The founder of one of our portfolio companies had the idea to develop a tool that would enable schools to live stream sporting events at ESPN-level quality. By enabling schools to create such high quality productions, the schools would generate additional revenue by creating hyper-local online ad inventory.
While the founder had achieved some initial success with his SaaS go-to-market strategy, he ran into barriers increasing customer acquisition and scaling revenue. He had a promising business opportunity that was stuck in first gear.
Here’s how we worked with this solopreneur to overcome those challenges, get his SaaS go-to-market strategy in check, and eventually get his product to market nationwide.
The Problem: Is Your SaaS Go-to-Market Strategy Too Vague?
When this founder began his go-to-market journey, he thought that his Ideal Customer Profile (ICP) was already well defined enough that he did not need to go further. His initial ICP was “high schools.”
But like most markets at first glance, high schools are an incredibly large market with many different factors at play. In reality, this founder was confusing his ICP for his total addressable market or TAM.
Because he thought his ICP was this large, vague market, he ended up spending much of his limited go-to-market time and energy knocking on the wrong doors and having conversations that went nowhere.
The company’s other issue was focusing solely on in-person channels and events to make sales, which they quickly discovered was not a scalable strategy. This often is the case when a startup makes the assumption that their ICP is “old-school” or “doesn’t respond to email.”
The problem with those assumptions is that a solopreneur – let alone a sales team – can’t fly and drive to every high school in the U.S. talking to administrators in-person. If this startup couldn’t get its business going with another sales channel, the company would be doomed.
Because of these two issues, the startup suffered from slow growth and high customer acquisition costs. They needed to change, so they turned to GrowthX for help.
GrowthX was all-too-happy to apply our go-to-market strategy expertise to this portfolio company. After all, that’s our unique value proposition: our founders find product-market fit and find great founders to invest (and re-invest) in!
The Fix: Use Common Sense
Like most founders, this entrepreneur didn’t have much experience setting up a SaaS go-to-market strategy. However, he did have two important things working for him.
For one, this founder already had sales experience. He just needed to focus his efforts.
Second, he already had customers, so he knew that his ability to win deals at the bottom-of-the-funnel was not an issue. What he needed to solve for was the top of the funnel.
Our team at GrowthX realized that we needed to help him reorganize a few parts of his go-to-market strategy. When this founder got in front of his leads, he closed the deal.
We needed to help him maximize his time and throughput so that each person he spent time with at the top-of-the-funnel had a high likelihood of closing at the bottom.
To do this, the startup needed to refocus on Mr. or Ms. Right Now, instead of every high school in America. For every early-stage startup, your market consists of the following three customer types:
- Mr. or Ms. Right,
- Mr. or Ms. Wrong, and
- Mr. or Ms, Right Now.
The focus should be 100% on Mr. or Ms. Right Now. For Mr. or Ms. Wrong, the answer is to be polite, end the communications and move on. For Mr. or Ms. Right, the answer is a nurture framework – a passive campaign to remain helpful and top-of-mind if/when this customer type becomes Mr. or Ms. Right Now.
So how did this founder identify Mr. or Ms. Right Now? They needed to think about who would see the most immediate value of their product. Remember this company’s differentiator?
The end-goal was for schools to make money from their hyper-local ad network built through sports streaming. This is where we needed to work backward from.
If the customer is going to make a meaningful amount of money from ad revenue, the bigger the audience and the more engaged that audience, the better. So, we needed to identify high schools with big, highly engaged audiences.
To get to the answer we started asking a series of practical and logical questions, such as:
- Should the target schools be top performers in athletics?
- Where would the best target schools be located? In major metropolitan areas or in more rural areas further away from major sports teams?
- Should they be big schools or small schools?
- Which high schools have a big stadium, meaning they most likely have a large audience? (They wouldn’t build a state-of-the-art stadium if nobody came to the games!)
After answering those questions with the founder, we saw that big high school stadiums are often in rural areas far away from pro sports teams and other entertainment venues on a Friday night.
To narrow it down even further, we needed to think about the benefit that this product provided for the ideal customer profile. For example, the schools in the target geography facing budget cuts, and who would therefore benefit the most from generating additional revenue.
After this analysis, we knew we were looking for top-performing schools in the southeast with major football, basketball, and baseball programs. Then, all we had to do was turn to Google to look up state and division title winners going back 5-10 years. After that, we found schools in this category facing budget cuts, which is public information.
We ended up with a tangible list of about 200 schools that met all of these criteria. We also looked at the customers this founder already had from the past few years, and it turned out that they overwhelmingly also fit these criteria.
Let’s pause right here for a second. All of those questions we asked about the market and the research we did seem like common sense, right? Many founders just skip over these thought exercises. This founder was in business for a while but hadn’t taken the time to think about his specific target audience and refine his SaaS go-to-market strategy.
Once we had the new ICP figured out, we needed to fix this founder’s channel problem. It wasn’t feasible to drive around to all 200 high schools that met our criteria and meet with them in person.
Instead, we set up a multi-touch email campaign to send a few people from each of the 200 high schools on our list. This strategy is often used in account-based marketing. If you reach out to more than one person at the organization, you have a better chance of getting your foot in the door. We also used our email outreach tool to identify signals of digital engagement and then reached out via phone to the contacts that scored the best.
A list of 200 is still large, and a generic email will amount to spray-and-pray, reducing the impact of the work we did to generate a highly-targeted list. Therefore, we only sent emails to people who closely matched our criteria. We also gathered enough criteria on each contact that it enabled us to send personalized and relevant emails to these contacts.
While it took time to build and clean this list from the ground up, the investment in effort was quickly returned in tangible results.
The email campaign worked. As soon this startup sent it out, it got responses. This email campaign strategy significantly increased predictability while reducing slow, in-person sales cycles, which allowed the founder to spend his resources closing more deals.
Starting with the first campaign and progressing over several months, we were able to achieve an account-based reply rate of 35-40% consistently. Of those replies, Marketing Qualified Leads outnumbered responses of no-interest 3:1!
This go-to-market strategy also helped reduce customer acquisition costs because he wasn’t driving from town-to-town anymore. The founder also noticed increased conversion rates from the first meeting to close. This is because he was starting with more pre-qualified leads, so he saw faster, more predictable outcomes.
Today, the founder has nearly tripled revenue and has built a highly-scalable business with this new SaaS go-to-market strategy.
What can your startup learn from this founder’s journey?
1. Stop and learn from revenue to improve your SaaS go-to-market strategy.
If you have customers already, stop and take a moment to identify what they have in common. This founder tried many things to move the needle, but he never actually stopped to analyze his customer base to see if a pattern had emerged. If you don’t have many customers yet, the same logic still applies. Stop and digest the meetings you’ve already had to see what the common themes are.
2. A clear and targeted ICP may be a smaller market in the short term, but it will drive faster revenue.
This might feel counterintuitive at first, but it’s actually quite logical. Like this founder, you are strapped for time and resources. Rather than tackle a large, diverse market, you should get started with a small, targeted ICP that you can leverage as a springboard for your scale-up strategy. A small, specific market gets you to a bigger market much faster.
3. If you’re already successful at the bottom-of-the-funnel, then the top-of-the-funnel is about maximizing quality throughput.
If a founder is closing deals but can’t scale revenue, it’s probably because only one or two out of 10 meetings or leads are useful. The rest are just wastes of time. The good news is that this is a very solvable problem. At the end of the day, you’re choosing who you talk to, and you need to view that choice as an investment. Focus on filling the top-of-the-funnel with quality leads, not just a lot of them. If you focus on quality over quantity, you’ll increase deal velocity and conversion rates while actually saving time by avoiding deals that go nowhere.