that it gains adoption easily and quickly through a freemium model. They couple that with a network/community of users that collaborates and shares, and then combined that with functionality that gives developers an ability to deal with a deep level of complexity in their B2B client base. This last is a facet of capability that developers see right away but budget holders didn’t quite get, so for many B2B use cases, they are the only logical choice. This advantage was hard to see on the surface but once made visible through talking with customers/users and examining usage data, and then reinforced in the product and offering, it has reinforced their advantage versus alternatives and helped them increase the amount that they can charge to a certain segment of customers, which then increases the size of those deals.
Outcomes
In all the examples above, a cross-functional team has to be engaged to develop the strategy and then take it to execution. Once a cross functional team has developed this common view of their market – and have gone through the process of evaluating and analyzing it to make decisions about target segments, packaging, pricing and value communication, then they keep that lens and approach even as dynamics shift over time. Then every decision about product functionality, about sales process, and about customer support, is accompanied by these questions:
- Who values it, why do they value it and how much do they value it?
- Will it drive more value for customers and therefore drive adoption and expansion (and more revenue long term)?
- Does it reinforce our advantage/position/strategy in our core markets?
Strategy is nothing without execution. Stay tuned for more on that topic at a later date!
