Go-to-Market Strategies. 2004 Increase Ltd. All rights reserved.

1
Go-to-Market Strategies
A go-to-market strategy describes how a company develops, markets, sells and delivers
products and services. This paper discusses four levels of go-to-market strategy
transactional efficiency, solution effectiveness, customer collaboration and joint-venture
geniusand discusses the implications of choosing the right strategy using examples from
the technology sector.
I ntroduction
How has dabs.com grown from a small
mail order firm to one of the top UK
computer dealers with annual sails of
100m and able to consistently provide
the lowest prices for computer
consumables while at the same time
provided outstanding customer service?
How have Sage grown revenues from
312m in 1996 to 560m in 2003 and
become the worldwide leader in business
management software for small-to-
medium enterprises?
Why are Xansas customers forming long-
term relationships with this services firm
and driving Xansas revenues from 27m
in 1993 to 453m in 2003?
Why has BAE SYSTEMS become the world
leader in aerospace and defence joint
ventures, vital to the success of partners
including Thomson, Airbus, Matra, Saab,
Boeing, Lockheed Martin and Raytheon?
The answer to all four questions is very
similar. All four companies have clearly
defined their go-to-market strategy. Their
go-to-market strategy describes how they
develop, market, sell and deliver their
products and services. All four companies
have been able to focus on their chosen
go-to-market strategy and execute it
brilliantly. By doing so, all four companies
have set themselves apart from their
competition and created exceptional value
for customers, staff and shareholders.
The concept of a go-to-market strategy is
not new. Nor is the concept of creating
exceptional value. What is new is the
extent to which customers now determine
your go-to-market strategy. In the past
customers judged the value of a product
or service on a combination of quality and
price. The only go-to-market strategy
available was to communicate features
and benefits and to keep the cost as low
as possible.
With so many companies today selling
technology-related services rather than
products, the product-based go-to-market
strategy is no longer the optimum strategy
for every market. Services are invisible so
attempting to compete on features,
benefits and low cost is a losing strategy.
Todays customers have an expanded
concept of value that includes
convenience, credibility, security, trust,
competitive advantage, innovation and
collaboration. With so many expectations
one might assume that the market leader
Go-to-Market Strategies. 2004 Increase Ltd. All rights reserved. 2
is the company that competes best in all
these areas. But this is not so.
Companies that have dominated their
market and enjoyed the resulting growth
and profitability have not expanded their
focus to attempt to satisfy all customer
expectations. Instead, they have narrowed
their focus on a go-to-market strategy and
aligned their whole organisation around it.
The strategy of dabs.com is an example of
what we call go-to-market strategy level 1:
transactional efficiency. By efficiency
meeting the customers computer
products requirements based on price,
availability, convenience and after-sales
service dabs.com is becoming the category
leader. On the other hand, Sage is an
example of go-to-market strategy level 2:
solution effectiveness, because they are
rewarded for selling and delivering
innovative solutions to SMEs challenges
in managing business operations. Xansa
and BAE SYSTEMS are examples of got-o-
market strategies levels 3 and 4: customer
collaboration and joint-venture genius.
Xansa collaborates with customers to
create new technological approaches that
solve strategic business issues. BAE
SYSTEMS form joint-venture partnerships
that harness the core competencies of
both partners and pursue new markets.
No go-to-market strategy is necessarily
better than another for any given
marketplace. The optimum go-to-market
strategy can only be determined by the
expectations of the customer. Operating
with no clear go-to-market strategy leads
to inconsistent employee behaviour,
disappointed customers and distraught
shareholders. On the other hand, being
able to implement multiple go-to-market
strategies, while difficult, is possible and
in some cases required by the size of your
business and marketplace.
Each go-to-market strategy requires a
different set of organisational capabilities.
An organisations capability is the sum of
the personal capabilities of all the
employees in an organisation. So if you
took the top-performing salesperson from
dabs.com and placed that person in the
sales team at Dixons, for example, they
are likely to under-perform. Even though
these companies compete in the same
marketplace they operate different go-to-
market strategies. The sales competencies
required are different too. In fact, most
top-performers from any department
disciplinemarketing, human resources,
operations, finance or service delivery
would struggle in an organisation that
operates a different go-to-market strategy.
Conversely, companies that share the
same go-to-market strategy share many
similar attributes. People can transfer
more easily between companies even in
different marketplaces if the companies
share the same go-to-market strategy.
Too many organisations are confused
about their go-to-market strategy. Xansa
compete in the IT services market against
companies that operate other go-to-
market strategies or operate none at all. If
those competitors were to recruit staff
from Xansa without recognising the need
to overhaul their go-to-market strategy,
the new recruits would struggle to regain
their former levels of success.
The conclusions weve drawn on go-to-
market strategies are based on our work
with emerging and established UK
technology companies.
Can a Company Succeed with
Multiple Go-to-Market
Strategies?
Same companies, such as Dell, are able to
successfully implement more than one go-
to-market strategy at a time. Dells home
and home-office business competes at go-
to-market strategy level 1: transaction
efficiency, based on price, performance
and convenience. The SME division
competes at level 2: solution effectiveness,
based on packaged solutions, trust and
after-sales support. The preferred and
corporate accounts businesses compete
at level 3: customer collaboration, based
on cost of ownership.
Operating multiple go-to-market
strategies can succeed but it requires an
even greater degree of focus and
leadership.
Go-to-Market Strategies. 2004 Increase Ltd. All rights reserved. 3
Go-to-Market Strategy Level 1: Transactional Efficiency
Transactional efficiency describes a
specific approach to production,
marketing, sales and distribution. The
objective of a company aiming for
transactional efficiency is to maximise the
number and value of transactions made
by customers. They do this by minimising
costs throughout the organisation by
constantly looking for ways of improving
efficiency. Product development focuses
on production cost and product features;
marketing focus on communicating the
features and benefits and lowering the
cost of customer acquisition; sales focus
on reducing selling costs and purchasing
friction; distribution focus on minimising
shipping costs and reducing returns.
Dabs.com focus on transactional
efficiency. As a computer products
distributor, production is focused on
streamlining their supply chain;
marketing communicates special offers,
product features and reviews; their
website which is their primary sales
channel makes goods easy to find, always
available and conveniently delivered.
Transactional efficiency is a leading
strategy when companies are selling
products or services in highly competitive
and mature marketplaces. The
transaction value is likely to be relatively
low, whereas the transaction volume is
often high. In terms of the technology
adoption lifecycle, their customers are in
the early and late buying majorities. These
buying segments have waited until
technology is fairly well established,
supported, cost-effective and proven.
These buyers generally know what they
are looking for: all the want is a
convenient way of paying the lowest price.
Outside the technology sector other
companies are focusing on transactional
efficiency: Amazon.com, Federal Express,
Pizza Express and Ryanair.
Go-to-Market Strategies. 2004 Increase Ltd. All rights reserved. 4
Go-to-Market Strategy Level 2: Solution Effectiveness
Those pursuing a strategy of solution
effectiveness aim to continually develop
new solutions to problems. Often these
solutions are a combination of old
products with new services, or new
products with well-established services.
The reason for this is that customers
prefer to see a continuous stage of gradual
evolution, rather than buy from a
company that innovates discontinuously
which would jeopardize their investment
in previous solutions.
Solution effectiveness requires that a
company be nimble in order to innovate
and commercialise new ideas. Product
development focuses on incorporating new
ideas and technology to solve existing
problems. Marketing communicate the
propositions features and advantages.
The role of the sales force is to bring the
marketing messages to the customer and
allay concerns over cost and risk. Delivery
is often the ability to customise the basic
solution in order to meet the customers
exact requirements more closely.
Sage is well known for their solution
effectiveness. As a software supplier to
small and medium businesses, product
development is focused on making sure
the software evolves to meet the changing
needs of businesses to changes in
taxation and accounting legislation.
Marketing is focused on communicating
the broad range of solutions and their
suitability for any of the customers
business operations. The sales force at
Sage is responsible for discovering the
customers requirements, provide the
appropriate products and services and
negotiate the sale. Delivery at Sage is
achieved through a network of partners,
including Sage accountants, who help
customise the software.
Solution effectiveness is a leading strategy
when companies are selling products and
services in new markets. The transaction
value is likely to be moderate or high, and
the transaction volume or frequency is
often low; but each sale represents an
additional opportunity to cross-sell
another product or service. In terms of the
technology adoption lifecycle, customers
are early adopters or the early buying
majority. These buying segments generally
know what problem they are trying to
solve; but dont yet know what the
solution is. Theyre willing to take a risk,
but remain careful with their budget.
Most technology companiesMicrosoft
and Sun Microsystems are classic
examplescompete with a solution
effectiveness strategy.
Go-to-Market Strategies. 2004 Increase Ltd. All rights reserved. 5
Go-to-Market Strategy Level 3: Customer Collaboration
Building on a platform of parity in
transactional efficiency and solution
effectiveness companies can increase the
value provided to customers by operating
a customer collaboration strategy. The
focus here is to use key organisational
capabilities to solve the customers
strategic business issues by providing
completely tailored products and services,
unique to each customers needs.
Customer collaboration requires the
ability to bring fresh insight to new
situations and bring experience to bear on
customer problems. Research and
development often focuses on academic
research to challenge current ways of
thinking. Marketing communicates
strategic insight, business results and
depth of relationships with other clients.
Selling is highly consultative with
significant value shared during the sales
process. Delivery aims to deliver new
solutions and then internalise the new
experience.
Xansa is typical of a company focused on
customer collaboration. By bringing to
bear their experience in market sectors,
business processes and technology Xansa
aim to transform the business results of
their customers. Marketing is focused on
communicating and nurturing the depth
and duration of Xansas long-term
relationships. The sales operation
develops custom solutions through the
sales cycle to initiate major contracts.
Delivery by Xansas consultants is geared
towards achieving the clients business
objectives.
Customer collaboration is an accepted
strategy among service providers such as
management consultants, but it is also
being adopted by product providers with
broad and strategic product ranges. The
transaction value is large with long-term
relationships common. Customers are
often visionary or early adopters in the
technology adoption lifecycle. These
buyers need third-party capabilities in
order to execute their strategy and are
willing to make significant investments in
these relationships.
Examples of companies pursuing the
customer collaboration strategy include:
PriceWaterhouseCoopers, PA Consulting,
and IBM.
Go-to-Market Strategies. 2004 Increase Ltd. All rights reserved. 6
Go-to-Market Strategy Level 4: J oint-Venture Genius
Organisations that adopt a strategy of
joint-venture genius possess a profound
set of core competencies that they use to
identify and pursue new market
opportunities in strategic partnerships
with a handful of customers. By
complimenting their own competencies
with those of the joint-venture partner the
aim is to attack new markets and serve
new customers.
J oint-venture genius requires that a
company not only excel in a set of core
capabilities but also in forming joint
ventures: identifying partner
opportunities, building trust, sharing
capabilities, adapting to change and
managing complexity. As well as key go-
to-market disciplines in development,
marketing, sales, and service delivery
companies that pursue joint-venture
genius have to have visionary leadership
and change management functions to
support people through successful
transformations.
British Aerospace, from which BAE
SYSTEMS has been evolving since 1977,
is well know for joint ventures such as
those with SEMA Group for form
BAeSEMA, with CASA and others to form
Airbus; and with Lockheed Martin on the
J oint Strike Fighter project. BAE
SYSTEMS continually promote their core
capabilitiesland, air, sea and spaceas
well as their global reach and the value
they place on partnerships. In fact, BAE
SYSTEMS dont promote any products,
solutions or services in its marketing
messages; instead they reinforce the joint-
venture genius strategy. Of course, BAE
SYSTEMSs joint ventures do develop,
market, sell, and deliver products,
solutions and serviceseverything from
underwater sonar systems to spacecraft
but BAE SYSTEMS rarely does so alone.
Some technology vendors and service
providers attempt to operate a joint-
venture genius strategy. However, most
strategic partnerships although significant
rarely meet our joint-venture criteria
because theres not enough skin in the
game from both partners. Instead these
partnerships are more often that not
customer-supplier relationships dressed
up in a press-release.
The transaction value of joint ventures is
usually immense, and often includes the
transfer of staff, processes, systems and
equity. Examples of technology joint
ventures include: Sun and Netscape
(iPlanet) and Microsoft and Accenture
(Avenade). Their genius, however, remains
to be proved.
Go-to-Market Strategies. 2004 Increase Ltd. All rights reserved. 7
Selecting a Winning Go-to-Market Strategy
Focusing on a single go-to-market
strategy is critical for the growth and
profitability of ambitious technology
companies. Choosing a winning go-to-
market strategy for any particular
business requires an understanding of the
market, the products and services, the
competition, and the people.
Most technology companies are already
operating along one or more of the go-to-
market strategies, but perhaps without
any focus. The challenges arise when
different parts of the company
unknowingly attempt to execute different
strategies. The classic example is the
clash between sales and marketing when
the marketing department are producing
product specification brochures and
advertising low prices (transactional
efficiency) and the sales force is
attempting to secure long-term
relationships with major accounts
(customer collaboration).
In our experience, the misalignment
between different departmental strategies
is the biggest barrier to revenue growth
and profitability. Departmental strategies
are often driven by the capabilities and
experiences of the people in the
department. So if a company tries to
exploit a joint-venture genius go-to-
market strategy, but recruit a finance
director without sufficient experience of
innovative commercial relationships
involve din a joint venture, then the
strategy is in jeopardy.
Changing Go-to-Market Strategy
Like any major strategic change adopting
a new go-to-market strategy is a
challenging transformation that requires
visionary leadership and capable
management.
Established companies often attempt to
make changes to part of their go-to-
market strategy without a complete
understanding of the ramifications. For
example, by shifting the product
development objectives, launching an
innovative marketing campaign, delivering
new sales training or altering service
delivery practices.
Most organisations already operate within
the limits of their comfort zone. This
means that an analysis of their go-to-
market strategy alignment is likely to
reveal the limit of current capabilities. In
order to transform the organisations go-
to-market strategy it is important to
consider the starting point of each
department.
Companies that lead their market by
executing the optimum go-to-market
strategy are run by leaders that not only
understand the needs to focus on a single
go-to-market strategy, but also
continuously examine the relevance of the
strategy and how well the company is
implementing it. These leaders will be at
the forefront of the understanding
individual capabilities and how these
relate to the execution of the go-to-market
strategy. By leading this effort they will
continually out-perform the competition
in exceeding customer expectations and
will drive their company to greater
revenue growth and profitability.
Go-to-Market Strategies. 2004 Increase Ltd. All rights reserved. 8
Characteristics of the Four Go-to-Market Strategies
Go-to-market strategy
Characteristic Level 1:
Transactional
efficiency
Level 2: Solution
Effectiveness
Level 3: Customer
Collaboration
Level 4: Joint-
Venture Genius
Customer need Acquire a product Solve a problem Improve results Create new markets
Value perception In the product In the product and
services
In the go-to-market
process
From the joint-
venture
Value expectation Low cost, now! Risk and return on
investment
Innovation Insight
Buying expectation Features and
functions
Benefits and
advantages
Expertise Commitment
Relationship
expectation
On demand Trust and service Reciprocal
contribution
Mutual dependency
Technology adoption Late majority and
sceptics
Early and late
majority
Visionaries and
early majority
Late majority
Product development Based on previous
sales
Based on customer
feedback
Based on customer
participation
Driven by
customers
customers
Marketing focus Acquire any new
customers
Acquire specific
customers
Maximise value of
existing customers
Integrate existing
customers
Marketing messages Weve got what you
want
We can solve your
problem
We can improve
your business
We could create
new markets
Sales focus Take the orders Concert sales leads Initiate and develop
relationships
Identify joint-venture
opportunities
Sales processes Simple enough to
follow
Support sales
people for each
solution
Enterprise-wide and
adapted for each
customer
Created for every
opportunity
Sales training Standard product
training
Product and skills
training
Customised based
on performance and
competencies
Executive coaching
Commercial focus Obtain payment Negotiate a sales Create innovative
contracts
Fund joint-ventures
HR focus Maintain staff levels Ensure thorough
training
Improve individual
capability
Improve customers
capability
Recruitment focus Fill the vacancy Find the best
candidate
Nurture new talent Find new leaders
Service Delivery
focus
Deliver on time Maximise solution
effectiveness
Create innovate
ideas for customers
Innovate for
customers
customers
Operations focus Cost efficiency Cost effectiveness Customers return-
on-investment
Generate value in
new markets
IT focus Maximise business
efficiency
Distribute
information
Provide insight into
information
Share insight with
customers
Website focus Enable e-commerce Enable e-service Enable
personalisation
Support customer
communities