In the first part of this three-part series, we explored the important role that a sales-focused Go-to-Market (GTM) strategy and a well-aligned operating model play in reversing declining revenues and sales productivity.
In fact, in today's rapidly shifting market, developing a strong GTM strategy is only the starting point of a continuous journey. To remain competitive and profitable, companies must continuously adapt their GTM strategy in response to external factors such as evolving economic developments, customer needs, technological advancements, and regulatory changes.
Here, we dive deeper into how external challenges impact your customer segments and serving models, and why a truly adaptive GTM strategy is crucial for sustaining profitable growth in an ever-changing landscape.
Navigating external challenges: The imperative of an adaptive GTM strategy
In a constantly evolving business environment, aligning a company's GTM strategy with its operating model is crucial for sustaining profitable growth. While growth strategy focuses on long-term objectives, the GTM strategy must be agile, responding swiftly to shorter-term changes in external factors. Shifts in social or technological trends, for example, can significantly impact customer behaviors, needs, priorities, and the overall profitability of specific customer segments. Additionally, the attractiveness of a customer segment can shift due to factors like reduced product relevance, increased competition, or regulatory changes, all of which may undermine a company's strategic fit and market position.
When external factors evolve, the effectiveness of a company's GTM strategy and operating model can quickly erode, leading to misaligned sales segmentation, serving models, overall offerings and underlying operating models. This misalignment can result in declining revenues and sales productivity. Therefore, continuously optimizing and aligning the GTM strategy and operating model is essential for regaining revenue growth and ensuring long-term sales productivity.
Mastering the sales-focused GTM strategy: Your path to profitable growth
A best-in-class sales-focused GTM strategy ensures profitable growth and sales productivity by deploying a differentiated sales and service model tailored to target customer segments, taking into account external factors and customer characteristics. In fact, a successful sales-focused GTM strategy maximizes revenue whilst minimizing the cost to achieve this. Here's how to get it right:
- Analyze profitability and revenue growth:
Begin by analyzing the true driver- and activity-based
profitability by business dimension at a transaction level,
including product and customer. This analysis should consider the
customer lifetime value and accurately allocated total customer
costs, including the cost to acquire and cost to serve each
customer. Overlay the gained profitability transparency with
revenue growth trends by business dimension, including product and
customer.
- Identify customer segments: Identify and
cluster customer segments by understanding their characteristics,
expectations, needs, and pain points, combined with true
profitability and revenue growth transparency. This ensures that
you target the right segments with the most appropriate
strategies.
- Assess serving options: Evaluate industry
benchmarks and competitive positioning regarding serving options,
ranging from basic to "VIP" sales/service levels. Map
these options along customer journeys and touchpoints for each
segment to ensure you're establishing the right
segment-specific serving model.
- Define the target serving model: Based on your analysis, create a differentiated serving model that aligns the value of each customer segment with the appropriate service levels. While some segments may thrive with premium sales and service options to meet their expectations, others can be efficiently served with more streamlined offerings, tailored to their specific needs, expectations and your strategic goals.
Keep in mind that external trends can materially impact steps #1 to #4 and therefore require continuous review and potential adaptation in all four steps: profitability and growth of customer segments, segments identification itself, changes in serving options, and target serving model. Thus, always factor in recent trends in external factors, such as increased customer interest in environmentally friendly services, and assess their impact on the characteristics of your target customer segments, amongst others. This allows you to stay relevant and responsive to changing customer expectations.
In summary, a sales-focused GTM strategy is about providing the right service to the right customer with the right resources and capabilities. By aligning your strategy with these principles, you can maximize profitable growth and sales productivity in a competitive landscape.
In our upcoming third article, we discuss the critical interlock between GTM strategy and operating model and focus on execution aspects to ensure profitable growth.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
