Importance of go-to-market
Customers are critical for businesses. And it's easy to assume that you know or understand what the customer wants. So you must have empathy and high customer understanding and listen to the customers to deliver what they want.
It's easy to assume, but you need to make sure that when you're doing the transaction, you're not internally thinking about what's best for the customer but you've actually listened to the customer and really are delivering something for them that they want, that's a challenge
Product management or engineering think this is a great cool thing, but you need to talk to your salesforce. They're the ones that are selling all those great cool things. Will the customer buy it? Is it something that they really need? If the sales organization is not part of that conversation and even the support organization is, you may be fooling yourself.
That reality check from the sales force is critical because they have to write that check. They're the ones who got to bring in the revenue. So if they say, this is really hard and a difficult, challenging sales cycle, then you need to listen to that and think about that because you need to walk in with that with your eyes open.
Start of GTM Planning
Always start with the deal thesis. Most of the time, it's in response to customer needs. It's a response to a product gap or it's a response and a way to accelerate a product road map.
Then the next question is, how do you make sure the customer sees that value and views it as something beneficial. I like to test the sales force on two levels. There's usually an optimistic and a pessimistic side.
It's getting at that thesis and seeing if we can really deliver on it. Building detailed financial models and thinking about the rejections is really important and a strong exercise. Make sure everybody's signing up for those projections.
Because if you're predicting the hockey stick growth and assuming a bunch of engineering roadmap deliverables to make that hockey stick growth, then engineering needs to be on the hook to get things done. It's not just the sales force thing.
So I look at the sale strategy as the three-legged stool.
- sales team
- engineering team
- product team
All three of them must be thinking in the same line and being aligned. The product is thinking several steps out. What are the key areas we want to do? The sales team is the rubber hits the road. How do we get something in the customer's hands and make money at it? And the engineering team is building all that. If two are aligned, and the other one isn't there, that's a problem.
Most companies all have a high-level deal thesis hypothesis. I always like asking the question, what do we have to believe? Is it that we can upsell the product to around 50% of our customers?
If that's a core assumption, then we need to ensure we're all agreeing to our understanding. And As you're going through due diligence, you may find out that it's not 50%, but it's 37. You just need to think about whether it is practical.
If that swing factor is getting really high, then maybe we aren't going to get the same upsell opportunities that we thought we could, then that's something that you need to step back and either rethink the core thesis and the targets that you set or rethink the entire deal at this point.
Because maybe you're chasing after something that's too hard. You're chasing after something that's just going to be really hard to get the return.
To balance it out, you have to look at it from different angles. When I'm thinking about changing our back office systems, how much of that is engineering optimism? Because I think engineers are biased that way, you have to look at it from that perspective.
The big thing there is to track the previous history. For instance, if they keep telling you it will only take five days but it really takes 15, then you know that there is always a factor of three that you must multiply to determine what's realistic.
It starts with when do you think things are going to get done, and how long you stay in the interim process. You have to land on your internal systems and your sales organization at some point and you need to set general guidelines.
- Does it run in parallel for 6 months to a year?
- Is it going to rain for a long period of time what you have to get used to it?
We would set that expectation that this is how long it will take. We need to be practical about what that interim system will look like and how that process works.
Now you've figured out the "back office processes," it's really important to step back and think about the following:
- How's this going to work for the customer?
- Is this we're going to have present two sets of paper, and they have to sign two different agreements. Is it two sets of billing?
- How do you make that clear to them and how do you set that expectation?
I'm willing to expect a company to take a year, even 18 months to get things sewn together. That is reasonable because there's a lot of work. But at some point, as a customer, I don't want to see that it's two companies. So you have to think about how you get to that position really early.
That may mean that you have to do some things on the front end to present a single point of view to the customer, but there are a whole lot of back-end processes that you're doing that may be manual to create that better customer experience. Because I think you have to go back to the customer and ensure they see value in this transaction.
Steps to Planning
It's an iterative process; you have to go back and look at how much you think will get into the systems. What are our revenue goals, our customer goals, and our sales targets.
Circle back and forth on this to get to a clearly understood plan. I'll play out one extreme here where it took multiple years to get into the four core product infrastructure pieces.
- How do we manage the customer?
- How do we manage sales?
- How do we do joint products during that period of time and be thoughtful about it?
There may be a day one where you have a swivel sales team, both teams are heavily coordinating, and you have three-legged sales call where you got both companies coming together, but they should be tied together at least with one leg, so they are looking coordinated.
And then how you go from something rough to a more polished system in an interim stage. And do that in a way that you're not creating new features that eventually fully impact that back-end system that may be burdened. You need to think that through, plan that out and talk about what's the financial impacts of those decisions.
You have to be honest with yourself. That's the challenge because nobody really wants to talk about the fact that, back-office systems and back-end systems can drive front-end interactions. It's really important to have a strong technical team who can talk to these pieces, but also speak the truth.
And then it's going back to that key, which is the sales team. We're going to do this. Does that affect your sales? Help me understand what that impact is. Because that, ultimately gets back to whether or not you're resetting your revenue targets practically early so that you don't have a surprise as you go into the integration.
It's all pretty intricate. Having a really detailed cross-functional team that can step in and do the M&A work who knows how things work is paramount. Unfortunately, those are the same people that are doing the re-platforming work, the big architecture.
It's a tough thing to build the case that you have to invest in your systems team so that you can go faster because it's not directly driven to revenue. But the thing I've seen for those companies I had touched on that do this well is that they have invested in building that infrastructure.
So that it is multifaceted and can support different sales models fairly quickly. And that takes time and effort and it's hard. You have to build the case with multiple deals in some cases and this is something that is worth investing in.
I'm talking about core resources within the engineering team who can then help onboard and build those new APIs for the new companies that come in.
Sales readiness is being clear on how you view the new joint product and how you view what value that is to the customer. Hopefully, the inbound sales team doesn't say that's crazy because that is a warning sign there.
You will learn a lot when you talk to the inbound sales team. Stuff that you will not get just by looking at financials. So always test the sales force. Always ask the question, how's this fit? How do you go about selling it?
Asking those questions, it's challenging thing to do when you're in overlapping areas because neither company wants to share their customers or processes. So you have to talk about the sales motion.
You have to work through some high-level assumptions and then ask leading questions and then listen very carefully to both sales teams because those people aren't shy. They'll tell you what they think they can do. If we're bundling these together, I'll ask:
- Is that a fast sell or a slow sell?
- What other follow on materials do you need to sell that product?
- Do you have to have a proof of concept?
- Is this a reference sale?
- What's next when you do that first sales call.
- Do they buy solution one and then six months later, they need to buy solutions two and three?
You must think about how the full sales motion goes across an organization and how those make sense. Just be careful about the gun-jumping rule as there are things you cannot discuss just yet.
Always get advice from your competition council. I'm not a lawyer. Make sure you're not sharing your competitive information.
The rule of thumb that I always use is: If the deal fell through, would either company be at a disadvantage if that information had been shared?
Testing the Sales Team
You test internally with your sales team first. And then when the transaction is almost completed, or it's done shortly afterward, you can talk about it in great detail.
There's always a desire to go out there and sell jointly together, but pick an easy softball layup for that first sales cycle so that everybody understands and it's super simple.
Don't get too complex because as you start to ask some of these questions, now that you both can talk across the table and share all the information, there may be things that you thought were going to be easy that are not. You want to make sure that you're focusing on what brings the best value to the customer the quickest.
Also, be conscious of inertia. Suppose we're really not making a delightful experience for the customer and generating revenue. In that case, we really need to step back and think about that, which is getting back to testing again with the sales organization.
Key People Involved
The key people involved are the inbound team, the operations team, and the sales operations, team. You want to talk to them very early on about the systems and processes because you need to understand how they're working and what works well, and what doesn't and why they chose to automate some sections and why they chose not to automate some sections. That should give you some interesting data on friction points and how to make the best experience for the customer.
Also the head of sales and how they think about the sales team and how the sales teams are going to work together.
There's a big change in management. Now you have two sales teams working together. So you have to think about territory mapping and you have to think about who's going to work in each territory.
You have to think about how you tune somebody that may have been selling in just a small region now suddenly has a bigger region because it's a bigger company.
Do you need to look at the resourcing for that one person? Because now you may have a bigger footprint that person has to cover. Those are things that you have to think through and work out.
There is a lot of thinking involved, so on the acquirer side, you need a group of dedicated go-to-market integration folks who stay constant with all the back-office system pieces.
But they also need to be thinking around the next two, or three steps out around the corner as you even start the thesis so that you can be ahead of the sales force. They are always eager to do things and sell stuff.
You have to think about how close it is to your core and the further it is away from your core. So the general integration thinking is that it should be more of a phased incubation integration.
So you may leave them more standalone for a lot longer because they're further away. So you understand their business before you bring them in.
If it's really adjacent, you're just selling a widget with a different color, then yeah, bring them together immediately.
But it's always important to be clear with the inbound company that integration will happen. Eventually, you're getting folded in and we're working as one big team but that may be a while and it's important to set that.
Another important thing people don't spend time thinking about is how you're clear about announcing an end-of-life product. You're phasing something out.
You know you're taking something that was a maybe standalone product and then you're going to fold it completely, wrap it into your product, and the standalone is going to disappear at some point.
You have to be clear with setting some clear end-of-life policies and notifications. Announce something that's going to be the end of life, but it's going to be maintained for 2, 3, 4, 5 years if it's hardware, and you have to be clear about that.
You have to be very consistent so that as a company that's come in and has bought both that product and you're eventually phasing it out, and maybe for the company it's not the best decision to go onto your joint solution, you're giving them a very clear transition path.
You do that once or twice, and then that affects your sales cycle. It affects your ability to sell. If you're in a consumer-based product, the cycle's shorter. If you're in an enterprise or an infrastructure product, the cycle's much longer. So you need to think hard about that.
Marketing is really interesting because it ties to branding. When you are changing or thinking about migrating the brand, the first step is marketing to the customer base that already knows the product. Product X plus Y or Product X brought to you by platform Z.
Those are very important that signal the direction of where you're going. The other thing that's important to digest is that the acquiring company has more brand reputation, And it usually gives the inbound team a lift in presence.
So that a very important question to ask for the time. Who can lift who? Because sometimes the target company has a better brand specific to the market segments or a group of people.