PLG Weekly #7: What's your unit of Value? & Kyle Parrish on PLG Sales.
Welcome to the seventh edition of the PLG weekly. This week we were wondering about how to think about Go-To-Market for our startup and were looking around for some good frameworks. We stumbled upon an amazing framework and thought you’d be interested as well. Read on!
🧪What’s your unit of value?
As you are building out your GTM motion for your startup, you should take a look at Jerry Chen’s Unit of Value framework.
What is a Unit of Value?
The smallest measurable unit at which the product/service delivers value.
The unit of scaling that is used while increasing pricing or services.
What the customers pay for. E.g., servers, TB of storage, API calls, Users, etc.
Here are a few examples of Units of Value.
As you can see, bigger units of value need bigger deals & longer sales cycles. Depending on the size, the key questions differ:
Bigger Units of value: (a. how to build a cost-effective direct sales force? b. how to build an advantaged go to market?)
Smaller Units of value: (a. how to create a cost-effective channel? b. how to scale up the value?)
Because of these differences, the path to building or scaling up to $100M would differ.
To scale your GTM, you have to scale your Unit of Value. And there are multiple ways to do that.
The product should be built so that the more customers consume, the more value they receive. And the value they receive should be proportional to the price you charge. (Eg. Dropbox's free tier of 5 gigs, Slack's free tier with a search limitation)
Sell complementary products at scale (management, monitoring, security)
Sell to a different or additional buyer (CTO, CIO, CFO)
Another compelling type of scaling that makes it hard for you to be displaced is Non-linear scaling.
Network effects: Build a product or service that will enable network effects to create a non-linear value for customers. (Whatsapp, GitHub, slack)
Standardization: Build a product to help reduce complexity and costs for enterprises that standardize their apps. De-facto standards + network effects often lead the winner of every industry and gain the majority of market share (Languages and frameworks, Ms.ppt & doc formats)
Platforms: They take the longest to build but will yield massive economic benefits if built right. Ways to create non-linear value for platforms include building a system of record, becoming the glue between layers of tech, applications, and cloud platforms that are trying to be both storage and glue.
How do you put this to work in your company?
This is how Jerry recommends you go about this exercise.
We're excited to see how you can apply this to your company. Let us know what you come up with :)
📊Kyle Parrish on how to build sales teams in PLG companies.
Kyle drops some absolute gems in this video. Block an hour of your calendar to listen to this and you won’t regret it!
You’ve reached the end of this week’s edition and we hope you’ve enjoyed it. We’ll be publishing every Wednesday and if you like what you read this week, please subscribe.
Also if you like what you read, share it with anyone who might be interested in PLG.