The 10 most common GTM myths about early-stage SaaS
Hey - it’s Alex!
Welcome to Startup Business Tips, a bi-weekly newsletter, where I share with you 3 actionable growth tactics that will help you quickly grow your SaaS business from €0 to €1 million ARR 🚀.
Today we cover:
1️⃣ The 10 GTM myths for early-stage SaaS founders
2️⃣ The 10 GTM myths - Podcasts
3️⃣ The Sales Demo Cheatsheet
👉 Bonus material (software, content, news) - ChatGPT prompts for SDR & AEs
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1. The 10 GTM myths for early-stage SaaS founders
I’m speaking every week to early-stage SaaS founders and there are a lot of myths about GTM, that I hear over and over again.
That’s why we cover in today’s newsletter the 10 most common misconceptions about GTM for early-stage SaaS companies.
Myth #1: “My product sells itself, I don’t need marketing/sales”
You can have the best product in the world but if nobody knows about it, how will it sell?
If you have great features, that are making the life of the users easier, it is also about how you present these to your customers.
You need to tell them about how these features enable them to do things that they could not do without your product.
And this is the job of marketing and/or sales.
👉 So I’m sorry to tell you: You will have to learn how to sell it 🤠
Because in the end your success is a combination of 2 things:
1️⃣ good GTM will attract users, and
2️⃣ great products will keep the user.
Only if you do both, you will see success.
P.S. Even the best PLG products in the world, invest a lot in product marketing, messaging etc.
Myth #2: “We need a free plan to grow faster”
If founders can’t acquire paying clients, they often suggest: ‘Let’s add a free plan, so we grow faster…’.
Here’s the thing: In 95% of the cases, this will not solve your problem.
Instead do the following and then make a conscious decision if Freemium is a good idea for your business.
Step 1: Challenge yourself why you think you need a free plan
Option 1: If the answer is, that you fear that users would not pay for the product, then most probably you are not solving a big enough problem. So with a free plan, you would just ‚delay‘ the decision in the future, if you solve a big enough problem (where users are willing to pay). This is not a good idea. Because it hurts a lot if you spend months or years building something and then realize that no one wants to pay for it.
Option 2: You want users to test the product (without paying). Then you still have the option to offer a free trial (for a limited period, e.g. 14 days).
Step 2: Make sure your market is big enough (most probably it’s not)
There is a good article from Jason Lemkin about it. It says that you need around 50 million active users to make Freemium work (if you want to build a 100€ million ARR business).
Here’s the math behind it:
Let’s assume a 10€/month subscription (or 100€ per year).
So you need 1 million paying users (each paying 100€ per year).
With a 2% conversion rate from active to paying users, you would need 50 million active users for your product
👉 this is not the case for most SaaS products
So I’m not against freemium at all. I just believe that most early-stage SaaS startups (that are not attracting millions of users like Zoom, Canvas, and Linkedin of the world) are better off with free trials.
Myth #3: “We only lost deals because our product is too expensive”
This myth includes 2 things.
1️⃣ Do you track your lost reasons properly?
2️⃣ Are you sure it’s a pricing issue or rather that you’re not delivering enough value?
This being said, of course, theoretically this could be true. But what I see most of the time, is that ‚being too expensive’ is not among the top lost reasons. It’s rather the opposite, I see that most startups undercharge their product.
But to fix this and get a clear understanding of your lost reasons, here are a few things I advise doing:
✅ Track your lost reasons (dropdown in your CRM with pre-defined lost reasons)
✅ Reach out to them and ask for real reasons
✅ For PLG: add a custom cancellation flow/ exit survey if they don’t convert after the free trial (+ send them an email)
And if you see ‘too expensive’ among your top lost reasons, then this means the prospect did not understand/experience the full value of your product.
Then there are 2 things to do:
✅ Revamp the way you present the value (Messaging, Sales Demo, Value Proposition)
✅ Revamp your product, so it solves a big (enough) problem
Bonus: Analyze lost reason per customer segment. Focus on the ones with a higher willingness to pay for your product.
Myth #4: “We don’t have any competition”
This is not true. Every company has competition.
I like to separate between 3 types of competition.
1️⃣ The DIRECT competition
Those are companies, that do the same.
2️⃣ The INDIRECT competition
Also referred to as alternative solutions. There are other ways you can achieve the same result/ fix the problem, including Excel, manual work, hiring someone, or patching together non-purpose tools
—> Check out April Dunford’s Positioning book to learn more about it.
3️⃣ Status Quo
NOT DOING ANYTHING. Prospects stick to what they do right now.
It’s most of the time your biggest competitor and number 1 lost reason.
So when you need to position yourself in the market, you need to think about these different types of competition.
Because this is how prospects will evaluate and compare you.
Bonus: And if there is no competition, there is no problem to fix. So this is a problem for you.💡
Myth #5: “We run Google ads and post on LinkedIn, that’s our GTM strategy”
It’s important to understand that there is a difference between Growth Tactics AND GTM Strategy.
I like to separate between:
1. GTM Strategy
It’s your strategic foundation. Without this, all your tactics will show 0 results.
Your GTM strategy includes:
✅ Ideal Customer Profile
✅ Positioning
✅ Messaging & Value Proposition
✅ Pricing
✅ Sales Process
Create your powerful GTM strategy using my Free Workbook (helped 3000+ SaaS founders).
2. Growth Tactics
Running Google Ads, Posting Content on Linkedin, Doing Outbound Emails/Sequences, and Running weekly webinars.
These are all tactics, depending on the growth/marketing channels you choose.
The right channels and tactics depend on your GTM strategy (mainly on ICP and Pricing).
3. Growth Activities
Growth activities are what you need to do. Your (daily) input.
Like sending 5 Emails a day to ICP and commenting on 10 LinkedIn posts or publishing 1 blog post per week
Things you do consistently.
👉 You need to have a solid GTM Strategy first, otherwise, you will just burn a lot of money (as none of the tactics and activities you do will show conversions
Bonus:
When founders approach me and say our LinkedIn posts are not working or our outbound emails get 0 responses, the problem is most of the time not that they do not post enough, or that they don’t send enough emails - it’s a strategy problem (they target the wrong people, they position their product in the wrong way, they do not hit message-market fit)
Myth #6: “Our ICP is everyone, from prosumers to SMBs to enterprises”
As an early-stage startup, you don’t have the resources to serve everyone.
So say goodbye to your FOMO and start with your initial customers (Beachhead segment 🏖).
It might be true, that long term the product could be used by different types of companies, from small to enterprise. But this is not where you start. Each segment has a different GTM motion.
A powerful ICP is also more than Role + Company Industry + Region
For me, a powerful ICP is the combination of
1️⃣ Ideal Personas (User + Buyer)
2️⃣ Ideal Company
👉 I’ve created an ICP framework that includes more than 40 data points, including things like:
✅ Jobs to be done
✅ Pains & Challenges
✅ Metrics
✅ Daily activities
✅ software they use
✅ the content they consume
✅ important Trigger Events / Intent data
Myth #7: “PLG (Product-led growth) is all we need to grow faster”
PLG is great, and I would encourage most founders starting now, to build the product in a way, that enables self-service.
But it’s not a magic bullet and it does not mean, that you should always do it.
In the early stage, there is nothing more valuable than talking to potential customers daily. So doing demos & onboarding calls with prospects gives you a lot of feedback.
PLG is not for every SaaS product, generally speaking, it works better if
✅ rather lower MRR
✅ fast time to value
✅ not complex
✅ works in a single-player mode
So if PLG is the right solution, depends.
Myth #8: “My prospects want to see all features, that’s why I demo all features”
I’m shadowing a lot of sales demos. And it happens a lot, that instead of a demo, I see more of a product training.
And I know it’s tempting because you as a founder, love your product and want to show them everything.
But, a good demo focuses on the most important pain points/challenges of your prospect and shows them only the features that improve/change this.
So don’t make it complex for them to follow. A demo is not product training. The goal of a demo is to get them excited/hooked, to invest more time/energy to try the product, and see the overall value of it.
👉 Check out the Sales Demo Cheatsheet (at the end of the page) or my Ultimate SaaS Product Demo Guide
Myth #9: “We do all channels at the same time - Outbound, Content, PPC, SEO, Events, Affiliates…”
“We’re not growing, so we need to add more channels.”
This is something I hear quite a lot. But the truth is, each channel works differently. Each channel takes time to master. Each channel takes resources. And all this means €€€.
And €€€ is what’s mostly limited in the early stage.
So It’s better to focus on 1-2 channels that work and do more on these. Once you gain more traction, you can expand to other areas.
Of course, to find those 1-2 channels that work, this could mean doing smaller tests for different channels.
Here it’s also important to keep in mind, that some channels take longer naturally to get results (e.g. SEO, Partnerships), while others get instant results (Google Ads, Outbound).
Myth #10: “We don’t care about churn, acquisition is what matters”
Churn is like a ‚leaky bucket‘. You keep adding new customers on top, but you will lose them at the bottom. This means you’re not growing, you’re just burning money.
So please do not invite more people into a broken product.
Fix the holes in the bucket first, before you spend more money on adding new users.
Retention is a great indicator of Product Market Fit.
I always advise founders to
1️⃣ Track their churn rates
2️⃣ work on retention, if they see unhealthy churn rates.
Because if you don’t do that, you will burn a lot of cash. Cash you spend to acquire new customers, but if they don’t stick your CLV will be low and never really start to grow.
Bonus Myth: “We hire an agency to build our GTM strategy for us”
As I work as an advisor with the SaaS founders, this is also something I hear quite a lot.
Are you doing then the GTM Strategy FOR us????
My answer is always: NO
It’s the founders’ job to build their GTM. I’m just helping them to do the right things at the right time, keep them accountable, and reduce trial and error.
But it’s still them who need to do the operational stuff.
They need to go out and talk to potential customers to understand:
What their problem is.
What do they care about?
What’s wrong with their current solution?
What’s their desired outcome?
to figure out messaging that resonates with them.
They need to win their first clients, find patterns, iterate, and build their first version of GTM.
Don’t hire too early first sales manager and marketeer. It’s the job of the co-founders to do this early on. To build a GTM playbook.
Once you find, something that works, you can go from founder sales to founder-led sales.
2. The 10 GTM myths - Podcasts
For those of you who prefer listening over reading, I’ve talked about the 10 GTM myths in 2 awesome SaaS podcasts.
Björn’s SaaS Symphony podcast (german podcast)
In this podcast, we will discuss all of the Top 10 GTM myths (from above), plus 3 more GTM myths:
🚨 “We just need more leads”
🚨 “Expansion comes automatically”
🚨 “Our founder is a lead magnet”
You can listen to the podcast:
Maja’s GTM strategy podcast (english podcast)
It’s a 59-minute deep dive talk about each of the 10 myths.
You can listen to the podcast:
👉 Before you read on:
✅ Create your own powerful SaaS GTM Strategy with my FREE Workbook (helped 3000+ SaaS professionals) and GTM-strategy 1-pager Notion template (helped 1000+ SaaS founders/leaders)
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✅ GTM Advisory for early-stage SaaS founders on their way to hitting the first €1 million ARR. We’ll have regular 1-on-1 sessions deep-diving into your most important challenges.
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3. The Sales Demo Cheatsheet
One myth we covered was:
“My prospects want to see all features, that’s why I demo all features”
So to 10x your demo performance and don’t make the mistake of demoing all your features, make sure you apply the demo tactics below 👇
And if you truly want to deep dive into how to demo your product, check out my Ultimate SaaS Product Demo Guide.
It’s a step-by-step guide on the 9 crucial phases of a powerful sales demo, including:
Phase 1: Research and Preparation
Phase 2: Warm-Up and Intro
Phase 3: Framing for the demo and sales process
Phase 4: Recap of Sales Discovery or new discovery
Phase 5: Get Buy-In for the pain points and the desired outcome
Phase 6: Demo the 3-4 key features, that help them to solve their Pain Points
Phase 7: Get a reconfirmation
Phase 8: Pricing
Phase 9: Quick summary and next Steps
💪 Bonus material (software, content, news) - How to leverage ChatGPT for Sales (SDR & AE)
Koen Stam shared how to unlock chatGPT as SDR or AE in less than 5 minutes.
One prompt he shared is:
𝗣𝗿𝗼𝗺𝗽𝘁 𝟭:
"I sell [define product] to companies. These are the outcomes we provide:
Help companies [insert value prop 1]
Help companies [insert value prop 2]
Help companies [insert value prop 3]
Help companies [insert value prop 4]
What departments within companies should I target for my sales outreach?"
You will find the resource here.
Happy growth 🚀.
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GTM advisory (for early-stage SaaS founders on their way to hitting the first €1 million ARR) - Work with me 1-on-1 in weekly or bi-weekly deep-dive working sessions to build and execute your powerful GTM strategy.
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