Last year I did a podcast with Ramp on shifting your GTM strategy during a recession (you can check it out here) and wanted to unpack a few of these ideas for the Stage 2 Community as we kick of 2023:
To say the ‘23 planning season is different from the ‘22 planning season, is an understatement.
Gone are the days of lofty 400% growth goals and unfavorable burn ratios.
For many founders and investors alike, this is the first time building in a down market.
You’ve heard the advice to extend runway and monitor cash flow closely. You know purse strings are tightening, budgets are flat or down, and teams are being asked to justify any new purchase.
But what does that mean for your own ‘23 go-to-market plan? What should you be doing today to evolve your GTM messaging, plan, and team?
Your Message: Evolve to Survive
Is your business a vitamin or a painkiller? A vitamin is a “nice to have”, but a painkiller is a “need to have” that solves an immediate pressing problem. It’s going to be really hard to go to market with a vitamin in the coming quarters. If you aren’t already thinking about how your website, content and sales enablement needs to shift, it’s time to start.
Even if you’ve spent the last 2-3 years figuring out the ideal message for your ideal customers, that may no longer be relevant. In fact, there’s a really good chance that the message is no longer top of mind and that your ICP is shifting in real time. From where we sit, the messages most team’s are bringing to market have not shifted boldly enough.
You need to figure out a quick way to pivot and make sure that your message is resonating with a core audience you can target.
- Take a good look at who your best customers are today — who will weather this storm with you and who is at risk?
- Extract learnings from this data and build a list of hypotheses with your team — start with evolving your ICP and build corresponding messaging.
- Then, make a bold call and run at it based on what you know about your customers. You don’t have time to run long experiments and brand assessments for the next 6 months — you need to start learning and iterating on it in real time. You can do this by holding daily film reviews with cross-functional teams to see how the message is resonating.
Let’s use Outreach as an example. Back in August of 2020, their message was simple: “Make your team a revenue-driving machine.”
In other words, if your buyer is hiring 50 salespeople this year, Outreach will help them drive revenue:
Fast forward to June 2021. When we were all feeling the pain of transitioning to remote and hybrid work, their messaging was on point: “Close deals faster in the remote sales world.”
And today, where we know cash is king, they’ve moved fast on messaging again. If a buyer just reduced their sales team by 20%, but they still need to grow: “Add revenue. Subtract costs”:
We could all take a page out of the Outreach playbook 😊
Your GTM Plan: Back to the Basics
The story of a startup is one of survival. In a bull market, survival looks like outpacing the competition — raising the big round, creating the category, building a massive platform, and making a ton of noise. But in a bear market, tactics shift and survival takes on a new meaning — cash is king and customer retention takes precedence. Businesses need to revert to proven routes and exploit them, as unnecessary costs are cut.
Sales leaders are being asked a lot right now — deliver more with less in 2023. Hit a growth target, but don’t add headcount; cut burn, but accelerate the sales cycle and grow ACV… easy right? 😉
- Customer first: We are no longer talking about growth at all costs and we need to shore up our customer base first. Focus on your leading indicators of retention and customer health — per the point above, is your ICP shifting? Are any of your existing customers at risk? What plays are you giving your team to retain and grow accounts? Reprioritize your customer list and develop plays for your Account Management and Customer Success team’s based on churn potential, who is likely to extract the most value from your product, etc…
- Proven strategies: Double down on what’s working, but more importantly eliminate assumptions of new and experimental revenue expectations from your plan. There is less room for blanket experimentation in ‘23. It’s time to be hyper-focused in your approach to GTM. If there is a segment of your customer base that is outperforming (faster sales cycles, higher ACVs, increased engagement, etc…), lean into that. Have your BDRs, Sales and Marketing teams align around a narrower ICP for the short term and remove the distractions.
- Make sure comp matches: Incentives need to match the plan which means focusing on business outcomes, whatever they might be — retention, growth, cash collection, upfront contracts, etc....And while you’re at it, check the compensation packages (and equity!) for top performers. Tenured reps generally contribute a higher percentage of revenue — turnover is a huge risk and retaining your top performers is key to your ‘23 strategy. If you need a new plan, we recommend checking out the templates on comp hub to get started.
Your Team: Where to invest and how to make cuts
I was asked an interesting question during the Ramp podcast: “What role do you think redeploying people within the organization can play during an economic downturn?”
I provided what might be an unpopular answer, but I believe it.
People have super powers and they should be pointed at the work where they can have the highest impact. Now, more than ever, it’s imperative to have the right people in the right roles. Most companies don’t have the luxury of “testing” unproven people in new job functions right now.
As I think about the broader team strategy during this time, I think it comes back to focus — you want to set the company up to invest time, energy, resources, comp, and enablement into the core team, which means making some difficult decisions.
Our advice (which it turns out isn’t all that different in a bear or bull market):
- Run a meritocracy. Start by setting clear expectations for every single role in the company and then hold a high bar on performance. This means consistent feedback and acting on under-performers quickly — your team and bottom line will thank you. When leaders see a hiring freeze, they often settle into a mindset of trying to keep everyone that they have. Don’t fall into this trap. The company is still better off moving on from low performers and replacing them with better talent while keeping the cost basis the same. And there is a silver lining here; eliminating the hours of interviews each week will give you and your management team found time for effective coaching that can provide a real bump in productivity across the team.
- If it’s time to cut headcount, do it all at once. Try building multiple plans for the year, now.
- At a minimum you want to have a cash flow breakeven plan, along with the milestones you need to hit to avoid using it, in your back pocket.
- If you don’t hit the milestones you laid out in Q1, the best thing you can do is to act fast, make one set of cuts, communicate it thoughtfully and clearly (Stripe did this well) and rally everyone around the go-forward plan. It’s impossible to move forward with a team that is fearful of ongoing layoffs.
- Communicate: We’re talking about a lot of change year over year. As a founder, you are thinking about this every single day — how to survive, how to evolve, what it means for your customers, your employees, etc. However, for most of your employees, this is not their day to day. Avoid knee jerk reactions and blunt, drill-like communications when something is going wrong. Attempt to be transparent and bring them along for the journey on how the macro environment is changing business operations, why you are shifting messaging/ICP, and how you anticipate this impacting 2023 and beyond.
Ultimately, we know that great companies are going to be built during this period, but it’s going to take real leadership and quick thinking to not only survive, but thrive in 2023.