The Hamburger Model: A Go-to-Market Strategy

The Shift to Product-Led Growth

Historically, in traditional software environments like those of Oracle and SAP, a strong sales force was the primary driver of competitive success. Currently, however, we operate within a paradigm of product-led growth. In this model, the engineering teams – and crucially, the software they develop – represent the most significant point of distinction.

Customer satisfaction with your product is the key indicator of progress. Positive reception signifies you are on the correct path, while a lack of enthusiasm suggests a need for reassessment.

Reaching the Growth Ceiling

Even companies that excel with product-led growth will eventually encounter limitations. No matter how exceptional a product may be, strategies for broadening the customer base and scaling from a startup to a substantial, multi-billion dollar revenue organization are essential.

This is where the “hamburger model” comes into play, offering a framework for sustained expansion.

Understanding the Hamburger GTM Model

The analogy to a hamburger is used because effective go-to-market (GTM) strategies for startups share a similar layered structure:

• The bottom bun: Represents a bottom-up GTM approach.
• The burger: Symbolizes the core product itself.
• The top bun: Represents enterprise sales efforts.

Within this hamburger GTM model, the product serves as the central component. We will now examine each layer in detail, followed by a discussion of successful implementation strategies.

Successfully navigating this model requires a balanced approach, leveraging the strengths of both bottom-up adoption and targeted enterprise sales.

Understanding the Hamburger Model of Growth

A core product is paramount: The hamburger model posits that a successful business begins with a truly excellent product. Founders should prioritize product development and customer understanding from the outset, deferring immediate revenue concerns. Concentrating on delivering value to users is the most crucial initial step.

Focus on acquiring users, not just leads: Unlike traditional top-down sales strategies that rely on marketing-generated leads for enterprise sales teams, the hamburger model emphasizes acquiring users directly. These users are not initially contacted by sales; instead, a bottom-up approach fosters growth through organic adoption and customer satisfaction. This method often feels more organic for companies prioritizing customer needs.

The necessity of enterprise sales integration: While a bottom-up strategy is powerful, it’s rarely sufficient in isolation. Eventually, all companies require a top-down sales component. Surprisingly, even companies renowned for their bottom-up approaches now incorporate dedicated enterprise sales teams. This is due to the requirements of certain sectors – such as healthcare, insurance, and government – which necessitate direct sales engagement for compliance and security protocols.

The fundamental components of the hamburger Go-To-Market (GTM) model are a compelling product that distinguishes itself, a bottom-up sales strategy to convert users into paying customers, and a sales team dedicated to pursuing larger, more complex clients.

However, constructing an optimal sales model, akin to assembling a perfect burger, presents several challenges. Here are key considerations:

Navigating the “messy middle”: The intersection of bottom-up and top-down selling can be ambiguous. When engaging with large global enterprises, the need for a salesperson is clear. Conversely, a small startup signing up via a website is ideally suited for self-service conversion. But what about prospects falling in between? Determining responsibility for companies with a few hundred or thousand employees, or large brands with small initial teams, requires careful consideration.

These complexities are amplified when different teams have conflicting incentives. Should a lead be assigned to sales (who typically desire it) or customer success (who may not actively pursue it)? Is a contact a free user or a qualified lead? Understanding these distinctions is vital.

Often, our initial instincts are flawed. It’s tempting to defer to sales, but this can divert resources from larger prospects and potentially diminish the customer experience. A prudent approach is to prioritize bottom-up engagement whenever possible, ensuring a seamless and straightforward user experience.

Prioritizing community engagement: Cultivating a thriving community is invaluable, but demands a long-term perspective focused on connection rather than immediate transactions. Companies like OrbitLove are pioneering a “go-to-community” model, treating end-users as primary stakeholders and fostering experiences that drive conversion and advocacy. Further insights are available in this Orbit blog post.

Developing a champion network: How can smaller customers evolve into larger accounts? Instead of forcing mid-market deals into an enterprise sales cycle, concentrate on empowering users to become champions. IBM’s adoption of Slack exemplifies this approach. For organizations employing a hybrid model, nurturing a network of internal advocates can facilitate expansion from small teams to enterprise-wide deployments.

Leveraging pricing for growth: Pricing plays a crucial role in the hamburger model, but must align with customer value and offer clear pathways for increased spending. Usage-based pricing, increasingly popular for product-led growth companies, is a common strategy. (This was previously discussed in our pricing post.)

Within a usage-based model, each pricing tier should deliver incremental value. The paid tier must be sufficiently attractive to discourage indefinite reliance on the free plan. Simultaneously, the enterprise tier should provide compelling benefits without appearing disproportionately expensive for high-value customers.

Implementing “just-in-time” sales expansion: A product that proactively addresses customer needs as they arise creates opportunities for upselling. Rather than unsolicited sales calls, the product itself should identify emerging requirements and offer relevant solutions.

Product features and functionality should naturally unlock new use cases and monetization opportunities, fostering a virtuous cycle of innovation and expansion. When your product solves problems at the precise moment they occur, both you and your customers benefit.

Re-evaluating the executive team structure: A skilled Chief Revenue Officer (CRO) is essential for bridging bottom-up and top-down sales efforts. Effective CROs establish infrastructure, align incentives, and define clear boundaries across sales, marketing, and customer success. Increasingly, companies are also appointing Chief Customer Officers (CCOs) to champion a user-centric approach throughout the organization. Our “who, what, when” post explores the roles of non-traditional organizations in bottom-up GTM.

Balancing product development priorities: Supporting both “buns” of the hamburger requires careful product development planning. For the bottom bun to succeed, product and engineering must prioritize self-service, streamlined billing, and viral features. The top bun, however, often demands features like compliance support, Single Sign-On (SSO), user administration, and detailed reporting.

Managing these competing demands can be challenging. Engineering resources are often directed toward the top bun due to louder demands and larger potential revenue. However, sustained success requires a balanced approach, equally prioritizing the needs of the bottom bun.

Recognizing the timing for enterprise sales investment: If rapid growth is being fueled by a successful bottom-up sales motion, it may be time to invest in a sales team. Delaying the development of enterprise sales capabilities can result in lost market share and hinder long-term organizational growth.

Conversely, if a strong sales team is already in place, consider creating a frictionless on-ramp to your product – a “try before you buy” option that facilitates user adoption. Launching a free or cloud-based product often requires more time and effort than anticipated, so begin planning now.

Adapting to usage-based pricing models: With the rise of usage-based pricing, the role of sales executives evolves. New packaging is needed to provide them with tangible offerings, such as annual usage commitments or credit packages.

Sales compensation structures also require adjustment. Usage-based models necessitate incentives for securing numerous small deals rather than a few large accounts – such as monthly payouts and bonuses for new logo acquisition. The hiring strategy should also be modified, prioritizing Sales Development Representatives (SDRs), Sales Engineers, Account Managers, and finally Account Executives. Customer success teams should be incentivized with quotas and commissions, mirroring the approach for sales.

Focusing on the different components of the hamburger model simultaneously is complex. It demands increased time and resources, and there are valid reasons to postpone building one bun when the other is performing well. However, a comprehensive approach can differentiate your business and unlock its full potential, so avoid undue delay.

Conclusion

Ultimately, the majority of organizations will need to evolve from a singular sales methodology to a hybrid model, regardless of whether their initial focus was top-down or bottom-up. This allows for engagement with a broader spectrum of buyers and enables the tailoring of the purchasing journey to individual customer requirements.

The "hamburger model" effectively integrates the strengths of both distinct approaches, offering a viable pathway to exceeding $1 billion in revenue. Much like a hamburger, the core component – your product – is paramount, but its success is contingent upon the complementary elements of both bottom-up and top-down sales strategies. This approach is decidedly not restrictive!

The investment in this strategy proves valuable in the long run. Your product will attract users, while your sales team will focus on securing substantial deals with intricate buyer profiles. Satisfied users will then become advocates, facilitating the transition from initial adoption to company-wide implementation.

This represents a formula for both a compelling offering and a thriving business.

Disclaimer: The content within this article is not intended to be construed as financial advice originating from Coatue. Please be aware that, as of the publication date, Coatue maintains a private investment in Orbit, a company mentioned herein. Furthermore, Coatue’s holdings in publicly traded companies, beyond what is disclosed in official SEC filings, are subject to the limitations of federal securities regulations.