Community-led Growth: Take Your Growth from Funnel to Flywheel

Did you know that some of the world's most successful businesses didn't grow from scratch? They started small but grew through building and nurturing thriving communities around them. Figma, Notion, HubSpot are just some examples. Community-led growth has quickly become popular for many reasons:

1) Community-led businesses scale more efficiently.
2) Communities can provide valuable feedback and support.
3) Community-led helps businesses create lasting connections with customers. 

When done correctly, community-led growth can be extremely effective in helping you achieve your business goals. I sat with Michael Francisco, VP of Marketing at Common Room, to unpack the growing importance of communities. And how businesses can leverage that as a growth lever. 

Tl;dr

• Community-led growth is a natural outcome of changes in buying behavior. 
• Informed buyers are more capable of forming their opinions.
• Community-led can actually complement your product-led and sales-led motion.
• Product education is key to community-led growth.
• Measuring success of community-led growth is different from measuring marketing success. You need to start with establishing your ethos and understanding what it is to engage with the community.
• Investing in the community is a leap of faith. It takes courage and vision to take this step forward. 

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Note: The blog is a revised and edited transcript of our Tech CMO Talk with Michael. Watch the entire conversation in the video above.

Meet Michael Francisco, a marketing leader in the tech industry

Michael spent time at GitHub, Amazon, and Microsoft and was an early member of the marketing and business development teams responsible for strategy and execution for emerging products, including Azure, Alexa, and GitHub actions, which we are all familiar with today.

Why communities matter to business today

Some people say the community is the new moat. And we see a lot of companies today investing in communities. Why should marketers pay attention to communities and why it matters to business today?

So a long time ago, when I started doing marketing at Microsoft years and years ago, the community was a thing where we had people who were out there working with the developer community trying to help them adopt products and make sure that they were leveraging the tools that Microsoft brought to bear for developers. And so it's a thing that's been around a long time because it's how developers gather, it's how they learn, it's how they share information.

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They get together in these social channels to share best practices, troubleshoot, and learn from each other. And over time, that has shifted from a place where it used to be that the work done around the community was wholly separate from the go-to-market engines that go to market engines, the marketing teams, and the sales teams. It was thought that they cleaned teams.

How software purchase has changed

It was just about letting people use our tools. And that's the function of that. At the time, a lot of software was purchased through internal procurement organizations, and there was a lot of top-down selling, a lot of state dinners, and that sort of thing to drive these large deals across enterprises.

But that has changed, I think, as we've seen in the industry; this kind of trend tends towards shifting left from a development perspective, moving more and more responsibility onto the developer's plates. We've also seen more autonomy and budget shift in that direction in terms of how they choose the tools they use for their daily work, whether it be to solve problems, whether it be infrastructure choices, or whatever those things are.

Developers now and development teams and engineering teams have the opportunity to select the right tools for themselves. And if you look at how that has impacted the way that software is purchased, you see this trend where a lot of decisions are made not based upon marketing materials or not based upon selling engagements. Decisions are made based on the recommendations of peers and trusted advisers.

People have a problem. A good example of this is, say, observability. I need to figure out how to solve the monitoring problem. And within my infrastructure, I'm going to forums where people discuss these topics. I may ask some of my peers, look for recommendations from trusted advisers, and see if that tool works for me.

In most of these cases, folks want to make this discovery and learn on their own without having to engage a seller. I think Gartner recently said that 5% of the total buying journey is the part of the journey where sellers can engage and influence the other 95% of that is happening outside of the CRM. It might be having marketing touches, but a lot of that is happening within the community, and we believe that community is a kind of where decisions are made and where growth for organizations happens.

If we look at the impact of that buying journey and people wanting to self-select and then only engage with sellers when it's appropriate for when it's beneficial for the buyer to do that, it creates a bit of a problem or an opportunity, I would say, for marketers and sellers to figure out what is the right way to engage that group.

And so what we see, especially in many of our customers, is a continued focused intent in engaging that community, helping them, and adding value in hopes that it continues to grow the adoption and, ultimately, acquisition of their software.

So it's the changes in buying behavior. At the same time, also the information is at your fingertips. You don't need to rely on vendor marketing materials. 

Think about how you choose where you go to dinner. If I think about where I'm going to dinner, I might go check out a menu on a website. But more likely, what I'm going to do is get on Yelp or OpenTable and look at what other people are saying.

People who are not personally invested in me spending money at that restaurant right there are just giving their own opinions and sharing information. And that's where I will get the most honest feedback about what's happening at that particular location. And the same is true in enterprise software purchases. My marketing materials could say that I have the best solution ever.

That's a wholly biased opinion based on the fact that I am intrinsically motivated to get you to buy what I have. Talking to your peers, it's a different scenario. Like I could see a menu that said the best Italian food in town. I'm going to ask one of my friends who is an expert in these sorts of things, maybe had a mother who created and cooked great Italian food, to give me an opinion on this. Because there's no bias there. And I think that that pattern is becoming more pervasive across the board. And I think it's important to recognize the influence that communities have on business.

Is Community-led another growth model alongside product-led, marketing-led, and sales-led?

I think it's a new way to think about your end-to-end funnel for software acquisition. I wouldn't say that community-led growth replaces either of those things that say it's complementary. Just as a well implemented PLG model is complementary to a traditional sales model, you have more of this hybrid motion.

It forces some changes in the way that each of those functions behaves. So in the PLG model, for example, a lot of that selling motion is focused now on retention and expansion within those accounts. And sometimes, selling happens when the volume that they need to purchase exceeds whatever they can do through self-service. Then the seller engages in more of a consultative approach to help them navigate the buying process, make sure that they are getting the right discounting, make sure they're getting the right solution to solve their needs, versus having that seller focusing on going out prospecting, bringing that lead in, warming it up and bringing it through. That still happens, and there's always a need for enterprise sales.

However, the emergence of PLG is going to change that. And now, with community thinking about how community kind of sits alongside both of those things, community becomes a very complementary model to both of those, helping the marketing teams who are seeing a kind of declining efficiency in traditional marketing tactics. I think inbound this year, HubSpot said that outbound email marketing has decreased by 30% in efficiency. And so, as you're thinking about a marketer and having to break through the digital fatigue prospects are experiencing, you need to find new ways to reach them. And often, the ways to reach them are through their trusted peers in the communities in which they're engaging. So I would say community-led growth is both a complement to what's happening today, and whether it be a traditional sales model, a hybrid model, or a PLG model, it's complementary at the front end of that experience.

But it also, and when I say complement, it's a new set of signals. As you think about PLG providing product signals to your sellers to understand when somebody has a high intent to buy, or they've reached a certain threshold where you're fairly confident that they need, they're ready to convert. The community provides a different set of signals that happen before they even engage with the product.

That's very valuable to marketers and sellers as they move the process. But the community doesn't just affect the initial purchase. The community affects the entire lifecycle of that customer. If you think about a company like Figma. Figma was recently acquired. It is a great testament to the power of a kind of community and then taking a product, really maturing it, and driving it to a place where it was of high value to another organization.

Education is crucial for community-led growth

Not only is community valuable for them in terms of sharing, building awareness, and affinity within the community, but it's also important from an awareness and retention perspective because those people don't stop visiting the community when they buy this software. They continue to engage. And education is important for both of these things.

And so if I have a strong community that has a high level of activation among its members, there's a high likelihood that my users are engaging in that community. They're learning from each other, they're sharing best practices, which ultimately leads to broader usage of the product, and help them think about how to use this product with other organizations.

So in the case of Figma, I might have been a designer, but now I'm working with my product team. My product team is working inside Figma. Now we're engaging with our product marketing team, and they're also working inside of Figma. So you can see how that expands very, very broadly. 

And so the community is not just about growth at the front end; it's about growth throughout the entire lifecycle, ensuring that you are helping nurture and build those customers to places where they're expanding their skills, expanding their usage, and being more likely to not only renew but also expand as they get to the renewal points.

‍Which industries are adopting a community-led strategy?

Today, we're seeing a lot of adoption from companies born in the cloud. 

SaaS developer tools companies are a very natural fit for this. But I would also say that as we've progressed through our journey, we're seeing much more interest from large enterprises who are recognizing that they need to figure out a way to engage your community as well.

And I think that this is relevant not just for these two kinds of folks, these hyper growth SaaS developer tools, as well as these large, you know, software enterprise companies. But I also think that over time, we're going to see this expand into other industries, as well as communities of practice and communities of product continue to grow.

I think that we're going to see organizations move away from kind of standard social listening strategies and tactics and think more about how do I leverage kind of what I'm learning from the community to better support them, better activate them, and as a result of that positive, adding a value to the community, see added growth within their organizations.

So I think today it's very much focused on software, and I think that over time we're going to see that expand quite a bit.‍

Who is leading the communities in software companies

So it's interesting if we look historically, you see these several community building teams live all over the organization? We recently did a developer relations compensation survey and found a pretty even mix of around 32% of teams sitting inside marketing versus inside their organization. And over time, what we're seeing is a trend.

And of course, they said in other places while engineering when I was at GitHub, they sat inside the product organization, and it really kind of it depends on the goals from within the company for what they want to do with that with their kind of developer relations function at GitHub is very much about product feedback, making sure that we're supporting our users, learning from them, but also making sure they have great experiences in the product.

In other organizations. It makes sense for them to live inside of marketing, where it's really about how we invest in our users' satisfaction and which is of course, a leading indicator for retention. Over time, you'll see those things live inside of marketing. So it's a pretty diverse setup. But what we're seeing is a lot of movement toward community teams living inside of the marketing organization.

But what do you need to tap into the community?

Start with establishing your ethos and understanding what it is to engage with the community. And I think historically, one of the reasons why you didn't see these teams sitting inside of like marketing and kind of go-to-market teams is because there was a separation there between church and state where these teams were very much focused on revenue and community endeavor.

All teams were focused on something different, they were focused on satisfaction and engagement, those sorts of things. When I think about engaging with the community, when I say the ethos, it's really about understanding that your community is not a marketing channel. You aren't going out there to acquire a list of thousands of users who are engaging with each other that you can then send your marketing to.

It's really about adding value to the community. First, you have to add value before you can kind of build value in your own organization. So I think that's where it starts from there. Then I think there are a number of platforms and tools that make sense for people to engage their communities. So there are forums that you can implement that are a combination of chat and knowledge bases.

You can implement a discord server, chorus, and slack to engage your community. There are a lot of ways that you can engage from a technology perspective. And I think there's a difference between communities in the context of what you own, meaning I have a slack channel that I've built a community around, and people are engaging directly with me.

That's one place the community lives, but it's a short-sighted and narrow view of what community actually is. And as we think about community, it's the entire ecosystem of people talking about your product, either positively or negatively. And it's not just happening in one place. There's this distributed network effect that we see where people are engaging perhaps in your Slack channel. Still, they're probably also engaging in GitHub or maybe in StackOverflow, or maybe they're engaging in a private channel specifically around the topic or the solution area that your product fits inside of.

And so I think there's a number of tools that you can use to own and engage. Still, it's also important to have the ability to see kind of across the ecosystem and be able to aggregate all of that data to get a real view of what's happening inside your community. Your community is larger than your community. You got your company to overcome. It's everything happening out there, and getting visibility into that is important.

Common challenges - measurement of success is different for communities than traditional marketing KPIs

One of the biggest challenges I see is, I would say, a lack of full commitment to supporting the community. I think folks who are community professionals know that it's a lot of work to go out and engage in a meaningful way. And the most important thing in engaging your community is both adding value, and doing that consistently in order to build trust and to build thought leadership in those sorts of things, and then trust is the most important thing.

You have to be consistent, and you have to be constantly engaging. You can't just show up when it's convenient for you to show up. If I have a community and I'm just showing up every time I launch a product to tell you about this new cool thing I launched, the authenticity of that relationship declines significantly. And so one of the challenges that we see is people trying to engage in community, trying to go out and influence them, but not investing in the right way to help themselves with this to effectively deal with the scale of the community that they need to influence, which then actually works against them because of the lack of authenticity and people see. 

And what about demonstrating the ROI from these efforts? Yeah, that's another thing. And I think that goes right back to the question about investment. Right. I'm returning to my example of community organizations sitting inside of marketing as the marketing leader in that organization. I care about a lot of KPIs. I care about things like MQLs and bounce rate, but ultimately, that's not how I'm evaluated.

Those are simply things that I am evaluated on, which is the amount of revenue that our company drives. At the end of the year, at the end of every quarter. Right. And my role in that as a marketing person is to make sure that I'm building a sufficient pipeline for us to hit our revenue targets and also making sure that I'm putting the right things in place to make sure that we're accelerating deal velocity and things like that to ultimately lead to the number.

If we look at community metrics and how we've traditionally evaluated community, if we intended the health of community engagement, we might look at things like the number of active members who look at response rate activity growth over time, things like that, to understand the health of the community. But the translation of that to the metrics that I care about as a marketing leader or a sales leader or a CRO, and there's a gap in the communication there, both in terms of what the desired outcomes are, but how those things work together.

Investing in the community is a leap of faith. 

And so often, when we are talking about investments in the community, there is a leap of faith that somebody needs to take to invest. If they don't understand how that connects to the business. So being able to connect community outcomes and to meet very focused outcomes that are focused on the needs of that community and the health of that community, being able to understand how that translates to business metrics is important for getting the right level of investment and commitment from executive teams to make that investment.

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