Go-to-market (GTM) strategies are critical for any B2B company looking to efficiently convert prospects into loyal customers. However, many companies encounter what is known as "go-to-market bloat," an issue that can significantly hamper growth and efficiency. This comprehensive guide will delve into what GTM bloat is, how it manifests in businesses, and actionable strategies to solve it.
What is Go-to-Market Bloat?
Go-to-market bloat refers to the inefficiencies and excessive expenditures in a company's sales and marketing operations that do not translate into proportional revenue growth. This bloat often stems from outdated strategies, misaligned objectives, and a lack of coherent data-driven decision-making processes. As Chris Walker explains, "The number one problem is the overinvestment in go-to-market without the appropriate return leading to macro effects called go-to-market bloat, which is bloated expenditures across the entire sales and marketing engine without getting the appropriate return."
Symptoms of GTM Bloat
Inefficient Marketing Expenditures
One primary symptom of GTM bloat is inefficient marketing expenditures. Companies often invest heavily in various marketing channels without a clear understanding of their ROI. This can include spending on events, digital advertising, and content creation that do not yield significant returns.
Excessive Sales Headcount
Another common sign is an excessive sales headcount relative to the amount of pipeline being generated. This results in companies frequently finding themselves with too many sales reps waiting at the bottom of the funnel that are capable of closing deals, but do not have enough pipeline to achieve their quota.
High Customer Acquisition Costs (CAC)
High CACs and long payback periods are direct indicators of GTM bloat. Walker highlights that "the average CAC payback period at private SaaS companies is between 48 and 60 months."
Causes of GTM Bloat
Siloed Analytics and Reporting
One of the primary causes of GTM bloat is siloed analytics and reporting. Companies often rely on bottom-up reporting, where each channel's performance is evaluated in isolation, leading to a fragmented understanding of overall efficiency.
Misaligned Metrics
Another significant cause is misaligned metrics. Companies often focus on vanity metrics like MQLs (Marketing Qualified Leads) instead of more meaningful metrics that reflect true business performance, such as CAC payback periods or net new ARR (Annual Recurring Revenue).
Outdated GTM Models
Many companies still rely on outdated GTM models that do not align with current buyer behaviors. The shift in how B2B buyers access and process information necessitates a reevaluation of traditional models. Walker emphasizes the need to move away from past strategies: "The fundamental difference from 2014 until now is that the maturity and scale of the internet and how a B2B buyer uses the internet to decide what to prioritize, where they want to consume information, and what products to buy."
Solving GTM Bloat
Implement Top-Down Analytics
To combat GTM bloat, companies need to adopt a top-down approach to analytics. This involves starting with high-level business metrics and drilling down to understand channel performance. Having a tops-down reporting process starts with top-level business metrics like growth rate, NRR, GRR , and sales and marketing percentages as a percentage of net new ARR.
Focus on High-ROI Activities
Companies should identify and double down on high-ROI activities while systematically eliminating low-performing investments. This involves a thorough analysis of each channel's contribution to overall revenue. According to Walker, "The fastest way to optimize your go-to-market strategy is to look at all the things in times where your sales team, your SDR team, and your marketing dollars are losing, or not performing clearly based on signal-based analytics, and systematically eliminate them.
Optimize Marketing and Sales Alignment
Improving the alignment between marketing and sales can significantly enhance efficiency. This includes ensuring that marketing efforts generate high-quality leads that are likely to convert, thus optimizing the use of sales resources. Walker stresses the importance of this alignment: "The number one way to get there, at least get partially the way there, is to improve the efficiency of your go-to-market expenditures."
Leverage AI and Automation
AI and automation can play a crucial role in reducing GTM bloat by handling low-value tasks and improving data analysis. This can free up human resources to focus on more strategic activities. While AI is not a silver bullet, it has a ton of potential in go-to-market by automating the low-value and manual tasks.
Conclusion
Go-to-market bloat is a significant challenge for many B2B companies, but it is not insurmountable. By adopting a top-down approach to analytics, focusing on high-ROI activities, improving marketing and sales alignment, and leveraging AI and automation, companies can streamline their GTM strategies and achieve sustainable growth.
The key to solving GTM bloat lies in a comprehensive understanding of where inefficiencies exist and making data-driven decisions to eliminate them. As Walker says, "we need to follow suit with transformational changes in how we run, plan and evaluate our go-to-market, not based on the incremental improvements that we've been doing for the past decade."
By addressing the root causes of GTM bloat and implementing these strategies, companies can not only improve their efficiency but also position themselves for long-term success in an increasingly competitive market.
