The key to profitable growth: A sales-focused Go-To-Market strategy and aligned operating model (Part 1/3)

In today’s rapidly shifting business landscape, nearly half of all companies are confronted with declining revenues and diminishing sales productivity. The root of this challenge often lies in a company’s sales-focused go-to-market (GTM) strategy that is not only poorly executed but also misaligned with market realities and external factors, coupled with an operating model that fails to adapt to these dynamics. These shortcomings prevent companies from effectively capitalizing on market opportunities and meeting customer needs.

This article is the first in a three-part series where we’ll explore the root causes of this issue and offer solutions to drive profitable growth with an effective Sales-focused GTM strategy and aligned operating model. This first article will examine the symptoms and consequences of a poorly aligned GTM strategy and operating model. 

The pitfalls of a misaligned GTM strategy and operating model

To reverse declining revenues and diminishing sales productivity and regain profitable growth, companies must prioritize the development and execution of a robust sales-focused GTM strategy. This approach revitalizes sales productivity by enabling precise targeting of customer segments through a differentiated serving model that accounts for external factors and customer characteristics. Aligning these strategic elements with a cohesive operating model is crucial for transforming challenges into growth opportunities, ensuring that companies can operate efficiently and effectively in a fiercely competitive market.

The magnitude of the issue and its potential is extraordinary: 

1. From H1 2023 to H1 2024, 40% of European and American companies with revenues exceeding €150 million experienced declining revenues.
2. The year prior, from 2022 to 2023, 50% of these companies struggled with either declining revenues or decreasing sales productivity (measured as revenue per selling cost).
3. Concurrently, selling costs constitute a staggering 48% of all SG&A expenses on average across industries, making them the highest cost component of overhead.
4. Furthermore, various industry reports and surveys reveal that 40-50% of companies lack an effective go-to-market (GTM) strategy and underlying operating model.
5. Companies with poorly defined GTM strategies and misaligned operating models are up to 70% more likely to suffer from declining revenues and/or sales productivity, according to multiple sources.
6. In fact, nearly 75% of sales organizations fail to achieve revenue growth targets, primarily due to misaligned GTM strategies with their overall operating models.
   
   
   
    

On top of that, today’s constantly changing macro and micro factors significantly destabilize the attractiveness of a company’s business dimensions and the effectiveness of its GTM strategy and operating model.

In summary, the need to optimize and continually align a company’s GTM strategy and operating model—especially the sales-focused elements— has never been more urgent. Mastering this alignment is vital to driving profitable revenue and sales productivity growth.

In the following two articles, we’ll discuss how to adapt to external market changes and provide actionable steps to implement a sales-focused GTM strategy and aligned operating model that drives success.