Product-led growth vs. community-led growth

When product-led growth, or PLG, came onto the scene a few short years ago, it showed the software industry that business could—and would—be done differently. Now, community-led growth, or CLG, has entered the chat. Unlike some other go-to-market strategies, PLG and CLG don’t poach resources from one another. Instead, they can feed into each other to generate exponential growth for an organization.

What are product-led growth and community-led growth?

Product-led growth is a go-to-market strategy in which the product itself is used to drive business growth. Many companies now offer a “freemium” version of their product or a free trial to entice their target market to create an account and experience the offering’s value firsthand. For example, Airtable, a cloud collaboration platform, offers a free version of its software for individuals and small teams of up to five users. From there, customers can unlock additional features and invite more users via three paid plans. With teams at more than 300,000 organizations, including 80% of the Fortune 100, Airtable is a great example of finding success via product-led growth.

A community-led growth strategy increases customer engagement, retention, and lead generation by leveraging a community of enthusiastic users and subject matter experts (SMEs). This carefully nurtured community offers users and prospects quick answers to their questions, forges connections within and across industry builders, and often results in community-generated content which can be used to reach and convert more users.

For a glimpse into the power of a well-executed community-led growth strategy, check out Asana Together, a community Asana developed to engage and support prospects, customers, and builders in the productivity space. The community generates product awareness, helps distribute and elevate product education, and grows customer accounts.

The key difference between product-led growth and community-led growth is that PLG builds from the solution, while CLG builds from the customer. Together, they form a powerful growth strategy.

How product-led growth influenced community-led growth

Product-led growth marked a paradigm shift in how software companies thought about go-to-market strategies. It gained popularity because it reaches beyond traditional methods, like paid advertising and cold calling, which are inherently limited by budget and people power. Companies realized that using PLG methods—allowing users to self-serve and freely access some version of the product—reduced friction between their prospects and their products, creating additional paths to trial and adoption.

Regardless of the success of that initial experience, the product likely won’t maintain traction if you don’t continue to connect with your users. This is where community-led growth becomes a differentiator. Savvy businesses are cultivating dedicated communities, as well as the channels and networks to support them. The goal: sharing education and information about product value and best practices.

Key differences between product-led and community-led growth

While product-led and community-led growth are complementary, there are some key differences to be aware of.

Audience vs. community

Offering an introductory or abridged version of a product is key to product-led growth. Prospects who opt in comprise an audience of users with some level of intent—they’re likely open to receiving educational and some marketing materials. In a purely product-led growth model, these recipients have little opportunity to contribute to the larger conversation around your product or connect with people who share similar goals or responsibilities. With this approach, you’re speaking at your users.

Applying a community-led growth strategy opens up a way to speak with your users and allows them to interact and build with each other. Instead of being users, they transform into community members whose presence, usage, and expertise benefit each other as well as your business. Members are able to teach and learn from their peers, which also provides businesses with timely product and market insights and, often, relevant and valuable account leads.

User feedback

In a strictly product-led growth model, audiences are more likely to leave their feedback on social media profiles or in reviews in the App store. Feedback must be actively sought by customer support and service representatives, which requires a manual burden of time and overhead. Some companies may also send out user surveys, which often suffer from low response rates, hovering between 5% and 30%.

Alternatively, in an active community fostered by an intentional community-led growth strategy, feedback is shared organically through conversations among members as well as the community team. With the right community growth platform, community managers can capture, categorize, and triage this data to identify insights that inform stakeholders across the organization, from marketing and customer success teams to product, engineering, and support teams.

Performance metrics

While the number of downloads or sign-ups is a flashy metric to track within a product-led growth model, tracking the number of product qualified leads, or PQLs, is much more informative. A PQL is a user who actively engages with the product (usually a trial or free version), demonstrating high intent and signaling that they’d likely get value from a sales conversation to convert or upsell.

As you move toward a community-led growth strategy, tracking the number of new members and engagement metrics, such as responses, reactions, and shares, is important but only scratches the surface. Similar conceptually to PQLs, tracking community-attributed leads or revenue offers a much more comprehensive picture of business impact. These leads represent members who appeared in the community before becoming an opportunity in a customer relationship management platform (CRM), and the revenue is the annual contract value (ACV) from the organization those members belong to.

Whether someone interacts with your offering through the product first or the community first—or both concurrently—you’re ultimately working toward measuring the impact that PLG and CLG have on broader business goals, such as lowering the cost of acquisition, increasing customer lifetime value (CLV), and improving retention rates.

Ownership

Within product-led growth, certain teams are more heavily involved in different stages of the funnel. First, as the name suggests, the product team develops a compelling freemium or trial version of the product. The marketing team is then responsible for attracting leads to that free version of the product, after which the sales team often steps in to convert those leads into paying customers (if they can't—or aren't—signing up for the full featured version on their own). Customers are then passed on to the customer success team, and so on.

In a community-led growth model, the responsibility of attracting leads is more equally distributed across the organization. While a community manager is often primarily responsible for regularly engaging with community members, marketing, sales, success, product, and support teams can also participate in the community in more casual, connective, and authentic ways. When cross-functional teams engage with the community, members are able to interact with the product, business, and brand in more meaningful and enduring ways.

How product-led and community-led growth approaches work together

Think about community-led growth as an expansion pack for your product-led growth strategy. Prospects trust advice and referrals from their peers and impartial online sources over those of sales representatives or marketing materials. Fostering an active and engaged community is a valuable way to build and activate brand advocates who can more easily bridge that gap. These advocates will help with attracting leads, growing industry and product knowledge, increasing adoption and retention, decreasing support volumes, and refining your products for customers.

When successfully paired together, product-led and community-led approaches can enable your business to drive both revenue growth and value to your customers.

Drive awareness

A stellar product, a useful introductory trial that demonstrates value, and, potentially, a “freemium” offering are key to PLG success. Add a CLG-based strategy to that, and you’ll supercharge your potential to drive awareness.

In step with your community, you can build programs that give superusers early access to new features to help refine product development, land marketing messaging, and generate hype. It also allows you to highlight real-life customer use cases and success stories, forge deeper content and product partnerships, and extend the reach of product and community referrals that add to a community flywheel effect.

Drive upgrade and expansion

Product-led growth begins with a high-value, low-investment offer. It truly succeeds when a sales team is able to demonstrate the value of a paid plan to a large percentage of users (or, even better, they self-serve into a more robust, paid offering). Valuable sales conversations are easier to have when representatives have insight and context across the prospect’s journey.

By observing organic interactions within your community channels, your community and sales teams will better understand a prospect’s situation, interests, goals, and needs. This information will then empower sales representatives to have relevant, personalized conversations at pivotal moments.

Drive engagement

Encourage, acknowledge, and reward contributing members and power users for highlighting the ways they’re using your product or sharing knowledge, ideas, and content. You might invite them to collaborate on a blog post, participate in a beta testing program, share their tutorials on your social platforms, or co-sponsor an event to generate mutually beneficial reach and recognition. Depending on your community’s inclinations, you might also consider using gamification methods by creating challenges, games, and prizes that encourage members to have fun and share their experiences more broadly.

Drive community empowerment

As community engagement, product awareness, and usage grows, so too will your library of tutorials, self-service help material, and troubleshooting resources. Encourage your community, customer success, and support teams to point users to these resources to empower them to quickly find solutions to problems previously addressed by fellow community members.

Drive value

Use community channels to surface, track, and understand common questions, problems, requests, and trends. These insights can be used to improve the product itself, as well as the educational content in your knowledge base. When customers are empowered to succeed and shape the future of the product they’re using, value is created for them and for the business.

Tips for getting started

Software companies have an extremely high ceiling for expansion when they implement both product-led and community-led growth strategies. Read on to learn whether PLG and CLG strategies are a good fit for your business and what challenges you might see along the way.

Factors to consider when implementing a product-led growth strategy:

Things to keep in mind when implementing product-led growth:

• Two introductory offers that serve the goals of product-led growth are “freemium” products and free trials. In both cases, it should be easy for the end user to create an account and access the product.
• The user experience should have as little friction as possible while delivering recognizable value. Users haven’t invested time or money into your product, so they have little motivation to wade through complex functionality.
• Prospects want to know how you can solve a problem for them—right now. Delivering immediate value should be at the forefront of your marketing efforts.

Challenges to prepare for:

• Deciding just how much functionality to make available in the free version of your product can be difficult. Too much, and users have little reason to upgrade to the paid version. Too little, and they may abandon your product for their previous solution or for a competitor.
• Product-led growth is supercharged when a business or product achieves virality, which is often an elusive and ever-moving goalpost.

Factors to consider when implementing a community-led growth strategy:

Things to keep in mind when implementing community-led growth:

• Be intentional as you decide what type of community is best for your business. A community of product helps members use a specific product more effectively and creatively. A community of practice brings together people who are working toward similar goals or solving similar problems across industries.
• Be thoughtful as you build your community tech stack. Select the platforms and channels that best serve your target market and choose tools that allow you to track and measure the KPIs that are important to your business.
• Identify your product champions as they emerge. They will be important contributors, collaborators, allies, feedback providers, and fans.
• While a community manager will own community initiatives, it’s important that cross-organizational stakeholders to participate. For example, marketing team members should contribute to content production, customer success representatives can highlight great solutions and use case examples, and product teams can go deep into feature requests and feedback.

Challenges to prepare for:

• Analytics can be particularly challenging unless you use an intelligent community growth platform. Manually compiling, analyzing, and reporting data from various community sources is time-consuming and unmanageable at scale.
• It can be difficult to convince SMEs to dedicate their time to participate in community discussions, especially if you’re struggling to prove ROI due to limited analytics.

How Common Room can supercharge your community-led growth engine

Common Room is the intelligent community growth platform that unifies member data from previously siloed sources—think about all of your product users across platforms like Twitter, Discord, Slack, LinkedIn, GitHub, Discourse, YouTube, etc. When brought together in Common Room, this provides a holistic view into the conversations, trends, questions, and issues arising across your community channels.

From this unified view, Common Room surfaces intelligent insights to help you identify and take action on key product adoption trends, feature requests, product champions, and community initiatives. These insights can then be used to boost conversion rates, shorten your sales cycle, and help you deliver better products and experiences that people love.

Next steps

Communities often engage across multiple platforms, which makes it challenging to get a comprehensive view into what’s working, what isn’t, and what’s most important right now.

Use Common Room’s intelligent community growth platform to quickly understand data from your various community channels and surface intelligent and actionable insights that inform your ongoing product/market fit process, GTM strategy, and product roadmap. Try Common Room for free today or request a demo.