Community-led Growth: what is it & why is it important for business growth?

Community-led growth has become one of the fastest-growing trends in modern marketing. But what exactly is it, and how does it work?
Community-led Growth: what is it & why is it important for business growth?

Download our community-led growth playbook here.

Every brand has a community. Whether you have 10 customers or 10 million, there are people out there who hold a passion for what you do and would love to share it with the world. Activating the marketing power of these people, placing them front and center and empowering them to share that passion with the people around them, is all part of a marketing strategy more widely known as community-led growth.

Put simply, community-led growth is the process of turning a product’s users into its best advocates, who go on to share their experiences using said product with their peers. 

This helps brands in several ways:

  • Promoting a product and recommending it to their peers.
  • Driving engagement by coming together online to share best practices, content, success stories, and discussions.
  • Providing feedback to a brand about its products, services, and marketing or sales strategies.

The beauty of community-led growth is that it is mutually beneficial to both brand and customer. For the brand, it creates a network of enthusiastic customers that will influence others considering making a purchase, driving acquisition and growth. For those customers, being part of a community extends the value of the product or service in question, giving them the ability to learn asynchronously and in tandem with their fellow customers. This extends CLV and can have a healthy impact on a brand’s ARR.

But why are so many marketers turning to community-led growth as a strategy? To understand that, we first need to examine the state of the SaaS market today.

From funnel to flywheel

The growing popularity of community-led growth stems from the changes that have affected the SaaS market over the last few years.

The funnel metaphor has traditionally defined most marketing strategies, focusing on optimizing every step of the purchasing process — from awareness and discovery to evaluation, engagement, conversion/sales, loyalty, and advocacy. People are pushed along the funnel in a linear fashion. 

As the way customers interact with brands has evolved, the funnel metaphor has become less apt for describing the customer journey. There is less of a definitive end point to the relationship than there once was; brands now understand the importance of nurturing leads even after they have converted to customers in order to build loyalty and extend CLV.

The four stages of the CLG flywheel are:

  • Awareness - the customer becomes aware of the brand
  • Consideration & Sales - the brand begins nurturing the prospective customer in order to distinguish itself
  • Post-sales  - the brand continues nurturing the customer after the point of sale by creating networking opportunities and demonstrating value
  • Advocacy - the customer recommends the brand to their peers, beginning the cycle again

community-led growth flywheel

A community doesn’t push people towards a binary endpoint. Instead, it creates an environment so compelling that it naturally attracts people toward its center (converting and advocating). This process is better represented using the flywheel pictured here; by continuing to engage, retain and grow customers long after the initial transaction, these customers can become advocates who go on to advocate on behalf of your brand to others. The funnel becomes a virtuous circle, lowering acquisition costs and putting community front and center.

Driving growth in SaaS

The market for many SaaS organizations is saturated and fragmented. Often, when first searching for a solution they can become overwhelmed with the choice and noise in the market. A community cuts through this with real-world, real-time success stories from their peers. 

For organizations looking to drive a wider transformational change (either across a business or industry-wide) a community is even more important. Influencing a prospect’s behavior is a lot easier when they see their peers achieving success by changing a process or using a new tool. Sova Assessment witnessed this first-hand when they launched their own community, as creating a more scalable onboarding process required a cultural shift within the organization and from its customers.

Communities also provide value to customers after they’ve purchased by showing them how to get maximum value from a product and keeping them updated with new features. Users join the community, share ideas with their peers, become champions of the brand, and then attract new prospects, who then convert and join the same community. 

Types of online community

Online communities can benefit a wide range of companies - but one size does not fit all. There are a multitude of different forms of online communities, but the six main types worth knowing about are as follows:

  1. Knowledge and learning communities
  2. Expert networks and advisory communities
  3. Event communities
  4. Membership communities
  5. Brand communities
  6. Communities of action

While these types of communities differ in structure and the benefits they offer, one thing they have in common is their ability to unite people around a brand or topic, making them a solid choice for organizations looking to put their followers front and center in their marketing strategy.

Your community-led growth strategy

The foundation to your community-led growth is having a distinct strategy that operates in tandem with, but separate from your marketing strategy. Like any other strategy, your community-led growth strategy needs to have goals, responsibilities, tactics, and success measures. 

It’s important to consider how the community will operate alongside your organization. There needs to be permeable boundaries between the community and other parts of your company, to avoid the community drifting off on its own and becoming disconnected from your business’ goals and success. 

Expert communities are fast becoming an organization’s most valuable asset. Why? Because they connect us more deeply with each other, with brands, and with purpose. 

We are seeing a societal shift from ‘me’ to ‘we’, as recent events have sparked broader discussions on the role of organizations, employers, and individuals in driving positive changes for all. Organizations that put community at the core of their business strategy will beat those that don’t. 

This rings particularly true for high-growth start-ups and SaaS companies. Having an engaged and loyal community can provide a valuable, sustainable go-to-market strategy. Indeed, the likes of Mural, Notion, Lattice, and Seven Seven Six have signed pledges naming communities as “a company’s most valuable asset”. 

To learn more about what a community-led growth strategy could do for your brand and how to implement it, download the playbook here.