how to add a go-to-market channel

Collin Stewart
May 17, 2024

Good morning Predictable Revenue community,

I've been helping founders add their first growth channel for 12 years. I’ve seen extreme product market fit and hammers in search of nails. Here’s what I learned.

tl;dr

Product market fit is a multiplier of gtm efforts
Poor definitions of target audience produce poor results
GTM channels have different timelines, minimum investments, and ROI timelines

product market fit is a multiplier.

When you reach a market with unmet needs, they will flock to you like moths to a flame. This is what extreme product market fit feels like.

When you launch a product that is 20% better, faster, or cheaper than the competition, customers will hesitate.

We came face to face with this around 2016 when a new customer came to us and needed help launching a new product to an existing model. Their new offering not only saved costs but also brought in revenue.

It wasn’t just 10x better, it was 100x. The results were obvious, our average person contacted to meeting booked ratio was around 1%, this client’s was 33%.

Our client was getting 33x better results from our service because their product market fit was extremely strong.

“The most fundamental reason that companies fail is that they don’t have 10x better products. If you can’t generate substantially more value for the end-user, you can’t overcome the switching costs.”

– Peter Thiel, “Zero to One”

If you are trying to penetrate a market, your offer needs to be 10x better to overcome the inertia of doing nothing.

Where your product market fit sits on the spectrum of 20% better to 10x better has a direct correlation to the efficiency of your go to market. But just being 10x better isn’t good enough, you also need to be able to communicate who it’s better for, how, and why in a way that resonates with the audience you’re trying to reach.

defining product market fit.

When you run a product or service that can be directly tied to revenue, you live or die by your customer’s results.

I’ve had a similar situation happen to me a few times, a new customer comes in and wants to test sales development as a channel. We always build our lists off of a profile of our client’s best customers (see the matrix below) so it makes this next part surprising and frustrating that it’s happened more than once.

At the 6 month mark, we were doing a pipeline review and they were sitting at zeros. Not just zero sales, zero pipeline. After digging in, the founder admitted they had never closed a deal with a company in this vertical. We had seen case studies, had referenced testimonials, they were for a slightly adjacent market and the subtle difference was important to prospects. We spent 6 months being measured on our revenue performance but not targeting clients that were winnable.

If you are building a new go to market channel, start by targeting the clients that are most likely to buy from you. This way you’re only testing one thing, the channel. When you’re testing a new market with a new channel and nothing works, you’re just throwing darts.

When I’m building a new outbound strategy, I like to build things on top of three hypotheses:

Targeting → how do we define the audience we’re trying to reach
Need → what unmet needs do we believe they have
Solution → how we describe how we solve those unmet needs

If you want to get waaay more detailed than these, feel free to check out our MarketFit Matrix. If you go this route, I recommend starting by brainstorming the jobs to be done, mapping them to friction points, and then cutting down to a few high level JTBD.

If you’re interested in working through this live, hit me back with “MARKETFIT” and if there’s enough interest, I’ll set something up.

the shape of go to market channels.

There is no single greatest go to market channel. The trick is to figure out which channels will enable you to profitably reach your audience. Here are the variables you need to consider.

timing.
How long does it take to prove it’ll work, optimize it for profitability, and scale up?

minimum investment.
How much will it take to reliably get to profitability?

scale.
How profitably does the channel scale?

reach.
What percentage of your target audience is reachable through this channel? How likely are they to respond?

resources.
Who do you have on the team that can already do this? Will you need to hire someone with specialized knowledge?

Here’s a sheet to input your own scores. I used Ads vs Sales Development for this example because they are both great for different reasons. My scores are for illustrating the point only, I think they’re directionally correct but I haven’t put any meaningful research behind them.

In my experience, ads are a very fast way to learn but you can also reach the point of diminishing returns pretty quickly. On the flip side, sales development takes longer to get going but once you’ve ramped the team the costs scale up linearly and results scale along with them. It’s the length of time to results that has given many founders the feeling that sales development won’t work for them.

If you spin up an SDR team and only give them a few months of runway, you’re not going to learn anything meaningful. To get all the pieces in place, especially if you’re building an internal team for the first time, can take multiple quarters.

Once you have a team, process, and tech in place (can take 1-2 quarters), here are the guideposts you should look for:

First quarter - prove that you can get meetings, it doesn’t have to be pretty, we just want to see it’ll work.
Second quarter - show me that you can improve the numbers (meeting booking and reply rates) and that this channel will produce meetings that turn into pipeline.
Third quarter - some of that pipeline should be closing and more should be building in behind it.
Fourth quarter - if we’re closing deals somewhat regularly, show me that you can grow the team and get the same results.

There’s your first year with an SDR team. Prove it, optimize it, and then scale it. And make sure you know your timelines and minimum investment level before you make any investments.

Every channel will have a different shape so find the one that will suit your situation best.

Collin

PS - I didn’t want to ignore the fact that I sent out last week’s email with the subject from the previous week but I also didn’t feel it was worth leading with. Sorry about that.

“Pain is just the sensation of experience entering the body”

— Jerry Seinfeld