Why Community-Led Growth is SaaS’ Last Hope
Every few years, a new business strategy comes along that works wonderfully. Until it doesn’t.
For instance, SaaS companies everywhere are enamored with Product-Led Growth (PLG), where the product itself drives the business growth, attracting, converting, and retaining customers.
PLG is more about better UX and reducing friction in the buying process than about building trust and credibility.
PLG companies end up playing the numbers game of traffic, leads, followers, and subscribers. They think the key to success is building a huge audience—because the more traffic they get, the more sign ups they get, right?
With an audience, communication goes in one direction, from the brand to the consumers. It feels authoritative.
The fact is that people are reluctant to sign up for yet another SaaS tool, even if it’s free and it promises to solve their problems overnight. They’ve been duped too many times and they’re skeptical of hyped landing page copy.
You have to build trust and credibility—and not just with logos and customer testimonials. Those can only get you so far in the trust scale.
What you need is to engage with your audience in real conversations within a community. PLG is great for getting new customers, but community is what creates loyalty and leads to retention.
That’s why Community-Led Growth is the last hope for SaaS. In an economic downturn with tightening budgets, it’s not enough to make it easy for people to swipe their credit cards. You need to create massive value.
Sales-led and product-led companies can leverage communities to provide even more value to their customers. The brave companies that bet on community-led growth are growing fast (Notion) and even being acquired (Figma).
The good news is that more and more companies are realizing this.
Research by Peersignal found that 58% of the top SaaS businesses have dedicated brand communities.
“Brand communities have become a key business focus in B2B SaaS, according to PeerSignal research, especially among product-led growth companies. 40% of B2B and 55% of PLG SaaS companies have dedicated brand communities. Unicorn companies certainly got the message. On top of 58% of Cloud 100s already owning a brand community, 26% were actively hiring for community roles in Q4 of 2022, despite the tech downturn.”
— Carl Thomen
Those are encouraging numbers, but let’s define what we mean by community first.
WTF is Community-Led Growth?
“Community is a trusted space between like minded individuals with a shared commonality or goal,” says Jared Robin, CEO at RevGenius. “They bind together and help one another in working towards that. And the results often far exceed what one could do alone, which is so amazing!”
Although “community” is becoming a buzz word these days, the concept is as old as humanity. B2B companies didn’t invent community, they’re just trying to monetize it. It’s not a bad thing to make money, but your north star metric needs to start and stay with the people.
Jason Hubbard, COO at RevGenius, says there’s almost always a tension between monetizing a community and serving the interests of that community so that it flourishes. “You can absolutely do both but it’s damn hard to do it well,” he says. “So it takes both an internal culture and values aligned around ‘community first’ as well as the tracking and metrics to achieve that goal.”
Sumeru Chatterjee, Founder and Head of Community at CustomerEducation.Org, says that community is the sum total of all conversations among people who care about the problem a company solves. These conversations can happen in an owned community (a space where the company participates and controls the conversation) or in other places (dark social).
Peersignal calls it “Brand Community ” and defines it as a place where helpful interactions happen between people united by common interests and administered by a business with a stake in those interests.
This definition is what leads us to the concept of Community-Led Growth (CLG), the new hot trend in SaaS. And when talking about CLG, it’s hard not to mention Notion and Figma.
Camille Ricketts, the first marketing hire at Notion says that community-led growth happens when your community helps you achieve such ubiquity and such name recognition that it actually allows you to start moving upmarket into the enterprise market.
Word-of-mouth is what makes CLG so powerful. The brand reputation reaches decision-makers way before sales reps can.
“All the traditional demand gen channels are tanking in ROI,” says Chatterjee. “If you look at ROI for ad spend, for example, demand marketing is not working anymore or at least the costs are prohibitive.”
Despite what attribution software says, most people today buy software because they heard about it on social media or in a private community from someone they trust.
Chris Walker recently showed that 98% of Refine Labs’ customers came through their podcast or social media (self-attribution data).
So a lot of the buying decisions are starting with good word-of-mouth.
Figma relied on community to enter a market (design software) with an already clear category king (Adobe). These were Figma’s 5 phases of CLG:
- Planting seeds
- Building credibility
- Turning power users into early evangelists
- Empowering users to monetize
- Scaling to enterprise
In both cases, community allowed these companies to scale to enterprise.
- The communities began as forums to answer questions and solve problems.
- Then they evolved into spaces where dedicated community managers drove engagement and provided value.
- And customers became evangelists/ambassadors for the brand.
Betting on community-led growth has even more benefits:
- Testing: You have an existing audience/user base to launch/test new products or offerings.
- Retention: People have an incentive to keep using your product if they get value from the community.
- Activation and peer customer support: Existing users helping new users, creating templates, playbooks and answering questions.
- Customer success: You get customer insights and feedback almost in real time.
- Thought leadership: You can position yourself as a thought leader by giving your community access to your unique POV.
Getting Started with Community-Led Growth
Building a community requires investing in tools and people to run the community, create valuable content, and engage members.
So what if you don’t want (or don’t have the resources) to build your own community?
In that case, you have two options:
1. Start by becoming active in an existing community where your ICP hangs out. Notion, for instance, began by engaging in existing Facebook groups; Figma did the same in Twitter.
2. Leverage existing communities through partnerships or sponsorships. Many SaaS companies are doing this, getting their brand in front of their target audience without the huge investments of running their own community.
Remember, community is all about people helping people.
At RevGenius, we’ve created an open space for people to join (for free) and help other people. And although it’s an industry-specific community (30k+ revenue pros), we encourage members to bring their whole person into the community, to grow and learn.
Join the movement at revgenius.com or learn about partnering with us.