Forum Ventures Playbook: Go-To-Market for Early Stage SaaS Companies

This is a Tactical Guide to Go-To Market strategy so you can hit the ground running with sales and  marketing.

Part 1: Context

• Understanding Go To Market (GTM) and what that means for startups

• The connection between your ideal customer profile (ICP) and GTM

Part 2: Tactics

• The 7 pillars of a strong GTM strategy

• How to map GTM elements to your ICP

Part 3: Next Steps

• Linking GTM to marketing and sales

• Additional tips and how-to guides

The Basics of Go-to-Market

Go-to-Market (GTM) strategy is the plan for how to bring your product to customers - how you find and reach the right customers and then how you talk about it, sell it, market it, and price it in a way that gives you a competitive advantage.

GTM Inputs:

1. ICP identification

2. Founder story

3. Value proposition

4. Pillar story

5. Positioning

6. Pricing

7. Customer Champions

Pillar 1: ICP Identification

Ignore your TAM. Focus on your ICP.

Narrowing to an Ideal Customer Profile works because:

• You can test and iterate more quickly.

• You only need to build one acquisition channel to get multiple customers.

• It's easy to grow from and build a sustainable, repeatable sales process.

The Total Addressable Market (TAM) is a big, sexy number. But it's a false idol: 90% of your TAM won't ever become your customer (ever).

Your Ideal Customer Profile (ICP) is a prospect that:

• Experiences the pain your solution solves right now.

• Has a relatively simple decision making structure OR is a known early adopter of technology similar to yours.

• Has (or can allocate) budget to solve their problem.

Focus on your ICP to get a foothold and give you the resources / traction necessary to take on more of your TAM later.

ICP Gets You To Industry Standard

At early stages, no one outside of Innovators and Early Adopters will buy your product.

Innovators want to be part of a community at the cutting edge. They also want to feel they are helping to build the future of the industry. Innovators are great for candid feedback and testing new ideas.

Early Adopters want to be the first users of a polished solution. They want to feel connected to innovation and be seen as innovative. Early Adopters are great for testing scalable sales channels or messaging while also maturing your product with advanced features.

Knowing Your ICP Segment Size

The key to a successful GTM strategy is preparing for the right size of segment. Depending on the type of customer you're going after-SMB, Mid-Market, or Enterprise-your initial segment size will look different.

Use Forum's Market Sizing Template to estimate your market opportunity.

Refine Your ICP: Characteristics to Look for

Note: This is not exhaustive. We've included a list in the appendix of other ICP characteristics you can refine by. The key is to look for what makes sense in your business - all of these could work for you and none are prescriptive.

Example: Identifying Your ICP

Wave made their initial platform completely free and only charged a small fee for payment processing. That reduced barriers to sign up and created community feel - Wave only won when freelancers won. Result: After ~10 years of focusing on freelancers, over 2 million now use Wave for invoicing. Outcome: ~$400M (USD) exit to H&R Block in 2019.

Use Forum's ICP Framework Template.

Pillar 2: Founder Story

Founder Stories Help You Connect With Your ICP

In early stage startup sales, your story is critical. Stories are how humans connect with one another and find common ground. It also makes you much more memorable. A strong founder story explains why you started the business, making it easier for people to resonate with your product.

The founder story is the progress and moment when the founder identified the problem, realized why other solutions failed, and built the right (your) solution.

Done well, your founder story demonstrates why your solution is the only solution for the problem your ICP is facing. If the founder themselves is not on a sales call, their surrogate needs to be able to share the story with the same conviction.

The narrative arch of a Founder Story:

• The challenge that led to experiencing the problem.

• Your personal experience with the problem.

• The trends that helped you realize the true scope of the problem (that you weren't the only one)

• How you identified the root of the problem.

• Why current solutions didn't solve your problem.

• What you knew the problem really needed.

Use Forum's Value-Based Founder Story Template to build your founder story step by step.

"Use your founder story to frame the problem in the buyer's mind." - Whitney Sales, General Partner @ Forum Ventures, Creator of The Sales Method

Founder Story Example

Firstbase: We missed our kids walking, laughing and talking for the first time.

We realised the need for Firstbase in our last startup. We decided to be remote for a number of reasons but most importantly we saw it as a massive quality of life upgrade. Chris had been working away from home a lot. He missed his daughter walking, laughing and talking for the first time.

When we founded our own business we wanted to be there to see them grow up and have more time for the people we cared about most. At the same time, we knew we'd be far more talented and cost efficient. We would be constrained to hiring the best person we could afford in a 30-mile radius of a physical location; we could attract the best people in the world for every single role.

So we became a remote team. Then immediately started experiencing significant challenges and obstacles with operating that way. Something we were incredibly passionate about was providing a great remote work experience for our team. We recognised immediately how expensive and time consuming that was. Things wouldn't turn up, people would leave, it all led to a terrible experience for everyone. Without the right tools and equipment it is incredibly difficult to be as safe, comfortable and productive at home as you would be in an office.

Putting our heads together, we set out to solve this problem for ourselves. Firstbase emerged from our desire to provide our team with the best remote work experience on the planet. Our prior experience meant this was a problem we were uniquely placed to solve incredibly well.

Chris spent 3 years putting the same physical equipment we were giving to our remote workers in the most challenging and remote environments on the planet. Trey managed the deployment, support and training of mission critical cyber security systems and technical infrastructure for the US Airforce in the most challenging environments globally.

From there, we began mentioning 'Firstbase' to friends building remote teams. We heard the same things we already experienced and we knew it was a massive problem for them as well. We launched Firstbase in late September 2019 and began building out the product...

Pillar 3: Value Proposition

"If there's not a compelling reason to change, people just won't" - Nora Khalili, Principal Consultant at NJK Consulting

Customer Calls Help You Uncover Value Props

At this stage, customer calls are for understanding, not sales. Selling too early could damage your credibility.

42% of startups fail because they haven't established a market need (CB Insights)

Customer Call Type 1: Problem Discovery

Customer Call Type 2: Pain Validation

This step is when you talk to people in your ICP to validate their pains.

Aggregating Data

After 5-10 Customer Calls: Aggregate Everything

Primary goal: Tracking against hypotheses

• Is the pain real for customers?

• Did you ascribe the right value?

• Are other factors at play?

• Are we building the right product/feature?

While all data is ultimately for informing correct ICP identification, you should also have clear hypotheses that funnel into ICP identification around pain, price, and what they've done to solve the problem so far.

Informing Product Development

Key to remember: Wait at least 3-5 calls before making any changes to the product roadmap. If a customer call reveals a wildcard you weren't expecting, adjust future call questions to validate before changing product direction.

Example: You were expecting "Y" to happen as a result of X, but then a customer said "A" actually happens. Not: "When you do X, does "A" happen?" But this: "What happens after X?"

Note: Keep track of all customers that strongly identify with your mission on top of those in your ICP profile. Mission-aligned customers could form the basis of an informal customer advisory board down the road.

Prioritize Value Propositions After Aggregation

Prioritization is about finding a burning need for customers that will make them happy to spend money to address. You'll typically identify that need in one of these four categories:

Translate Prioritized Value Props Into Marketing Messages

Value Proposition Example: Evernote

Pillar 4: Positioning

The Positioning Journey: Inputs

Before creating your positioning documents and messages, make sure you have the right inputsVillains

The Positioning Journey

1. The Problem

• Villains (time, pressure, philosophical issues)

• Alternatives (workarounds, competitors, doing nothing)

2. Guide

Your value proposition that tackles all alternatives a customer faces and assuages all villains.

3. Plan

How to purchase, how to work with you, and how to overcome their villains and do better than their alternatives.

4. Action

Make sign up easy if a prospect is ready OR make engagement easy (i.e. a newsletter) if they aren't yet ready to buy.

5. Comparative

Your differentiating feature, proof point, credentials, or case study to show you can deliver on your promises and mitigate risks.

The Positioning Journey Example:

#paid Formula:

"Marketers are interested in influencer marketing but are concerned about shady influencers, long lead times, and limited performance data. #Paid is a creator platform that helps marketers quickly launch campaigns directly with the creator. This means they can develop a whole campaign in under a day with performance analytics to track campaign success or triggers to notice if the campaign isn't delivering and shut it off."

Pillar 5: Pillar Story

Write a Pillar Story to Amplify Founder Story and Value Propositions

A Pillar Story is like a manifesto. It puts your Founder Story and Value Proposition into one long-form blog post that can be shared internally, with prospects, and with anyone who wants to understand why you're building your startup.

The Pillar Story is powerful and flexible:

• Publish it as a standalone post (See Next Steps in this deck).

• Break it up into additional blog content.

• Use it internally to train value proposition and founder story.

• Use it to inform sales scripts and marketing copy.

• Use it to provide a guidepost for product development and to remember competitor pitfalls to avoid.

The inputs of a Pillar Story

• Founder Story, plus;

• Value Propositions, plus;

• Customer language and phrases / key words used (learned from validation calls).

Together, these inputs form the narrative of your Pillar Story

• Who you are and the problem you faced.

• Trends that led you to problem identification.

• Issues with current solutions.

• Realization of what a solution should be.

• Proof points and value of your solution.

Use the Pillar Story Template to write your story.

Pillar 6: Pricing

Develop The Right Pricing For Your ICP

The Goal of Pricing

1.1% increase in average revenue per unit (ARPU), also known as average contract value (ACV) 2. Net decrease in customer churn Pricing strategy is ongoing in early-stage SaaS, meaning once you hit the 1% increase in ARPU and net churn decrease, it is time to look again at your prices and packages.

Elements of Pricing Strategy

SaaS pricing cannot follow traditional models like cost-plus, try-and-see, or competitor-based pricing. Instead, it needs the following inputs:

1. Sentiment

2. Willingness to Purchase (WTP)

3. How prospects feel about your product relative to their pain

4. Budget allocated to solving the problem you sell a solution forPersonas

WTP-based demographics and psychographics

Value Levers The factors that determine when the price goes up or down "Pricing is the exchange rate on the value you're creating in the world"

Deviation from Median WTP How to Reach Pricing Goals: Differentiable Features The only way to run successful pricing tests is to know your differentiable features. This is not about what is unique about your product compared to competitors, but what customers are more willing to pay for (WTP) when it comes to solving their problems or giving them desired benefits. Add-Ons Low Value / High WTP Differentiable Features High Value / High WTP Trash Land Low Value / Low WTP Core Features High Value / Low WTP Relative Preference Magnitude

You can charge more for a select group.

You can charge more for everyone Customers don't care This is expected of your solution

Pricing Research

Pricing should first focus on differentiable feature identification then range of pricesDifferentiable Features

Use the "most-least" valuable comparison. Instead of asking people to stack rank a list of features or benefits, give them a comparison and ask them to choose between the two which is most versus least valuable.Example: Coffee

Of these two features, which is the most valuable to you and which is the least valuable to you? 1\. Taste 2\. Location or bean originRange of prices

Pick a range of prices to test, and then ask the following questions:

• At what monthly price point does product become too expensive that you'd never consider purchasing it?

• At what monthly price point does product start to become expensive, but you'd still consider purchasing it?

• At what monthly price point is product a really good deal?

• At what monthly price point is product too cheap that you question the quality of it?

The best research source is your own customers, if possible. If not, consider professional research platforms like Qualtrics, Survey Monkey, Survey Gizmo, and Lucid Technologies.

Pricing Strategy Steps

Develop buyer personas:

• List demographics and psychographics.

• Hypothesize pain levels, problem magnitude, and proposed willingness to pay.

• Suggest a proposed price range and value levers based on pain and WTP Conduct sentiment research

• Analyze for differentiable features.

• Survey for willingness to pay along your proposed price range.

Consider positioning

• Look at your positioning and what it might say about your price (high end, etc.).

• Consider potential distribution partners and their positioning that might impact your pricing strategy.

Set prices and test

• Set a number of packages and price levers / value metrics (best practice is 3 to start).

• Set prices based on the highest average price of "Really good deal" from surveys.

• Run tests to see if conversion increases and watch for churn on those customers.