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Secrets to Speeding Up Go-to-Market Expansion
DON’T CRASH AND BURN IN THE ARR RACE
If you’re planning for a Q1 GTM (Go-To-Market) expansion as part of your 2017 strategy, you need to hit the ground running as soon as possible. I know firsthand that every company’s GTM expansion process will be different. Where you are revenue-wise, in product and service adoption, your average sales price (ASP), and your existing client base all affect your strategy. I can also tell you that it’ll take longer and be more expensive than you think.
From growing our company in five markets and partnering with other expanding companies, I’ve learned that it’s important to look beyond the obvious data-driven decision. To expand successfully you need to understand cultural differences, what skills and experience really matter, and how to have long-term customer and employee loyalty. Learning from others is the best way to create a successful GTM strategy.
Before planning to GTM in a new territory or vertical, understand your motivation by asking yourself why you are expanding, what your goals are, and who you will need to make success happen. Typical reasons I’ve seen as the impetus for expanding are: success in an existing market, a desire to go up-market, or client demand. If your current market is becoming saturated or you’re hearing from current clients that they’re ready to use your services elsewhere, looking for new opportunities is natural for a CEO or VP of Sales.
To determine a new location or vertical, use culture and available talent supply as drivers. Your technology, ASP, and who you’re selling to will dictate your team expansion approach and whether you need to grow your inside sales or your enterprise sales team. When going to market in a new territory, move only two to three key people to lead your new office. Displacing too many people can backfire, and you will benefit more from hiring local talent.
WHO GOT YOU HERE WON’T GET YOU THERE
For small to medium sized businesses, it’s an interesting challenge to expand in a different geography. Not every city has the same level of talent. It’s impossible to get the same employee in two unique places. I’ve found it is very important to learn the traits of the available talent in the new territory you’re looking at before deciding to establish an office and start hiring. Finding top talent can be done in any location, but you have to know what type of employee your company needs. For companies opening inside sales teams outside of the Bay Area or Silicon Valley, you can expect cheaper talent and less of a battle to hire. Areas like Denver, Salt Lake, Austin, and others are great locations.
I’ve found that companies can get raw sales DNA straight from towns with universities or business schools. These companies then put in place processes to train these people. Although the onboarding is longer because of these necessary training processes, there is less hiring competition in emerging tech hubs. In these talent areas, you can expect more loyal employees that will work for your company longer and grow with your company. They will tend to have more realistic expectations and appreciate the job and salary you have to offer them. You can imagine the impact to your business and how you can better service your customers.
When it comes to hiring for enterprise sales teams, hiring from outside your company is best practice. Promoting internally will most likely not grant you the right talent that can lead a new territory or vertical. Your current top salespeople are successful within your established network. You need to look for talent that has enterprise experience, knows how to work remotely, and can hit the ground running. This experience with the enterprise structure is key to launching a new enterprise sales department. With the longer sales cycles and larger client targets, enterprise teams need to be built for each vertical and territory.
NO TWO CITIES ARE THE SAME
CEOs and Sales Leaders often ask me for my recommendation on what expansion location is best. Betts is in both established tech hubs and emerging markets. Each type of location has their pros and cons. You should prioritize culture as a way to determine whether or not a city is right for your company’s product or solution, regardless of established or emerging tech environments. Also, make sure your office space is sales friendly. Starting off in a co-working space like WeWork is a simple workaround to a long-term contract. You can explore a new territory without a real estate commitment. However, make sure you aren’t stifled in a communal work area. If you can’t make calls or host clients because you don’t want to disrupt your neighbors, you can’t turn a profit.
But what about Europe? If you’re looking to expand, Europe offers a brand new area to target and is appealing to many companies. My experience at Betts expanding from San Francisco to New York to London was eye-opening. We realized we had a lot to learn about the culture, talent pool, and the timeline for success. If you’re deciding between domestic and foreign expansion, you need to understand your target.
The sales cycle to recruit in Europe is much slower. We’ve found that there is less SaaS-experienced talent available. Companies that we see as established are viewed as startups. Comparing Europe to San Francisco reveals remarkable different experiences, expectations, and realities. Expanding to Europe as an investment that takes time to develop. I’ve learned that expanding to Europe always takes longer than anticipated to become profitable. Setting a realistic timeline, reasonable goals, and taking the time to understand the workings of your new area is how your company will become successful in Europe.
SO HOW SHOULD YOU START?
Regardless of your current success, set the right expectations. Start small to grow your company. Find a core team, pick a location that makes sense for your business, and do your research. Today’s ARR race can sweep many VPs and CEOs into a whirlwind of data analysis, projections, and rash decisions. Don’t lose sight of the basics of how you initially started your headquarters. You found success without access to these larger tools because you understood your market and matched to your culture. The same applies for your expansion.
Want to learn more? Click here to watch Carolyn Betts Fleming’s full webcast on Going to Market in New Territories & Verticals.