Unlocking Community-Led Growth for the Enterprise

Unlocking Community-Led Growth for the Enterprise

Date
March 15, 2022

The promise of community-led growth has gained new momentum at enterprise software companies. But what is driving this resurgence? How valuable are communities for enterprises? And how should companies think of building their own community-led growth strategy?

Introduction

Last year, I published a piece called “What’s next for Product-led Growth? Customer-led Growth”. I argued that top companies have evolved from picking either product-led or sales-led go-to-market models to hybrid strategies that meet customers on their terms. I dubbed this flexible model customer-led growth. Community-led growth is an excellent, but sometimes misunderstood, example of a customer-led strategy. This article explores the momentum behind community-led growth, outlines the characteristics that make communities powerful, and offers a framework for building a successful enterprise community.

The Forces Inviting the Community Renaissance

Communities are not new, so it is important to consider why they are finding new momentum among top companies. Multiple macro shifts are paving the way for an enterprise community renaissance:

1. Differentiation and retention are more important than ever; communities help with both

Software has never been easier to develop. Abundant venture funding, accessible cloud hosting, and a rich ecosystem of developer tools have invited more entrants and thus more customer choices. Top enterprises need methods of differentiation and retention that cannot be easily copied. Community is proving adept at both.

2. Enterprise software is specializing, naturally aligning users into communities

As software becomes easier to develop, it also invites more specialization. Companies are reinventing horizontal technologies into better, verticalized products. Toast and Squire have reinvented point-of-sale for industries like restaurants and barber shops, Air Labs and Playbook have reinvented digital storage for functions like marketing and design, and Lili and Mercury have reinvented digital banking for freelancers and startups. These verticalized businesses attract users with natural alignment, allowing community-first growth strategies to thrive.

3. The maturation of product-led growth has invited community-led strategies

Consumers have carried their buyer behaviors and expectations into the enterprise. And enterprises have responded with product-led go-to-market models (e.g. e-commerce). But as PLG matures, companies recognize that their self-service models must be nurtured to succeed. One of the most effective strategies is community-based marketing and buying.

4. The creator and passion economy has elevated the concept of audiences

Audiences and communities are quite different (more on this below), but the booming creator economy has underscored the monetization potential of audience-based distribution, inviting enterprises to test other long-tail-focused models such as community-led growth.

5. A new crop of enterprise platforms are rising to support community development

Products that support community growth are on the rise. Communication platforms like Slack and Discord have refocused from closed, internal communications to open, externally-facing user bases.

Collectively, these changes suggest that enterprises are better suited for communities than ever before, but the concept of community is often misused or poorly understood. So what makes a community a community?

What is a Community? What makes it Valuable for Enterprises?

Most people agree that communities are made of groups of aligned users. In an enterprise context, this alignment is often professional. Members might share a function (e.g., graphic designers) or an industry affiliation (e.g., restaurant owners). But not all groups of aligned users are automatically communities. A real community is dependent on the network structure of the membership. Consider two different networks of aligned users:

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The example on the left is an Audience Network, like a newsletter. In this network, one individual member (known in network sciences as a node) communicates asymmetrically to all other nodes. None of the recipient nodes are connected to one another. This one-to-many characteristic makes audience networks incredibly powerful for consistent and clear communication. It also makes them easier to create and control. But audiences have other weaknesses. One example is linear scaling. Growing a newsletter base 10x from 50 to 500 subscribers might be easy, but growing from 500 to 5000 is far more difficult. They are also fragile. While newsletter content is easy to control, if that content doesn’t resonate or if the creator is removed, the network will collapse.

The example on the right is a Community Network (specifically a “small-world network”). In a community network, many of the nodes are interconnected with direct linkages meaning that any node can communicate directly and thus contribute to the network. This many-to-many design is what makes a community different from an audience. A good example is a Facebook Group. While it might be difficult to build a community at first, a large enough community can withstand the deletion of any single contributor and therefore operate without any single-point of failure. This antifragile quality make communities incredibly powerful.

Many community networks start as audience networks and evolve over time. To ensure this transition, community owners must focus on cultivating two concepts: node interconnectivity and shared utility. Increasing a network’s interconnectivity (measured as “average path length”) describes the process of linking more previously unlinked nodes. More interconnected communities are more resilient. Boosting shared utility is more subtle. To do so, community owners must strive to increase the benefit that each node receives from its individual participation in the community.

This process is difficult but the payoffs are high. At scale a well-run community can help an enterprise with almost every core growth function--brand and product development,  customer onboarding and education, and customer acquisition and retention. So how can you create your own community? The following section is my best attempt at a framework for doing just that.

A Framework for Building an Enterprise Community

Before we dive in, it’s worth mentioning a few things: (1) Communities can exist in any medium (digital, real world, hybrid, etc.). For this article, I will focus on digital-first communities. (2) There is no universal recipe for successful community building. Communities are incredibly unique. The best communities arise from research, dedication and investment, and there are very few shortcuts. We suggest the following framework to get started:

1. Assess your community fit

Some businesses and user groups are predisposed to great communities. Others not as much. Before creating a Discord server and hiring a community manager, consider the following pre-work steps to assess your product’s fit for community-led growth:

  • Assess your product-fit for community building. Products that target single-player users, enable new workflows and promote user creativity and flexibility tend to be better candidates for community-led growth. A good example could be a no-code application development platform like Stacker or Softr. Products that perform non-core functions, serve broad sets of users, and seek to create uniformity are less predisposed to communities. An example here could be a compliance software.
  • Identify the shared affinities and goals of your users. Start by assessing the market status quo. Who are your customers? Are they entire businesses, whole teams or single users? What goals or problems unite all of them (at any level)? Do they typically interact with each other (outside of your product)? How active are they in those pre existing channels? What is bringing them together? Next, learn from your own product. What shared goals draw your users to your product? What similarities exist across their product usage (e.g. workflows, feature use, product bottlenecks)? How do customers speak about your product? More similarities mean more fire power for your community.
  • Define an ideal community member and contributor. Similar to mapping ideal customer profiles, ideal community personas (ICP) force you to specify the utility that your community will create for its members. Ideally your community members will all contribute value to your community, but this is not a prerequisite. Establish a profile for both an ideal contributor (giver) and passive member (taker). Once you’ve established your ICPs, consider the ratio required to hit your goals. This could be 1:2 or 1:10 depending on your contributions and members needs.
  • Create incentives to acquire early members. Map the potential members inside and outside your user base. How can you encourage participation at the onset? Next assemble a test group. It’s important to remember that the best communities are the ones that create the most relative value for members, not the biggest nor most frequently active. Stress quality over quantity.
  • Test and be honest with your findings. Test your initial hypotheses through conversation. How excited are prospective members when you describe your community? Be honest with your findings. Community building requires deep investment. If the ROI from a community-led growth effort appears to be less impactful than other strategies, the effort might not be justified.

If everything checks out, the next step is to build a plan and align your efforts internally. Map your community goals to your company goals. Share your research with stakeholders and discuss the time, labor and money required to run a sufficient experiment. Also consider how you will measure the efficacy of your actions. Once all these critical questions are answered, it is time to start thinking about a fitting community technology stack.

2. Set up your rails (the Community Stack)

There are many platforms that can be used to build and manage your community. Like your overarching strategy, the right combination of software will depend on your product, your customers and your goals. Most companies will experiment with multiple platforms over their lifetimes as goals evolve. But there are three main product categories that assemble to create an effective and scalable community:

Community Systems of Record (SoR):

Community SoRs serve two main uses. They either store data on the members of your community or they store data on the content that fuels your community growth. The first category includes CRMs like Salesforce or Hubspot. The second category includes CMS/MAP systems like Wordpress, Marketo, Mailchimp. Together these systems link your community back to your organization’s broader marketing and sales workflows.

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Community Systems of Engagement (SoE):

The purpose of a System of Engagement is to maximize effective communication. Many traditional SoEs like Slack and Discord have evolved from closed (internal) systems to embrace community (i.e., Slack Connect, Discord Community Servers). Other platforms like LinkedIn or GitHub have built community workflows directly into their products (e.g.GitHub Discussions, Twitter Communities). And others like Discourse, Tribe and Hivebite allow companies to embed community into their products or websites using discussion boards, forums, KX hubs and more.

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Community Systems of Intelligence (SoI):

Systems of Intelligence” is a term that was coined by our friend Jerry Chen at Greylock. A System of Intelligence operationalizes data from both the System of Record and the System of Engagement to create something more. For community building, that might be deeper monitoring to assess the real-time health of your community or the automation of community engagement. There are many platforms building in this domain such as CommonRoom, Commsor, Orbit, Tribe, and many many others.

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All of these systems have strengths and weaknesses. Choosing the right stack will depend heavily on how your goals and the behavior of your users align with each product. For example, your choice System of Engagement should be where your users prefer to interact naturally. If your target audience prefers Discord Servers like many Web3 communities, follow their lead. The same is true for you System of Intelligence. Early on, Orbit aligned itself with developer-first communities and as such has many developer-specific benefits such as deeper integrations with top developer SoRs and SoEs like GitHub.

3. Build and operate your community

After selecting an early community stack, it is time to build your digital community. As previously mentioned, the best communities foster two things: interconnectivity between nodes and shared utility. Once you have launched your community there are a variety of strategies that you can use to execute on both needs:

1. Design Seamless Community Onboarding: When a new community member joins a digital community, it should be easy to self-orient and discover value. Not every new member will have the same needs, but they should be able to align themselves and connect with other members without friction. If you have a strong sense of the needs of your users, consider creating channels or sub-communities within your broader community to help users onboard themselves. It’s also to set some ground rules so communities do not run amuck. Be clear and intentional about what is and isn’t allowed and why. To understand if this is working consider tracking the adoption of sub-channels, and the growth of member-to-member communication for sub-channel participants.

2. Promote Participation and Interconnectivity: To promote community participation, you have to reward it. Companies like GitHub, StackOverflow and Zapier have done a great job creating rewards programs to incentivize member participation for a variety of actions. Some of these programs are like living scoreboards that gamify community participation and increase shared utility for both the contributor and the member. Other communities like Axie Infinity, take a distributed, grassroots approach and empower champions to manage micro communities that are more nimble and easier to control.

To boost interconnectedness, publicly celebrate members’ achievements. This action shows members that they are heard and that their contributions are important, strengthening affinities. Promoting the relevant work of members also invites other members to mimic that behavior, guiding further engagement. While likes and shares are positive signals, the replication of independent celebrations by other community members is the key metric to measure.

If enough nodes contribute consistently your community will begin to morph. As noted, the early days of a community may feel more like an audience. To invite the evolution into a community, prioritize member-generated content over your own voice. Instead of a content creator, be a content curator.

To invite community-generated content find new ways to give your members an audible voice. HeadsUp has done a great job here by creating a podcast with top founders within their target customer profile. This strategy creates high value member-generated content, and it also offers contributors an elevated voice and a new audience.

3. Monitor, Measure, and Experiment: A successful community strategy usually translates into business outcomes. This goal could be liked to sales (e.g., more customers) or something more indirect (e.g., improved brand perception). In either case, assessing community performance will require monitoring and attribution. Our friends at Insight wrote a great article that covers a few of the ways to measure the sales impact of a community. It’s also worth highlighting the Orbit Model, a promotional framework that offers an elementary community assessment. Once you have a sense for how your community impacts your business, explore how your actions can impact your community. Experimenting with the levers of control at your disposal is the cleanest way to determine the true ROI of your community. Understanding this is the holy grail of community management and will likely require time to perfect.

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An example of seamless community onboarding: The PLG Slack community has created channels that speak to specific needs and actions, creating room for self-orientation and participation as soon as you join.

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An example of fostering community participation: Zapier has mastered the gamification of community participation, creating a public reward system for experts and contributors.

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An example of fostering community participation: The PLG Slack group does a great job of celebrating the achievements of their members in a non-intrusive way, deepening bonds and improving engagement.

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An example of fostering Community Participation: HeadsUp has created an excellent podcast that allows founders at their target customers to share their insights and promote their products.

Conclusion

Community-led growth strategies are still in their infancy, but when wielded correctly they can present major gains for enterprises. As the forces inviting community continue to grow, I expect more enterprises will explore their own community strategies and best practices.

If you’re thinking about building or experimenting with community-led growth or want to learn more about anything written above, please reach out to me at [email protected] As always, I look forward to learning from you.

A huge thank you to all the founders and community builders that have lent their time, inspiration and expertise to this post. Special (alphabetical) shout out to: Elizabeth Dlha @Deepnote, Jason Bhatti @Charla, Jesse Parker @ Zapier, Nathan Wang Liao Yinan @HeadsUp, Ray Paik @Cube, Pierce John Ramirez @The Product-Led Podcast, and many more! An additional thank you to the 645 Team for their diligent proofreads and support.