Hello, and welcome to the part II of go-to-market strategy. In part I, we discussed about One framework to define your GTM strategy I am Deepak, and I write an essay every week on product and growth strategy. Read more about the topics I am writing about here

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Understanding Channels

Last week, we discussed about the framework to create GTM strategy. It should be noted that at different stages of the product, the GTM keeps changing, i.e. different channels work well.

When you launch a product, you can do things that don’t scale like inviting your family and friends to get some traction. As Paul Graham advices startups in the early stages — “Do things that don’t scale”.

As the product grows and enters the growth stage (usually post series B), the founders often have to find 1-2 channels of growth that are scalable and repeatable.

The above points are true for both B2B and B2C companies, though the channels that will work for a B2C might be totally different from what works for a B2B.

First, let’s address the fundamental question — why do some channels that were working in one stage of the product stop working as the product grows? Geoffrey Moore answered this question in his book, “Crossing the Chasm” by explaining technology/product adoption lifecycle.

Product Adoption Cycle

Consumers display different behaviours when it comes to adoption of a new technology/product.

Specifically, the consumers can be divided into 5 parts on the basis of the ease of adoption. He calls them innovators > early adopters > early majority > late majority > laggards. There is a chasm between early adopters and early majority, and if a product can’t cross this chasm, it will fail. Hence the name of the book “Crossing the Chasm”.

Let’s discuss what he means by these consumers taking an example of short videos app. Instagram just rolled out ‘Reels’ as a competition of Tiktok, lets try to understand these segments in that context

Innovators — People who are deeply interested in this area and will try out everything new.
For short videos, these are influencers, looking for audience. They will be the first ones to try out ‘Reels’
Early adopters — People who quickly understand the benefits and try out the products.
Early adopters in this case are power users of both Tiktok and Instagram. They will try out ‘Reels’.
Early majority — Practical consumers driven by usefulness of the product
Loyal users of Tiktok or Instagram will check Reels at least 2-3 times to determine its usefulness. If they enjoy it, they will keep coming back.
Late majority — They will wait for something to be established and are largely driven by social proof.
Loyal users of Tiktok. Maybe over time, Instagram gets better because of higher number of influencers and celebrities over there. Add to that, it is useful in other ways like being a catalog of my close social life. When early majority starts talking about how good Reels is, late majority will start using it.
Laggards — They are not looking for a short videos app, and maybe will try it.

What’s your hot take? Will Reels reach early/late majority in terms of adoption? Write in the comments and lets fight it out :)

How Product Adoption Cycle Affects Channels

By now, it should be clear that when you are launching a new product, you can go to places where early adopters live, physically or digitally. These can be smaller in scale and work for you until you reach growth stage.

In the growth stage, you have to move to scalable channels when early or late majority lives. You also have to change your messaging to suit these consumers.

Now that we understand the product adopters and the importance of different channels at different stages of the product. Let’s dive into the channels available to us and how to evaluate them.

Channels for Promotion

The channels can be broadly classified into 6 categories

Online — Search Engine, Social Media, Blogs, Niche sites, Existing communities, Influencers
Offline — Cafes, Supermarkets, Stores, Offline Communities
Referrals — build an online referral program, or build a product worthy of telling others about (word of mouth)
Broadcast/Press — TV, Newspaper, Newsletters, Hoardings
Friends/connections — reaching them online or offline; one-on-one or broadcasting through social media.
BD or Sales — Generating leads and converting them through BD/Sales.

The Framework Revisited

Taking a cue from the last essay, the channels of growth will depend on your market, product, and pricing model.

The relationship or fit between the factors need to be evaluated as you can see it in this graph (in red)

The diagram is inspired by Brian Balfour’s 4 fits for growth, who wrote about it while at Hubspot as VP of Marketing. As mentioned in the last post, while brian discusses the 4 relationships, I believe there are 6 relationships.

Let’s start with questions that evaluate the fit between factors and apply them to build a growth strategy. From the last post,

Market < > Channel: Is the TG available on chosen promotion channels?
Product < > Channel: Where do people look when they are trying to find my product?
Pricing Model < > Channel: Will this pricing model work with the chosen promotion channel? For example, can you sell a product worth $100,000 through Facebook ads?

The first question is easy to answer. With some research, you can easily answer whether your TG is available on a particular channel or not.

The second question about product < > channel requires further probing into search, volume data, e.g. google, YT etc. If people are already searching for your product, or there are already communities built around your product, you are in good luck.

If you have built an entirely new category/product, and people don’t know about it. You will have to think a little about what kind of people will like this and then go to where these potential customers hang out, both online and offline.

The third question is where things get interesting :)

Channels < > Pricing Model Fit

There are two factors that play a role in deciding pricing model < > channel fit — 1. appetite for CAC and 2. sales complexity.

Usually high price products can also afford higher cost on customer acquisition as the economics works in their favour. Based on pricing they charge, their appetite to spend on CAC increases/decreases.

It is also true that products with higher pricing will have higher resistance to buy since the downside of something going wrong increases.

As the price keeps increasing, the buying become more complex decision and users will need more assistance.

free trial < demo < telephonic consultation < inside sales < field sales

So keeping these two factors in mind, we can map channels to pricing models

Online [Cost varies, high scale] — suitable for all when it comes to scale. In high priced products, users are asked to go for a free trial, followed by a virtual or face-to-face meeting.
Offline [Medium cost, low scale] — suitable for when you are starting out. This is more useful in gathering intelligence from users by visiting the communities where your users hang out.
Referrals[Cost varies, high scale] — suitable for all. The golden rule is if you can offer incentives for referrals that makes people use your product more.
Broadcast/Press [Medium to high cost, medium scale] — PR is useful to get early traction. Broadcast is useful for growth stage in gaining traction.
Friends/connections [0 cost, low scale] — useful in early stage for all companies to test your product.
BD or Sales [High cost, high scale] — useful for high priced products.

To sum it all up

— Online, Referrals are scalable channels for companies of all shapes and sizes, B2B as well as B2C.

— Friends/connections, Offline, Press help you gain early traction especially when people are not actively looking for your product because they don’t even know whether such a product exists; Broadcasting helps you gain traction in growth stage.

— BD or Sales work well for high priced products.

With this, I wrap this week’s post. If you want to read more, some of the good articles around this topic are:

Sales complexity by David Skok - https://www.forentrepreneurs.com/sales-complexity/
Summary of Crossing the Chasm - https://themarketingstudent.com/crossing-the-chasm-summary/
A book named Traction by Gabriel Weinberg. The writer is the founder of search engine, DuckDuckGo

In the next post, we will discuss in details around scalable channels for all kind of products— online and referral.

That’s it for this week! Hit me up if you have any stories, feedback, or insights to share. Otherwise, see you next week!

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Sincerely,
Deepak

The Growth Catalyst Newsletter

GTM Strategy : Understanding Channels