Strategy First, Tactics Second

In a recent conversation with the CEO of a well-funded SaaS company that had already achieved product market fit with a few thousand SMB and Mid-Market customers, I was asked what set of marketing tactics drove non-linear growth at Toast as we’ve scaled to over 100,000 restaurant locations.

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I’ve often been asked this question, and my answer has always been the same: You have to go “strategy first, tactics second.” The single biggest mistake that marketers make is copying growth tactics—often from competitors or companies they admire. As a result, they build funnels and programs that mirror the competition or, even worse, the buyer journey of a market they’re not even serving.

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I’ve had the opportunity to lead sales and marketing teams at Toast and other companies serving the full array of segments (Enterprise, Mid-Market, SMB, and vSMB) and buyers (Chief Customer Officers, Chief People Officers, Director of Benefits, Restaurant Owners, and even Entrepreneurs). To these folks, I’ve sold or marketed technology products of varying contract values from sub-$5,000 to well over $1,000,000.

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The only thing that has been consistent across all of these experiences is that the tactics that drive non-linear growth are wildly different. Copying someone else's growth strategy almost never works. 

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To win in any market—whether you’re a first mover or attacking an established market from below to disrupt it—you have to understand the market you’re serving and the buyer you're pursuing better than your competition. Keep reading for my thoughts on how to do it.

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Strategy First, Tactics Second

I’m always amazed by how much some companies spend on marketing relative to their investment in market insights. Said another way, if you’re going to spend $100,000 or $1,000,000 per month in paid advertising, why wouldn’t you spend $20,000 to $50,000 per year to understand if you’re even investing in the right channels and programs that increase your odds of success? You could burn millions on channels like paid or use ~$50K to get insights faster with a well-defined market insights strategy.

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Anytime I take on a new opportunity, a market insights capability is one of the first investments I’ll encourage a team to make—long before I’m looking for incremental marketing dollars. The second thing I’ll do before I make an incremental budget ask is to lock down an attribution model (but that’s another blog post entirely).

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The fundamental goal of establishing a market insights program is to really answer a few questions through qualitative and quantitative research that will guide your decision-making as a company. The simplest way to do this today is to stand up a panel survey that you run annually to truly understand:

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• Market: The size of the market you’re attacking and the key sub-segments where you’re currently successful or likely to be successful.
• Decision Frequency: The buying frequency of your initial landing product in the market as measured by the percentage of survey respondents that made a purchase during a set of previous time periods.  This allows you also to benchmark your churn rate and understand the percentage of decisions you’re participating in today.
• Discovery: For those who purchased in the past year, what channels did they use to discover the solution they ultimately selected? This will help you focus your marketing spend, funnel development, and testing efforts.
• Competition: For those who purchased in the past year, who did they purchase and why? This will enable you to expand your competitive intelligence efforts.
• Wallet Share: If you’re a vertical SaaS company, this is also an opportunity to understand how much they’re spending on technology and the breakdown across products to inform your multi-product strategy.

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The cost of running these programs has come down dramatically over time, and it isn’t that hard to get started. At prior companies, our “Market Insights” team has often started as a single summer MBA Intern with a consulting background and a small budget to fund the panel. Over time, you mature into a full-time hire in Product Marketing and, eventually, a standalone Market Insights team.  For vendors, there are plenty of panel survey providers out there.  

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If used properly, this investment's output is often empowering not only to your go-to-market teams across sales and marketing but can also serve as a guiding input into your company’s investment allocation decisions across functions (should we spend more in Sales or Marketing? Where should we allocate our next Marketing budget?, etc.) and innovation (should the next product we build be payroll or inventory?).

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As you formalize a research process over time, the program will help you see around corners. For example, at a prior company, we discovered that a 3rd party was playing a role in nearly 65% of purchase decisions, but one of our product launches had largely alienated that 3rd party, leading to friction in our funnel and a lower competitive win rate. As a result, we sunset the offending product and invested in a channel program to engage that 3rd party.

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Over time, with a consistent approach, you’ll build a historical record of the market you serve and understand key KPIs like the percentage of decisions you’re winning, etc. But it all starts with putting strategy before tactics. Only then are you really prepared to answer the question of which tactics to invest in to drive non-linear growth in my business.

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