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Strategy & Planning Updated on: May 19, 2023

SaaS GTM strategy: What does GTM mean and how do you plan for it?

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A go-to-market (GTM) plan is the strategic action plan you’ll be implementing to reach your target audience. For start-up SaaS companies that are ready to scale and jumpstart their growth, you’ll need first to answer one fundamental question. How do you decide where to go-to-market

Chances are, most of your key stakeholders, from investors to board members (sometimes even spouses), will have an opinion. Recommendations may be based on past experience, market research, gut feeling, or early sales. If you’re unsure where to start, we have this specialized B2B SaaS Go-to-market plan template that successfully helps our clients find their strategy.

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The three Fs of the SaaS GTM approach

Before you decide where to place your SaaS marketing dollars and efforts, consider this fact-based approach: focus, fit, and feasibility. The three Fs.

1. Focus: know where the money is

There are three different areas to consider when finding your product-market fit for your B2B SaaS venture: TAM, SAM and SOM. Let’s get you up to speed on what they are.

Knowing what share of the market you can claim helps you to understand how big the market is in the first place. For that, look at the total addressable market (TAM), which considers the entire market demand for your SaaS product or services, or in other words, the total amount of money spent in your specific category.

At first, TAM may look like an impressive figure. But the only way you’ll be able to access all of it is if you’re the only player in the category and can market to the entire world, which brings us to specific addressable market (SAM), the portion of the market which you could reasonably reach and service.

Your SAM will be limited compared to the TAM because you can only service a part of the market. For instance, your SaaS solution only integrates with a certain ERP system. That rules out prospects that are on another system.

That leaves you with SOM, your specific obtainable market. SOM will be less than SAM. It’s where your SaaS rubber hits the B2B road. It represents the portion of the market you can sell to right now, a function of your time and resources.

There may be a big addressable market in Europe, but without a team that sells there, you can’t take advantage of it. SOM is driven by how many people you have that can do the work, make the sales calls, do the demos, and install the systems today.

2. Feasibility: explore where can you realistically play

Feasibility answers the question: Where can you play that gives you the best chance of winning?

Let’s say your B2B SaaS solution automates the procure-to-pay process. It may be perfect for any vertical industries such as healthcare, oil and gas, financials, and more. But with limited resources, you can’t market to everybody, so you may decide to first establish credibility in the financial sector.

Within the vertical financial market are several sub-verticals: banking, insurance, private investments, real estate, government, etc. The easy thing to say is that banking is the biggest sub-vertical, so that’s the area to focus on. But banking may not be the most feasible for your service.

At this point, you need to look at your current penetration in these markets and answer the questions below:

  • Where do you have the most customers? 
  • Do you have case studies or testimonials that give you instant legitimacy? 
  • Do you have content that would help make the easiest and quickest sales?

Think of an X-axis that represents market penetration or position. It’s a percentage defined by your annual recurring revenue (ARR) per sub-vertical divided by the SOM ARR. Those sub-verticals with the most significant market penetration and the best market position go furthest to the right on the axis.

In our example, our market presence—and the highest feasibility for success—increases from private investing to banks to insurance.

It’s always better to establish yourself as a leader in a very specific sub-vertical within the industry than to try to cater to the entire industry as a whole. Doing so allows you to improve your service quality, develop industry-specific features, and empower your sales and marketing team to get faster traction.

3. Fit: define the best market for you

It may be feasible for you to market to several financial services sectors. After all, you have established credibility within several of them. However, some will be a better fit for you than others.

One way to zero in on the best fit is to create a Y-axis to complement our penetration/position rankings. For example, the Y-axis is a relative ranking that reflects any number of fit criteria: technology, competition, and complexity.

The technological fit could be how well your solution integrates with systems that most customers in these sub-verticals are using. Competition would reveal how crowded the marketplace is with similar products. Complexity could be standard integration versus customized or multiple decision-makers or layers of approvals. For instance, government agencies may have more decision-making levels to overcome a final sale than private entrepreneurial investors.

Focus + Feasibility + Fit = SaaS GTM strategy

By looking at where the various sub-verticals fall to each other in the sectors defined by our X and Y axes, you can see where the most promising opportunities are for going to market.

Those sectors where we have the best existing penetration coupled with a better technological fit or fewer competitors would take the highest priority. Sectors could be ranked and marketed to in order as resources allow. Doing so gives you the best possible chance for a go-to-market strategy for startups to be successful.

Related article w/ template

How to use Ansoff’s Growth Matrix to guide your SaaS go-to-market strategy

Kicking off your B2B SaaS go-to-market strategy? Use our Ansoff Growth Matrix template to lay out your top priorities.

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