Community business models: product-led community

Community building is not a new profession. Long before it became mainstream a lot of companies had community managers in their staff. Hell, I was occupied as a community manager in a local Armenian VC for some long 8 months.

However, there's something unique happening to communities right now. If I draw parallels from my personal experience as a community manager during 2017 in Armenia, the community manager was kind of the person with the connections. My main task was to always be aware of everything, know what people are around and how to connect them in a meaningful way. In short, a walking networking application.

Fast forward 3 years later now Community Manager and Community Builder have a different meaning. If we take the regular job description for a community manager, what we will see:

community manager's responsibilities

Workable thinks that Community manager is someone in between for event manager and social media manager. Which, might be still true to some extent in the corporate environment.

However, in the world of free-ranging bootstrappers, self-funded startups and content creators community management is taking on a different meaning.

Who is the Community Manager for the startup:

If we take into account these main characteristics we can say that there's some overlapping between the community manager role and the startup founder's role.

With that in mind, I want to look into community building through the lens of startup and talk about the business models communities created and reimagined in 2020.

Characteristics for product-led communities

A product-led community is something that is reimagined by the current startup ecosystems. In other words, it's a community around a specific product. It is important to note that the "product" in this case doesn't have to be the product of a startup or a corporation. The product can also be considered a specific programming language, movie fandom, or game.

Let's explore the main characteristics of the product-led community.

Common usage of the same product

As mentioned in the introduction the consumption of a specific product is the main point of gathering for this kind of community. It's important to note that this model of communities existed well before communities became sexy new features for the tech industry. Communities for gamers, closed communities for specific fandoms existed well beyond 2020.

Customer development

Specifically, in the tech industry, this characteristic is well explored and used. Product-led communities often are created to gather all the customers in one place. This particularly helps with gathering feedback on the product and getting feature requests directly from the subsegment of people who are using the product every day.

Why community as a feature is important in the tech industry? Some points here:

Market or competitors research

The existence of product-led communities is of course a resource for every other entrepreneur to get an instant deep dive into the life of it's competitor. Imagine if Instagram had a community for customers. I think Facebook wouldn't have bought it, but just secretly would copy the features (as it does now!) and moved on. Getting access to a competitor's customer-only community is helping not only to understand the customer's needs but also to get the grasp of the market needs. As we know the most important stakeholder in the market in the customer.

Reimagining the MVP and defining MVC

With the rise of community building, we can start questioning the practices in the tech industry. For a long time, the conversation was revolving around user testing, market research, and building an MVP. We all used a lean canvas and started to go through iterations. And while the process was very agile still it required some step-by-step approach. You can't change and pivot your product overnight, you need to spend some time with your customers to understand the needs, etc.

The rise of communities and the no-code movement helped to turn the wheels on the process. You can now start a product and build a community around your product at the same time, and have live nonstop interaction. With the interaction, your product is shaped into something that is more fitting to the audience you are targeting.

MVP as a minimal viable product is not stepping down to give more room to think about MVC - minimal viable customer. While before founders were trying to fit the product to a large customer segment, now they have the opportunity to narrow down the specific customer they want to target.

How to start a product-led community?

From all the business models of communities, the product-led community is the hardest to start. As the process is the most like starting a startup.

Let's break down the ways you can do it:

Leverage the existing network

Although I'm not a fan of this method, it certainly has it's placed on this list. The good part of leveraging the existing network is that you'll most probably gain some traction from your connections. It may become a ripple effect that will bring your product (and community) near the eyes of your actual target audience, which is a risk to take but still worth the try. The cons of this solution it's very dependent on the "quality" of your network.

Thereof if you already have a built in the audience on your Instagram or Linkedin it will be easier to get off the ground.

If you don't have the necessary connections (or you just don't like social media and everything it represents hence you don't put in much effort) it boils down to luck. 

Advertising on social media or niche groups and communities

Still, as much as I want to live in a world where targeted advertising doesn't exist, well it does. And whether I like it or not, it's the easiest and on some platforms the cheapest way to bring your product to people. While it takes some investments it's the most effective way, and it's relatively easy to "predict" on which social media platform your target audience hangs out.

The other way of getting to your audience is finding the specific groups or other communities where people spend a lot of time. This is a relatively new path. You need to be aware of the fact that a lot of communities (on Facebook, slack, or other platforms) adopted the Reddit-like rules like "no promotions" and "no advertising" so the best way if you're going through that part is:

Educational hub

Again relatively new path for product (and community) development. However, some founders may be familiar with the process of "educating the customers". It's essentially the same thing going through the route of content or education hub. This way will take a long time and a lot of investments (like SEO efforts, advertising) and operational load. Creating an educational hub often means creation and management of:

Creating an educational hub, is adding to the efforts of product development 1,000% more work.

2 metrics for product-led community

Measuring the performance of anything (especially product) is a very important step. As much as you can install zillion of analytics tools any product needs a very specific set of metrics and KPIs to follow. Let's explore what kind of metrics can be useful for product-led communities.

For the simplicity of this section, I will review the product-led community as an extension of the product.

Top members of the community

Identification and 1:1 communication of the product-led community a good way to create a circle of product advocates. Top members can become your beta-testers, people who try your product first and give initial feedback.

Number of feature requests

How many of your customers are suggesting new features? How many of them is actually using your product after the changes go live. A very effective way to measure the degree of engagement with your product.

Business model of product-led community

The business model of product-led communities is the easiest one to determine. Generally they don't follow a very specific pattern and are developed in the shape of the industry the product is in. Hence, the community adopts the rules and the business model of the industry too.

For this section let's discuss the business models of product-led communities for B2C products and B2B products.

B2C products and communities

Product-led communities targeted to the large public have two ways to go in terms of business model:

In the case of the free community, the founders are generally gathering potential customers in the group. The important part is the community platform is not very sophisticated (it can be a Whatsapp group, Telegram chat, Facebook group) and use it mainly for communication and centralized channel to gather information, circulate surveys, and more.

In the case of paid communities, the focus is a bit shifted. In this case, the startup is mainly created from the community and communities' needs itself. Mainly it's coming from an educational hub or an inner circle. The price tag for entrance is not only for the community management efforts but also is relatively close to the potential pricing strategy for the product.

Paid community is a great way to validate an idea and also have a rock solid evidence of the customer's readiness to pay.

B2B products and communities

In the case of B2B products, the community building is taking a different route. The main justification for creating a community is not only product development, but also:

The business model of B2B communities is almost always free.

Conclusion

Product-led communities is a very old term reimagined and appreciated by the tech industry.

TL; DR review of product-led communities in this article:

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