So, you’ve created a product that you’re proud of and you’re ready to go to market. Your vision is strong, the belief in your offer is unwavering, and you have a lot of hope. But this alone won’t cut it. And, you probably know that already. The method behind your go-to-market (GTM) strategy is paramount, and every detail matters. Enter demand modeling.
Demand modeling is the part of your business strategy and planning that dives into your target customers’ behaviors and overall market trends. With it, you analyze several factors, like historical data and market conditions, etc., to forecast future demand for your products and services. This information will help you to make informed decisions about your go-to-market (GTM) strategy.
Setting a goal is one thing. Setting, implementing, and achieving a well-informed ARR goal is another. And this is where demand modeling comes into play. You may find that you have no real reasoning behind your goals, only the expectation that they’ll be hit. So before we tackle this step, let’s make sure the other steps are executed the right way.
When setting an ARR goal, you must be ambitious and realistic. Start by calculating your current ARR and establish an accurate baseline to measure against. Define your growth strategy based on the data points mentioned above (i.e., market traditions, historical customer data, etc). Next, set an ARR goal that is ambitious but realistic. So, for example, if your current revenue is $100,000, and you’d like to grow your business by 30%, your target ARR should be $130,000.
Once you’ve established your ARR goals, it’s time to bring in your team. Your team should be a group of experts whom you trust to provide honest feedback. They care about the success of your go-to-market efforts as much as you do and will execute their roles to make it happen. That said, it’s important to have alignment and open discussions to ensure your ARR goals are realistic and attainable.
This step is the make or break behind your strategy. This is where you figure out how to get from “here” (your current ARR) to “there” (your ARR goal). Before we begin, take a look at this demand model sheet. This demand model sheet is what I’ll use to explain how to prepare your demand modeling forecast. It covers the essential details often missed to properly forecast your goals and establish the quantifiable strategy behind that process. It’s your job to personalize this to your company’s goals and ensure they are realistic and attainable.
With these variables accounted for, you’ve filled in Step 3 and, most importantly, established data-backed goals that make sense. I know this step is self-explanatory. You either hit your ARR goals or you don’t. But if you miss, you now have a tool to diagnose which part of the funnel needs improvement. Regardless, your go-to-market strategy isn’t a one-and-done process. It’s ongoing, and demand modeling pokes holes in the black box of “we hit!” or “we missed!” both of which give you a clear indicator of what’s going on.
So there you have it. With strategic, well-informed demand modeling, pulling goals from the sky is a thing of the past. Demand modeling is a powerful tool that provides priceless insights into customer behavior and market trends. By gathering specific data points, like historical info around sales length, MQL types, and market trends, you can make informed decisions and set realistic goals for your SaaS company’s growth. And, chances are, you’ll actually hit them.
