Your Product Is Your Go-to-Market Strategy. Here’s Why.
Get the product right, and it will sell itself — or your customers will help you sell it.
Tech product marketing has evolved through several dramatic phases in the past few decades. But the most recent transformation may be the most dramatic shift yet, bringing us into an era where some companies can do without a sales team at all.
Atlassian, a maker of tools that help software developers collaborate with each other, grew from nothing to $100 million in revenue without ever hiring a salesperson.
How? With a product that essentially sold itself.
This is the 4th stage in the evolution of tech sales. Let’s take a look at how we got here.
The Evolution of Tech Marketing
Field sales: The first marketing strategy that the tech industry pursued was an approach drawn from other industries: The field sales model. Oracle mastered this in the 1980s and 1990s, with an enormous, aggressive, highly competent field sales force that spent most of its time on the road, calling on customers, wining and dining them until there was enough trust and mutual understanding to close six- and seven-figure contracts.
Inside sales: The next stage was a more telephone-based, inside-sales model. In this approach, pioneered by Oracle and others in the late 1990s and embraced by Salesforce.com in its earliest days, salespeople spend less time on the road. The focus shifts to the inside sales force, calling lists of cold and warm prospects and closing many sales on the phone. Here, sales becomes more of a numbers game: You need a big enough list of prospects to deliver the sales you need, based on the rate at which you can close those prospects.
Marketing: As sales organizations began to understand the virtues of large numbers of prospects, the industry evolved into a third, more marketing-driven stage. HubSpot (content marketing), ExactTarget (broad marketing mix) Constant Contact (broad marketing mix including radio spots), and Barracuda Networks (creative marketing including the use of airport billboards) exemplify this approach. This stage elevated marketing from sales support to a more strategic role, where it is responsible for generating content and marketing programs to fill the sales funnel and while branding the software companies.
Product-driven marketing: In fourth-stage sales, the product begins to sell itself. In this stage, the product itself is the go-to-market strategy for your company. Atlassian is probably the most successful example of this, but there are many others including OpenView portfolio investments Expensify, Datadog, FieldLens and Lesson.ly to name a few. Beyond our portfolio, to a certain extent Solarwinds falls under this category, based on word-of-mouth referrals and its ability to be easily downloaded and installed. Even LinkedIn benefits from the “self-marketing product” strategy, especially now that it has achieved critical mass: The more people who use LinkedIn as their de facto resumes, the more it draws in hiring managers and HR staff who grow to depend on LinkedIn as a recruiting tool.
As marketing and sales have evolved, companies moved from a high-bandwidth, high-cost, high-effectiveness approach to sequentially lower bandwidth, lower cost, lower effectiveness approaches. But the old ways of selling have never disappeared: They’ve simply become equally valid options on an increasingly broad spectrum of possibilities.
Individual companies can and should tailor their sales and marketing strategies based on where they fall on this spectrum.
If you have a complex product and multiple/high level buyers, it generally requires field sales to educate the buyers and help them move down their buying journey over multiple meetings. Field sales efforts require an enormous expenditure of effort (and T&E budgets) by experienced, expensive sales executives. After identifying a handful of likely target customers, salespeople spend months wining and dining them, learning their needs, and customizing an offer to meet those needs. But the payoff can be high: A relatively high proportion of the prospects should be converted into extremely valuable customers, often with six- or seven-figure contracts.
If you have a more intuitive and simple product, you may be able to move all the way to the other end of the spectrum of go-to-market strategies by creating a product-driven strategy.
A product-driven strategy requires a product team that makes the product so intuitive and easy to use that the users intuitively understand it without extensive training. The better products get to the “aha moment” extremely quickly, may have free trials or freemium pricing models to help lower the bar to adoption, and may have built in functionality that better engages users more deeply over time, brings users back, and encourages users to get other users to adopt them.
As you move along the spectrum from field sales to product, the number of prospects generally increases, while the percentage of those prospects who convert into paying customers generally declines. In other words, the funnel needs to bring in more potential customers in order to be sure of producing a few conversions at the other end. But the cost and complexity of the sales effort gets incrementally lower with each stage.
What you need to do as you move along this path is to be able to dramatically simplify everything down to its essence, so you don’t need the bandwidth (of time or money) to educate the buyers and make the sale.
The buying process is one of being convinced that the value of using the product, net of what you’re going to pay, is positive. The sales team does this by communicating value. If the product itself can communicate its own positive value, then that equation works with very little additional sales effort needed. Your product sells itself, just as water flows downhill.
If you need more communications, marketing can help. If you need even more, then the telephone can provide that. If you need even more still, you have to rely on in-person salespeople. The key is to design a product that needs less!
How to Find the Right Mix
Finding the right mix of high-touch, high-bandwidth sales, lower-bandwidth sales and marketing and self-marketing products can be tricky. And moving from the high-touch to the self-marketing side of things is also a challenge — but it’s one that can pay off with dramatically more efficient sales and revenue generation.
As many others have recommended, the best way to start is first by creating a product that people are willing to pay for. Once you have something that sells — by whatever means it takes — then you can start to “de-labor” the sales and marketing process.
It is possible to start by building a product that requires virtually no sales effort at all from the start, but it’s trickier. Although Atlassian pulled this off, few other companies have successfully taken this route. The reason is that you get a lot of information from high-touch, high-bandwidth sales. Your customers will tell you what’s working and what’s not, and your field salespeople (even if those are the founders) will learn a lot by talking to them.
Also, those first sales will tell you a lot about the sales process. You’ll be in a position to ask, ‘Where’s the labor?’ And then you can start working on simplifying it.
And there are a few general approaches you can take to try and remove the sales labor from your product.
One is simply make your product so awesome that people can’t help but talk about it. You do that either by making it better by far than other similar products in the market, or by making it free (or incredibly inexpensive) in a market where similar products cost a lot.
Second, if your product isn’t innately incredibly awesome, you need to start polishing it. Focus on ease of use, making it possible for people to get started using it with very little friction at all. Data can help here. For instance: Imagine an email product that analyzes data from the emails you send, then recommends automated response emails that match your most common responses. You could then just approve and send these automatic response without having read the inbound email. That would be amazing, and we’d all be talking about it!
Finally, the third approach is to build in “naturally viral” components to your product. This is not always possible, but when it is, it works wonders. The very act of using a viral product like this helps promote it — the way Hotmail worked in the 1990s, or Instagram in the 2000s.
It won’t be easy, but if you can remove effort from your sales process and get your products closer to the ideal of selling themselves, you’ll add an incredible amount of efficiency to your business — and the rewards will be great.
How did the team at SurveyMonkey know it was time revamp their pricing strategy? Find out which signals tipped them off and how they made it a success.
Mike Walsh, CMO at Reflektive, has gone through multiple pricing processes and has developed his own framework for assessing the situation and then developing pricing that is appropriate and effective. Learn more about his 4-step framework here.