The Hamburger GTM: The Winning Go-To-Market Strategy

This article originally appeared in TechCrunch

The best Go-To-Market (GTM) strategies for startups are like hamburgers:·

  • The bottom bun: Bottom-up GTM
  • The burger: Your Product
  • The top bun: Enterprise Sales­
Hamburger GTM Strategy

In the Hamburger GTM Model, your product is the meat. In the old software world — think Oracle and SAP — sales were the competitive advantage. Today, we live in a world of product-led growth, where engineering (and the software they have built) is the biggest differentiator. If your customers love what you’re building, you’re headed in the right direction. If they don’t, you’re not.

However, even the most successful product-led growth companies will reach a tipping point because no matter how good their product is, they’ll need to figure out how expand their customer base and grow from a startup into a $1B+ revenue Enterprise.

The answer is the Hamburger Model. In this post, we’ll go through each layer before talking about some of the best ways to implement the model successfully at your company.

The Hamburger Model

1. The Meat: Product at the Center: The Hamburger Model starts with a great product. As a founder, this means you don’t need to think about revenue on Day 1. You do, however, need to obsess over your customers, what they want, and how to build it. Nothing is more important.

2. The Bottom Bun: Users Not Leads: In a top-down sales model, marketing creates leads that are then converted into sales by enterprise reps. In a bottom-up model, marketing creates users — not leads and those users are never touched by sales. For companies that have been customer-obsessed from the very beginning because they built something people love, this bottom-up model can feel far more natural — and fuel a successful business.

3. The Top-Bun: Building Enterprise Sales: Even the best bottom-up sales models aren’t enough on their own. Every company eventually needs top-down sales. It may sound counterintuitive, but even the companies most famous for their bottom-up approaches now have enterprise sales teams. That’s because there are certain types of customers — for example, healthcare, insurance, government — that usually require salespeople in order to engage with them due to compliance and security reasons.

These are the basic elements of the Hamburger GTM Model: a killer product that sets you apart, a bottom-up sales strategy to convert users into paying customers, and a sales team to go after bigger customers that require more attention.

Assembling the perfect burger — or perfect sales model — is a lot more complicated than it sounds. We’ve pulled together some of the biggest do’s and dont’s of implementing the Hamburger Model:

1. Avoid the messy middle — The gray area of hybrid bottom-up and top-down selling is in the middle. When you get an intro to a large, global Enterprise, it’s very clear that you need to bring a salesperson into the conversation. Likewise, when a 5-person startup signs up on your website, you know that company should ultimately convert with a credit card. But how do you handle deals that are less clear cut? Who should be responsible for a prospect with a few hundred employees? A few thousand? What about a big brand name with a small team signing up? Where to do you draw the line?

This question becomes even more important when you have different stakeholders responsible for different motions — each with their own incentives. Do you give the lead to sales (they always want it), or leave it to customer success (who will rarely fight for it)? Is the prospect to whom you are talking to a free user, or a lead? What’s the difference?

In this danger zone, our instincts are often wrong. It’s easy to hand the prospect over to the sales team, since they are the loudest voice and represent the fastest path to revenue. But this risks both distracting your sales team, which should be focused on larger prospects, and giving the customer a sub-optimal experience.

In practice, a good rule of thumb is: if in doubt, try bottom-up. Make sure your bottom-up user experience is simple and straightforward. You want to be the easiest company to get started with.

2. Treat your community right: A community is an incredibly valuable thing, but cultivating one is complicated. Communities are about connection over a long period of time, not one-time transactions. It’s why one of our portfolio companies, OrbitLove, is helping to pioneer a “Go-To-Community” model which treats end-users (not leads) as first-class citizens and focuses on creating the kinds of great experiences that can help convert users into paid customers and external promoters / advocates. For a deeper dive, see this OrbitLove blog post.

3. Build a Champion Network: How do you convert smaller customers into larger ones over time? Instead of trying to pull mid-market deals into an Enterprise sales cycle, focus on turning users into champions and letting them bridge the gap for you. IBM’s adoption of Slack is a great case study. For companies with a hybrid motion, that means cultivating a network of Champions who can share ideas and serve as advocates within their own companies — offering a path to moving a small team to an Enterprise deal.

4. Use pricing as a growth lever: In the Hamburger Model, pricing itself can be an important lever for growth — but only if you align price with customer value, and create natural on-ramps for customers to pay you more over time. This often means a usage-based pricing model, which is increasingly popular for product-led growth companies. (We covered this in our MAP Pricing post.) When you create a pricing model like this, the important thing is to make sure that each pricing tier adds more value. For example, the paid tier should be attractive enough and have that much more of a differentiation that customers don’t remain with your free plan forever. On the flip side, the Enterprise tier cannot be so expensive that these customers (who drive most of your revenue) feel like they are getting the short end of the stick.

5. Practice “Just in time” sales expansion: If your product delivers what people need as soon as they need it, you can create “just in time” moments to upsell a customer. The idea is simple: as a customer, would want a salesperson to call you about an “adjacent product” at a random time? Or would you prefer it if the product itself sensed that you were trying to do something different and offered a solution? The features, functionality and breadth of your product should unlock the next use-case and a path to incremental monetization — creating a virtuous cycle where product innovation is directly tied to expansion. If your products can solve problems “just in time,” both you and your customers will win.

6. Rethink your executive team: A strong Chief Revenue Officer can often be instrumental in bridging the bottom-up and top-down sales motions. Greats CROs will put the right infrastructure in place across sales, marketing and customer success to align incentives and create clear boundaries. More companies are also hiring Chief Customer Officers, who help algin the entire company around turning users into champions. Our Who What When post covers the role of non-traditional, non-sales organizations in bottom-up GTM.

7. Balance product development: Serving both “buns” can be a product development challenge. For the bottom bun to be successful, product and engineering need to focus on self-service, simple billing and viral features. For the top bun to work, product and engineering often need to focus on compliance, SSO, user admin and reporting features. Managing the pulls from both ends can be an issue. In many cases, engineering gets put toward to top bun because the teams are more vocal in their needs and the dollars are bigger. But long term success requires striking a better balance and an equal focus on the needs and success of the bottom bun.

8. Know when to build the other bun: If you’re growing fast and have a bottom-up selling motion that works, it might be time to start hiring a sales team. Many companies wait too long to start building out their enterprise sales — and end up ceding market share and ultimately failing to build the organization they need to achieve their potential. Similarly, if you have a strong sales team (or a few killer salespeople), think about creating a more natural on-ramp to your product — something users can ‘try before they buy’ and adopt with lower friction. And start now, since launching a free or cloud product often takes significantly more time and effort than most companies expect.

9. Usage-based models are different: Many companies are now implementing usage-based pricing instead of SaaS licensing. In a usage-model, what are your sales executives even selling? You will likely need new packaging to give them something concrete to sell. Even if it’s in the form of a yearly usage commitment or number of credits. The same is true for compensation of your sales teams. Sales compensation is easier in a SaaS model than a usage based model. In a usage model, you have to create incentives to land many small deals vs. a few big whales — like creating monthly payouts over quarterly goals and additional incentives for hitting certain new logo targets. In a usage-based model, the hiring roadmap also needs to be different. For example, you often want to start with hiring SDRs (sales development reps), then sales engineers, then account managers and last account executives. Unlike a traditional sales model, you will want to compensate your “farmers” (customer success) with quotas and commissions, not just your “hunters” (sales). In a usage-model, the goal is to land as many small customers quickly — knowing that your product itself will drive the upsell motion.

10. Be aware that the Hamburger Model is hard: Focusing on the different parts of the Hamburger Model at the same time is hard. It requires more time and resources, and there are plenty of reasons to put off building one bun when the other is working. But having both can help set you apart and help you achieve your potential, so don’t delay too long.

Conclusion

Whether they start with a top-down or bottom-up sales strategy, most companies eventually need to transition from a single sales motion to a hybrid approach — allowing them to engage with all types of buyers and to customize their customers’ purchasing experience to their needs.

The Hamburger Model combines the best of two separate methods, and can help provide a path toward a goal of achieving $1B+ in revenue over time. Like a hamburger, the meat (your product), is the most important element — but it doesn’t work without the buns (bottom-up and top-down sales strategies). This is no keto diet!

In the end, however, the effort is worth it. Your product will create users, your account executives will work to close $1M+ deals with complex buyer personas, and happy users will turn into champions — helping bridge the gap between early users and Enterprise-wide roll-outs. It’s a recipe for a delicious burger, and an incredibly successful company.

More like this

The Who What When of Bottom-up Selling: This post covers how to align your entire organization — from product to sales to customer success — around the vision of product-led growth.

The MAP Framework of Bottom-up Pricing: The MAP Framework ensures your bottom-up pricing is aligned with value for customers.

The information contained in this blog should not be considered investment advice from Coatue. As of the date of publication, please note that Coatue currently has a private investment in Orbit, which is referenced in this article. As of the date of publication, please note that Coatue may or may not hold positions in the public companies referenced in this article and that other than in publicly available SEC filings, the federal securities regulations limit Coatue’s disclosure of public stocks in which it is invested.

General Partner @Coatue; co-founder — The OutCast Agency; operating experience — Facebook