The 7 Building Blocks for Monetization: Part 2
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In part 1, we’ve outlined that there are seven building blocks for monetization with Product-Led Growth (PLG) and unpacked the first one about picking the right conversion tactic.
Those seven building blocks for monetization (learned from Reforge's PLG course with Elena Verna) are:
Pick your conversion tactics ✅
Define your use cases 🆕
Assess your use cases against the 4 factors: willingness-to-pay, motivation, ability, and permission 🆕
Build your growth hypothesis 🆕
Identify your value metrics
Build your pricing & packaging (P&P) matrix
Understand how you’ll escalate users
In this blog, we’ll learn how to build your growth hypothesis based on your use cases, assessed against the 4 factors.
Define Your Use Cases
It’s not a secret that if you try to solve everyone’s problem, you’ll solve it for no one.Â
Therefore, it is crucial to have a well-defined problem and a clear understanding of the target audience to optimize: starting from onboarding, to the aha moment, ending with monetization.
Here are four examples of how you can articulate and define your use cases.
Asses Against 4 Factors
Once you got your use cases clearly defined, you’ll need to evaluate them based on the following 4 factors:
Willingness-To-Pay (WTP)
Motivation
Ability
Permission
The willingness-to-pay WTP (high/low) is contingent on the complexity of the problem you're solving for the user and the availability of alternative solutions.
Motivation (high/low) is primarily determined by the urgency and the user's desire to solve that problem.
Ability (high/low) answers a question, ‘Can a non-technical user get started and start using your product right away?’.
Permission (high/low) answers a question, ‘Does your user need to go through the IT, security, or compliance reviews or can he just get started? Does a user need to get leadership buy-in or budget approval?’
Build your Growth Hypothesis
There are 4 Growth Motions:
Product-Led Growth
Product-Led Growth Sales Assisted
Sales Led Product Assisted (PLS)
Sales-Led
Think about it as a spectrum from true PLG, to something in the middle, all the way to pure PLS.
Product-Led Growth(PLG): PLG means it’s fully self serve, your product is doing all the heavy lifting.Â
Product-Led Sales-Assisted: It’s self-serve and your product is doing most of the heavy lifting, but some level of sales assistance is required.
Sales-Led Product-Assisted (PLS): Sales are handing the leads, but based on the product usage.
Sales-Led Growth(SLG): leads are handled 100% by the sales teams without any assistance from the product.
Most companies are a mix of a few, instead of being a true PLG or SLG.
It depends on the market segment (SMB, mid-market, or enterprise) and the stage of user journey (acquisition, activation, monetization).
Wrapping Up
There are 7 building blocks for optimizing your product for self-monetization. We've discussed formulating a growth hypothesis by evaluating your product's specific use cases against four critical factors.
In the next part, we’ll talk about how to pick the right value metrics to construct your pricing and packaging matrix, as well as strategies for escalating users based on these metrics.
Stay tuned for part 3 👀