In B2B SaaS product marketing, managers are essential to increase ARPU, lower churn and find PMF. Here's how to assess your SaaS product marketing...
Picking your SaaS Go-to-Market Strategy for B2B Products
There are two types of SaaS go-to-market strategies for b2b products. Marketing and sales to get high LTV users or product-led viral growth at lower costs.
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Your company growth can be supported by multiple growth opportunities and related Go-to-Market strategies that you have uncovered. That growth can come from many different sources. You can service a new market, command higher prices as you outperform the competition, diversify your services and monetize them within a specific customer segment, or expand into a new vertical. Some strategies will rely heavily on marketing and sales, and some will depend more on product innovation, or as is recently used as the common term, Product Led Growth.
A framework for building your B2B SaaS go-to-market strategy
Let’s look at a framework for identifying the best path to get to where your growth will come from.
- Are you a product-led growth company, or should you build a strong marketing growth engine?
- Do you need a sales-led go-to-market? Is your ACV going to sustain that CAC? (Customer Acquisition Cost)
- Is your growth fueled by expanding your market share, or the market expanding?
There is no good or bad answer to these questions. You just need to know where the growth that you and your investors count on is likely to come from.
Before we jump into the tactics of your growth marketing plan, it’s critical to understand the ways you can grow. You can use many frameworks for this. The below picture is also known as the “Ansoff Matrix”.
Each of the quadrants in the Ansoff matrix can benefit from specific growth execution tactics to maximize impact. Let’s discuss each of these a bit deeper.
A logical place to start your growth focus is to sell more of the same to the current type of customers you’re already successfully serving. This allows you to sell more of your current type of products or offerings, maybe at higher prices and lower cost. If you’re in the wine business, this would mean you go from selling them a little bit of wine to a lot of wine or to find more similar customers who would buy the same wine. This is all about optimizing the products and services you bring to the market.
This should be the main growth strategy for most companies after achieving product-market fit. SaaS companies with ARR under $20-30 million can usually drive strong growth by just doing this. The Market Penetration quadrant is typically best suited to a marketing-led growth approach, driving conversion optimization and flywheel growth effects with an audience where your solution has already reached product-market fit.
Go-to-market penetration tactics
- Improve funnel conversion and speed
- Price decrease/increase
- Productize your services
- Upsell campaigns
- Use ABM to improve ICP fitting leads
- Launch a referral program
- Price lock-in (discount in exchange for loyalty)
- Price increase with exclusive benefits
- Buy market share through acquisition
- Improve your value proposition through content and features that don’t require R&D
- Solidify organic search positions through content, webinars, and a training program
Your next growth option could be selling the offerings you’re already selling today to new types of customers. This could be a new industry, larger customers - going from small businesses to enterprises - or a different geographical market. This could for example include selling wine to restaurants and chefs, in addition to supermarket consumers.
Pursuing a Market Development strategy typically means you must invest in sales and marketing. You will define a new ICP and Personas and need the right content, find out where the personas are and market to them through the right channels. This approach will require a lot of direct engagement with new types of prospects to get quick market feedback, and thus can be seen as sales-led growth. This strategy is more likely to be successful when you have a unique product technology that you can leverage in a new market, or you benefit from economies of scale if you increase coverage (i.e., selling your product online, self-service).
Market development tactics
- Expand your audience personas and “Ideal Customer Profile” to adjacent customer segments
- Explore partnerships that can complete your offering to provide access to specific parts of the market
- Find ways or partners to lower the cost of sales, allowing you to service clients with a lower ACV
- Explore new areas or regions of the country and foreign markets that your product can service today
Product (or capability) development
A third way to grow is to sell something new to your current customers. In addition to selling wine, maybe you could sell wine racks or glasses. If you have a relationship established already, they may also buy related products and services from you. For this strategy, you will need some sales and marketing, but the largest investment would be in new product development, so we can also call this the product-led growth approach. In general, all innovation will become a commodity, as your competition copies you and improves your mousetrap. You need to innovate to survive, and product development should never be neglected.
Capability development tactics
- Invest in research and development of additional features that customers that fit your ICP ask for.
- Acquire the rights to produce, integrate with, or use someone else's technology, if that exponentially increases the value of your offering.
- Buying new capabilities and integrating them into your own product and brand.
The last quadrant is not something a lot of companies do successfully - you typically go to the upper left of the lower right first. This quadrant’s strategy often would be called a pivot.
A company in the wine business that sells to people who drink wine says: “Hey, we have a certain capability, [maybe it’s a chemical process that we’ve developed], that allows us to do something completely different”. To produce a different product or different service and sell it to very different clients.
An example could be an ability to create some kind of alcohol product to clean medical instruments and sell that to hospitals. This would be an example of a pivot of a company that might be built on top of certain capabilities, like in this case a distillation process expertise. We don’t see this growth strategy a lot because this is not easy to do. Diversification requires you to change your positioning.
Value vs. virality
One can simplify the above four quadrants even further, and state that there are really only two ways to really drive the high growth of a SaaS business. You either have to create a business with customers that have a high Lifetime Value, and build a significant marketing and sales apparatus to acquire these customers (mostly the two quadrants on the left), or you build a product-led growth business with such a high viral growth potential that you don’t need to spend as much time or resources on sales and marketing.
Before you go start down your growth path, the leadership team needs to be aligned on the goals so they can make decisions within their teams to support that vision.
It's important to get your leadership team to build an Ansoff matrix together. Getting focused answers to these questions is crucial to facilitating the growth of your company. This method gives everyone on the executive team a voice in the matter.
A step-by-step guide for facilitating a growth planning exercise with your team using Ansoff’s Growth Matrix.