Companies undergoing digital transformation face a dilemma—how quickly should they transform without jeopardising their core business revenue? Here’s a guide on how to craft go-to-market strategies targeted toward sustainable transformation.
Over the last decade, major organisations such as Cisco and Hitachi shifted their core business from hardware toward software and services. Cisco is undergoing a major transformation to shift its core business model, with over 53% of its total FY21 revenue coming from software and services. The transformation these organisations go through is multifold: from traditional/core hardware business to being software- and services-driven, and from onetime sales to a subscription/as-a-service model.
As organisations go through such a transformation, one of the first functions that must rapidly adapt and lead the transformation is go-to-market (GTM). Organisations must revamp their GTM strategy and capabilities and enable their GTM teams (including channel partners) to sell in the new world without jeopardising revenue from their core business.
In this article, we will discuss an integrated approach to plan, design, and transform GTM capabilities in five key areas that can help companies stay competitive with new portfolio and business models while maintaining revenues from legacy businesses:
- GTM strategy
- Customer engagement model (CEM)
- GTM operating model
- Sales enablement
- GTM metrics
GTM strategy: Aligning with enterprise vision and strategy
When organisations are reinventing their core business, a holistic approach to transformation is critical for success. The digital industrial transformation framework lays out the transformation approach — beginning with a refresh of the enterprise strategy and vision for the new business/business model, determining where to play and how to win, helping leadership determine the capabilities required, and defining the operating model needed to execute the transformation.
As organisations revamp their GTM strategy, a critical step is to align it with the overall enterprise vision and strategy. The GTM strategy needs to align with the enterprise choices made at each step of the transformation framework. For instance, the route-to-market choices need to be aligned to the enterprise choices around where to play and how to win; the GTM capabilities and operating model need to be closely aligned with the enterprise model.
In 2017, Hitachi Vantara, then Hitachi Data Systems, a market leader in data storage, transformed itself into a provider of software solutions that use data to generate customer and operational insights. Hitachi had to reimagine its hardware-oriented strategy and business model to one that focused on software and services and identify cross-organisational capabilities across product, sales, and services functions. The organisation also reconfigured its product-led operating model toward a more services-led delivery model.
Pitfalls to avoid: Even well-designed transformation efforts may not drive desired outcomes if the company fails to communicate with stakeholders at every level — from the C-suite to the field sales team — and ensure they understand the transformation vision and strategy and are committed to it.
Customer engagement model: Focusing on optimal coverage
Once the GTM strategy is set, the next step is to determine a CEM that serves the new business as well as the core ones.
The purpose of a CEM is to provide the right coverage at key customer engagement points across the sales cycle. Organisations can leverage customer usage insights to tailor CEMs at different points of the customer journey to improve customer experience and outcomes. As customers become better informed, more digitally savvy, and faster at decision-making, the challenge is to ensure the CEM is in step with not only the transformation but also changes in customer behaviour.
Often, organisations equate the customer engagement model with seller coverage. But an optimal blend of sellers and technology is required to enable always-on, cost-effective customer engagement; we call this CEM the customer surround model.
A CEM for business model transformation must aim to redefine customer experience for each offering type (hardware, software, services, etc.). This will inform roles and sales coverage and help develop a map for employee actions that synchronise with the GTM operating model (the next key element). Four factors are key to the success of the CEM:
- Customer-centricity: The organisation needs to identify critical customer interaction points and enable the right customer experience using a combination of human and digital elements. The CEM design should consider both customer-centricity and product complexity.
- Collaboration across teams: It is important to drive collaboration across GTM teams, including sales, marketing, customer success, support, and channel partners, with clear accountability for each customer interaction point and smooth handoffs.
- Digital enablement: Digital enablement can maximise self-serve opportunities (e.g., self-service portals that allow customers to monitor usage, manage licenses, and seek support) and drive seamless customer experience to provide services at scale without exponential increase in resources needed.
- Measurable metrics: Clear definition and monitoring of criteria (e.g., customer engagement levels, quality of interactions, sales conversion levels) across customer touchpoints are essential to measure success.
Pitfalls to avoid: Optimal design is necessary to avoid cost-intensive implementation (e.g., it is important to keep in mind that every human role/touchpoint defined in the model may result in additional head count). Another key aspect of the coverage model is the handoff of responsibilities across human and digital channels. Lack of clearly defined accountability and an ambiguous handoff process can result in an inconsistent customer experience.
GTM operating model: Enabling both growth and preservation
The GTM functions are usually among the first to change as companies reinvent themselves. Designing a GTM operating model that enables growth of the new business and allows for flexibility and agility to scale GTM capabilities across legacy and new businesses is critical for successful transformation.
The following set of principles are key to defining a fit-for-purpose and agile GTM operating model:
- Design for flexibility: As the organisation pivots toward new business, it needs to design an overlay structure that provides the flexibility to focus resources where most needed. The model should be able to scale with the growth of new offerings, enable phased changes during initial transformation, and be able to absorb new business models, customer segments, markets, and acquisitions as the transformation progresses.
- Redefine seller talent profiles: The organisation may need to redefine and realign seller talent profiles. For example, a company shifting from hardware to the anything-as-a-service (XaaS) business model might need customer-focused sellers with consultative selling skills. This may call for the creation of new profiles and roles that are flexible enough to adapt to the evolving business model and priorities; they should be regularly reassessed throughout the transformation.
- Enforce accountability: Sales personnel should understand their roles and what is expected of them during each phase of the transition. Organisations must use appropriate metrics and changes in the sales compensation structure to track accountability. For example, a company transitioning to the XaaS model will need to define and implement XaaS sales/transformation metrics, such as the number of XaaS deals closed, to drive desired sales behavior.
- Align enabling functions with speed of transformation: New offerings, metrics, and compensation structures require a change in enabling functions as well (e.g., finance, payroll, HR, IT, etc.). For example, if the new sales compensation structure is aligned to subscription selling, the finance function should have the systems and capabilities necessary to track and pay sales commissions based on the new metrics. All too often, enabling function transformation is an afterthought, which limits the organization’s ability to execute on its GTM design.
Pitfalls to avoid: Organisations that rush to change the GTM organisation structure without the right GTM operating model may lose out on the opportunity to build and optimize GTM capabilities. Such organisations may also face challenges in scaling, redesigning, or redeploying GTM capabilities as market conditions and the business evolve.
Sales enablement: Enabling sellers to succeed
In one of Deloitte’s 2020 surveys with sales and sales operations leaders across business-to-business (B2B) organizations, 60% of respondents identified “lack of timely/relevant information during key customer interactions, resulting in lost opportunities” as a critical challenge, and 52% identified “limited insight to inform the next-best sales action with respect to an opportunity, resulting in lower deal velocity.” A holistic sales enablement approach can help overcome such challenges as the sales team prepares to sell the new business.
Organisations often equate sales enablement with sales training, but it involves much more: a strategic alignment of processes, resources, and technology to equip sales teams with everything they need for their customer interactions. Sales enablement should be defined more holistically to provide consistent and scalable sales support across offerings. Figure 2 (below) gives an overview of some of the capabilities involved in sales enablement.
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