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Why market maturity is so important when selecting a go-to-market strategy for B2B SaaS companies
How do you know you’re using the right growth strategy for your market?
I’ve seen many B2B SaaS startups struggle to get traction because they’re using the wrong Go-to-market (GTM) strategy. This can waste capital, sales opportunities, and most importantly, time and can result in your team working incredibly hard to achieve only mediocre results while your competition gains ground on you.
But how can you know what strategy is best for your company?
Through our work with 70+ SaaS startups, we’ve found that it is critical to answer a simple question when creating your GTM strategy: how mature is your market?
The answer to this question may seem obvious, but it has significant implications that are often overlooked by many SaaS companies. Specifically, if you want to gain traction & grow in your market, you need to make sure that your GTM approach matches your market’s maturity.
Below I’ll outline how to identify the two main market maturity stages, their challenges and opportunities, and what your GTM strategy should be for each. With this information, you’ll have a great indication of how successful your current GTM approach will be and what levers to pull to improve your growth within your market.
Here’s what I’ll cover:
- Immature markets
- Mature markets
- Next steps
Immature markets occur to the left of Geoffry Moore’s iconic Crossing the Chasm model and are closely related to disruption, category creation, and the highly-coveted first-mover advantage. They are often referred to as “blue oceans” and are sought-after because they have little to no competition. If played right, they can be incredibly lucrative, but they also have numerous critical challenges that make it difficult to gain traction and grow.
How to identify an immature market
But how can you really be sure your market is immature? The easiest way to see is if there are no other companies providing the same solution as you (make sure you do some thorough research on this). But as competitors start to enter the market, it can become unclear how mature it is becoming and how to strategize accordingly.
Here are a few other signals you should look for to identify a market as immature.
- You’re the first mover. No one else has a solution to the problem you’re addressing.
- No competition exists when you’re selling your product or discussing it with prospects.
- Google searches show no other competitors.
- Buying google ad clicks is cheap.
- High-relevancy keywords have low volume.
- If there are investment rounds (PE, VC, etc.) in your category, they are relatively small and are investing in relatively unknown players.
- If you have paying customers, few have more than one annual renewal with you.
Opportunities in an immature market
Now that you’ve identified your market as immature, you have some big opportunities in front of you, if you can take advantage of them. These can lead to rapid and almost limitless growth we like to call T2D3. T2D3 stands for triple triple double double double. This is where you Triple your ARR two years in a row and Double it three years in a row, growing towards $100 million in ARR and the coveted “unicorn” status of Salesforce, Zendesk, Workday, Netsuite, etc.
Here are some specific opportunities that your company can gain by capitalizing on an immature market:
- If you move quickly, you can gain a first-mover advantage, solidifying you as the industry standard for all prospects for the foreseeable future.
- Even if you’re not the first mover, if you’re fast enough, you can gain the second mover advantage and capitalize on the mistakes of the first mover.
- Immature markets have low competition, so you can rapidly gain market share and revenue growth if you present a solution that solves customers’ problems.
Challenges in an immature market
It’s very important to note that you shouldn’t expect to waltz into an immature market and instantly see exponential growth. Immature markets have some significant challenges that require your company to think outside the box, be agile, and become customer-obsessed. If you don’t, your company can easily become stuck in a cycle of mediocre growth with no clear way out, while other competitors gain ground on you.
Here are some examples of challenges that can strangle growth if they aren’t dealt with appropriately:
- Immature markets are untested, requiring you to spend time and money to figure out if the market is actually interested in your solution and willing to pay for it.
- Prospects often aren’t solution aware or even problem aware, so you’ll need to invest heavily in educating the market early.
- Completely educating prospects means longer sales cycles and longer lead times before marketing initiatives gain significant traction.
- Typical Pay-Per-Click and Search Engine Optimization marketing initiatives may not cause instant growth, because audiences aren’t searching for information about a problem, or solutions to it.
How to create a Go-to-Market strategy for an immature market - “Making the Market”
Moving in an immature market means you’ll have to “make” it before you reap the benefits. This is because young markets have no proven GTM model in place. You’ll have to do the heavy lifting of finding the right type of customers, convincing them that they have a real problem, and that your solution is worth spending their time and money on.
One common misconception with immature markets is that entrepreneurs often expect prospects to immediately come to them and magically find their solution. If you’re lucky enough to find a market that has strong problem awareness with no legitimate solution you’ll be able to use inbound marketing to quickly prospects’ attention and convert them into loyal customers. However, if your audience isn’t “problem aware” (which is often the case when you’re the first mover), you’ll likely have to go out and find prospects through events, account-based marketing, outbound sales, and interruptive ads. (For more information on problem-awareness and marketing appropriately to customers, based on their awareness, listen to this podcast episode.)
This is hard work and shouldn’t be taken lightly. When you’re starting a market, expect to do a lot of testing as you get going, to make sure you have the right ICP and that your product resonates with your target audience. But if you can move quickly and establish a base of loyal customers, you will set the bar for that market and will be in a great position for T2D3 growth and the coveted “unicorn” status.
Here are a few tactics you can use to “make the market” and establish yourself as the leader:
- Take a stand against the status quo and become the thought leader in the market. Give prospects guidance on why their problems are important & impactful. Show them the way to a better future through industry experience, tips & tricks, and your solution (blogs, social media, podcasting, etc.).
- Build a community of loyal followers through relevant, thought leadership content.
- Claim SEO positions early. Conduct SEO research to make sure you show up for the most impactful, high-volume keywords out there. Look for problem-based and solution-based keywords to rank for.
- Run pay-per-click campaigns against relevant search keywords and on platforms where your prospects hang out online. Use engagement rates to refine your positioning & messaging early.
- Attend events and generate speaking engagements to educate the market and get the word out quickly about your solution.
- Focus on winning over the innovators and early adopters. Then, build credibility with the early majority through social proof and case studies to “cross the chasm”.
Mature markets exist to the right of Geoffry Moore’s chasm model, particularly in the early and late majority market segments. These markets typically have a clear group of competitors, a market leader, and an audience that is segmented into different demographics and firmographics. These markets are also competitive, with many companies vying for the same market share, which can make it easy for your company to get lost in the noise if isn’t differentiated from the competition. However, if you find the right market segment, you can quickly steal market share with customers whose needs aren’t met by legacy solutions.
How to identify a mature market
Mature markets are typically much easier to spot than immature ones. Once a market has become established, there is typically a flurry of activity of new entrants, sales and marketing spend, and product development to race to the top. Eventually, “feature parity” becomes the norm for the market, as lagging entrants catch up to the first mover. As this continues, market incumbents spend more and more on their Go-to-Market strategies, hoping to set up “moats” that will keep new entrants from disrupting their business models. This results in very crowded markets.
Below are a few conditions to look for when determining if your market is mature:
- There are many companies whose solutions and capabilities overlap that are vying for the same market share.
- Industry Analyst firms such as Capterra or G2 Crowd have an established “category” for your industry that ranks players on multiple criteria for prospects.
- Your prospects are in the early majority and late majority. They are more risk-averse, and want to see proof points and confirm ROI before they purchase.
- Your solution has reached Product Market Fit. People are paying, staying, and referring others to your service.
- Investment rounds in your category are much larger. You see Private Equity investments, Series C rounds, and consolidation through Mergers and Acquisitions in the market.
- You find yourself having to give discounts in order to close deals because competitors' functionality and positioning are so similar to yours.
Opportunities in a mature market
As crowded as established markets are, the right ones can be ripe for disruption. If you can successfully enter a mature market and build your solution around an unmet customer need, you can rapidly steal market share from incumbents and set a new standard for the industry. Plus, because mature markets are already solidified, the GTM testing has been done for your company and you’ll have a much better idea of who to target with what marketing tactics to grow your company. If you can create the right foothold for your company, you’ll be able to capture pent-up market demand and launch your company’s growth into high gear.
Here are a few factors that make mature markets appealing for entry and growth.
- There are clear blueprints of what works and what doesn’t in the market. The leaders have figured it out, and the laggards haven’t been able to crack it yet. Therefore you have great examples for your team to emulate for quick growth.
- Prospects are problem aware and solution aware. This means that you can use industry terms and they will instantly know what you’re talking about, why it applies to them, and how it can help them, allowing you to build messaging and execute effective campaigns much faster.
- There are clear benchmarks for success that can be beaten at every company level. You can very quickly know how effective your GTM strategy and execution is and easily compare yourself to the competition.
- There are often over- or under-served segments of the market that can be carved out to minimize competition and maximize differentiation.
Challenges in a mature market
The biggest issue with mature markets is how competitive they are. As a result, coming in with a standard position and GTM strategy will be a recipe for slow, frustrating growth, because you’ll easily be lost in the chaos created by your competitors. As feature parity increases, companies’ positioning and messaging become more and more similar, which can make it increasingly difficult to stand out. Many companies that are lured into mature markets, enter without fully understanding the product requirements for success or without understanding what their customers really want. In doing so, they fight very hard to reach the middle of the pack but are unable to rise to the top, resulting in increased spending with diminishing returns and slow growth.
Here are a few specific issues you may have when executing a GTM strategy for a mature market:
- It can be difficult to convince prospects that you’re better than incumbents with more resources, brand presence, credibility, and a more developed product than you
- It is very easy to get lost in the noise with so many competitors shouting so many similar messages.
- Paid media ad channels can become expensive quickly as many companies with large marketing budgets drive up ad costs.
- Companies in established markets often have already occupied the main segments of a market, making it difficult to uniquely position your company or serve the market without stiff competition.
- As a new entrant, Incumbents products have a head start on yours (sometimes decades-long). As a result, customers often have a high bar for performance and will be less willing to put up with bugs or product inefficiencies.
- As an incumbent, it is easy to become stagnant in your product development, positioning, and messaging, which can leave you open for disruption by a savvy new entrant.
How to create a Go-to-Market Strategy for a mature market - “Niche down and carve out”
Because mature markets are often so competitive, if you’re using the same GTM tactics as everyone else, you’ll be setting your company up for failure. Gaining market share quickly becomes a zero-sum game. And it’s really easy to get lost in the noise of the market, particularly as products become more and more similar.
If you want to avoid the fate of so many competitors, you’ll need to be bold and shake the market up. Take a unique position and stand out from the crowd. You’ll also need to have laser focus on a small portion of the market, and make it your company’s mission to serve that segment better than anyone else. This will require a lot of focus and will mean that you have to stay disciplined, often saying “no” to strategies that may be viable in the short term, so that you can achieve your long-term vision.
If you’re able to find the right market segment and properly differentiate yourself, you’ll be able to grow quickly, while leaving frustrated competitors in the dust. Your target customer base is also most likely product aware and solution aware, which will minimize your sales cycles and let you get more revenue in the door, faster. Finally, you’ll be able to create a beachhead that you can use to enter the market, with minimal competition. From there, you can expand to other, similar industries with a differentiated product and position, allowing you to increasingly gain momentum and market share, taking on (and beating) incumbent companies, even as a new entrant.
Below are a few GTM elements you can add to your strategy to help you gain a strong foothold in your market and prime your company for exponential growth:
- Conduct a TAM, SAM, SOM exercise to get your company laser-focused on an over- or under-served segment of the market that your service excels in. Learn everything you can about the companies and people in this segment.
- Build your sales and marketing efforts around that segment and specifically address their pains, fears, and dreams with hyper-focused messaging.
- Publicly become this segment’s champion. Take a stand against the status quo and rally your company around the issues that are important to your segment.
- Focus your product efforts on solving this segment's problems better than any other company.
- Say “no” to product or marketing initiatives that take your focus away from your target segment in order to allow your company the bandwidth to be the best solution for your target segment.
- Position yourself as the “best” or “only” solution for your market by combining your product strengths and market focus.
- Become a thought leader for your target market through organic content and organic social. Educate prospects on how to solve their problems and improve their lives. Show them that there’s a better way than the status quo.
- Generate customer testimonials and social proof in your target market segment, making you more credible than any other player.
- Create a referral program within your ideal customer group, to spread the word about your solution and have your customers do the marketing for you.
Now you know how to identify your market’s maturity level, the risks and opportunities it has, and what Go-to-Market strategy elements will help you capitalize on that market. Go build that GTM strategy the right way so that you can separate yourself from the competition and unlock your company’s growth potential.
Here are three steps to get you going:
- Define your company’s growth priorities
- Document your ICP & Personas
- Create a positioning and messaging framework
Now get out there and grow!