The underrated power of online communities for growth
Controlled online communities are the most underestimated tool for growth and product development in the startup world. In this article, I show why and how to use them for your business.
Controlled online communities are the most underestimated tool for growth and product development in the startup world. When you’re a Fortune 500 company you have enough resources to develop many products, serve many marketing channels and tackle many markets but in a startup, you have to choose carefully how to use them. It makes sense to strive for scalable and compounding channels to grow a startup; those that pay back more than you pay in. An online community is such a channel if done correctly. In this article, you will learn how startups can use communities in the form of closed environments, such as Slack channels, Facebook groups, online forums or Subreddits to grow and make better products and build strong and loyal tribes around them.
The power of controlled online communities (COOs)
Yuval Noah Harari points out the ability of humans to form groups and collectives in his book “Sapiens” as one of the main reasons for its survival and dominance. Malcolm Gladwell wrote about how ideas and trends spread through mavens, salesmen, and connectors to the broader mass in his book “The tipping point”. The power of communities has been proven throughout history over and over again, from the French Revolution to the American Independence to discovery of new countries, planets, and technologies. The levers and forces created by a group of humans can be stunning. And they can be used to grow companies.
What type of community are we talking about? Controlled online communities. In order to be leveraged for growth, a community has to live on a platform or environment that you can control.
Examples are messengers...
….social network groups...
...public messaging boards...
...and online forums.
Communities live on “platforms” and they must have the following core functionalities:
- Two-way communication: responding to other members to start conversations
- Storage: saving conversations and providing other members access to grow the depth of information of the community
- Sub-threads: splitting the community into smaller sub-groups to allow focused discussions
- Moderation: agreeing to norms and regulations that apply to all members to keep the community healthy
- Closed environment: allowing only registered or even invited users into the community to preserve standards and exclusivity
Just interacting with a community, say on Instagram or Snapchat, is not enough. You’re just part of a community but you don’t control it. In the next chapters, we’ll look at the precise benefits of controlled communities, which platform is the right one for your business and what steps to take in order to create your own community that you can leverage for growth and product development.
How to use (COOs) to grow a startup
We already established that startups are short on pretty much everything, so why should they invest into building an online community? There are two main tasks for every startup in that exact order: 1. build something people love (product-market fit), 2. grow. Opposed to most marketing channels, building a community can help you to achieve both, just like SEO.
Does that make it a marketing channel? Yes! Especially from the perspective of growth marketing, in which we don’t just sell a product but use marketing and research to make it better. When you own an online community you have a direct communication channel with your customers and potential ones. That opens the door to a vast amount of opportunities.
From a product development perspective, you get direct and fast feedback from users. You can invite them to beta-tests and receive ideas for new features. You can develop the product with your customers and ask prospects what features would get them on board. Just bouncing back and forth ideas with your (potential) customers makes them feel included in the development process and therefore more attached to the product. At the same time, humans tend to not easily question decisions they made, which means customers who were included in the development of a product tend to be less dissatisfied with it. That hypothesis is backed by a study about customer involvement in product development by Swedish researchers. However, ultimately it depends on the business you’re in.
From a customer support perspective, you can help customers out right away, collect the most common problems and feed those learnings back into product development. You can also create a list of the most common questions, which should inform your FAQ, tutorials/manuals and onboarding process. The latter is a crucial step in growth hacking that is often overlooked. Quick and easy onboarding affects the retention rate, which is one of the most important metrics for startups and indicator for product-market fit. Users will tell you when they hate the onboarding process and an online community you control is the perfect amplifier to build internal awareness for those issues.
From a market research perspective, you can converse with existing and potential customers to find out more about their problems, preferences, wishes, demographics, and needs. The possibilities are endless and so is the time you can invest into this step. But ask any developer or product manager about the insights you get from a 15-minute conversation with a customer about the product and you will quickly realize how valuable this is. Online communities come with the advantage that you don’t need to invite your customers into the office or call them on the phone, which most people despise anyway. The biggest benefit is that it’s on the customer's clock; she/he can decide when and if to engage.
From an evangelization perspective, you can turn existing customers into fans. When a customer has a problem with your product and communicates it, you have an opportunity to turn him into a fan by solving it within a respectable time or compensating for it. Not only do customers understand that they’re being heard, which is already powerful, but also that they’re being cared about. If that becomes part of a company’s DNA it doesn’t take long for the right person to evangelize a product just at the right time.
Perfect examples for customer service turning into PR (source)
From a customer acquisition perspective, online communities are the most efficient way to speak to a pre-qualified crowd. Announcing new products and updates or exclusive offers on COOs have a much higher conversion rate compared to other channels. Don’t advertise too often, though, or else you will quickly lose your community.
From an exclusivity perspective, users can get access to the company’s founders or product managers. This is especially attractive to “mavens”, a user group you pay painful attention to. Those are the people who call the number on the back of the soap to ask for the full list of ingredients. They want to know everything about a product and are therefore untouched experts. Mavens spread their knowledge out into the world and are especially valuable customers because they pay their knowledge forward and attract more customers if they’re satisfied. A COO provides them and other the perfect environment to engage and immerse themselves in the world of your business.
All of these benefits cannot only increase the signups to your product but also help you achieve and keep product-market fit. The constant monitoring through the community should qualitatively inform you about how much people love your product. With the value understood, it’s now time to get a little more hands-on and discover the right platform for your product.
Which community platform is best suited for your product
The right platform for your online community depends on your product and market size. Christoph Janz created this great chart that visualizes the 5 ways to create a $100M company, which helps you to understand how to find the right platform.
“The cheaper the product, the more customers you need”. There is a tendency that cheaper products suit bigger markets and vice versa. Cheaper products with more users benefit from network effects and user interaction, both of which are fostered through community-like features. This leads us to an understanding of optimal COO platforms that we can map on a graph, inspired by Christoph Janz.
The more expensive your product, the smaller the market. We can map different platforms to different market sizes and product prices, as you can see above. The four common types of platforms are:
- Messenger channels (Slack, Facebook, What’s App, Stride, WeChat)
- Social Network groups (Facebook, LinkedIn)
- Public messaging boards (Subreddits)
- Online forums/message boards
A platform like WhatsApp doesn’t make a lot of sense for a cheap product. The conversations would go too fast to follow, especially since users don’t have the time to constantly check for new responses. The only exception is if you have a smaller subset of your customers, e.g. premium customers, for which this could be an attractive benefit. For large masses of users, web forums or public boards are better suited. Good examples of large communities are the Salesforce developer and success communities.
If your product is expensive a platform like a messenger channel is better suited. Fewer users usually mean easier to follow conversations. A good example is the Propads slack community. On a subreddit, a small group would dry out. It would seem as if there was no engagement and that’s the death for bigger platforms.
Of course, there are exceptions that prove the rule. You can serve a large market but have only a few customers on a small platform. This either works when your product is very young or you take a small set of users. It doesn’t work the other way around, though. You cannot place a small user base on a large platform
With knowing what platform best suits your business now, let’s dive into how to actually build the community.
What the life-cycle of an online community teaches us about how to build one
The lifecycle of online communities can be found in nature and economy as well, like the incubation cycle of viruses or “the course of the empire” (source).
We can learn a lot of the COO life-cycle by looking at social networks. The life-cycle of social networks implies a lot of fast growth in the beginning, a decline of organic reach while the cost for paid reach increases, a cool-off period at which the community is saturated and then a slow death, at which users migrate to other social platforms. Two of the most popular social networks right now is still in the early growth phase.
Look at the crazy growth of Facebook…
… or Snapchat.
But we’ve also seen the death of the first couple of social networks, like Myspace.
And we’ve seen popular social networks stagnate in growth, like Twitter.
COOs are very similar to social networks but they’re not the same. We learn a lot from the life-cycle of social networks for the growth of COOs. We distinguish between four essential stages:
A fifth step could be the Diaspora, i.e. people migrating to another community platform (source). It would have been very interesting to see the migration from MySpace to Facebook, which probably started slowly and then caught up speed, possibly around the beginning of 2009.
You could also argue that a pre-first step is to join another community the same industry and become an essential part of it. This would allow you to then migrate some of the members to your own community and make the first stage significantly shorter.
Let’s look at each stage a little more in-depth and what you should do to get to the next one. Members join at different stages for different reasons, which is why you should not do the same thing in every stage.
Inception. The goal is to get to critical mass, which starts when ~50% of growth comes from members inviting other members, instead of the community manager. The focus should lay on high and frequent interaction to create momentum. As a community manager, you have five tasks at this stage and five tasks only:
- Bring new members on board.
- Engage with the community.
- Create content on the community that’s helpful for members.
- Make it as easy as possible for members to invite their friends and colleagues. Quora, for example, does a great job in increasing user acquisition by motivating its users to share their answers on other social networks.
- Set the tone - what’s okay and what’s not - by moderating the conversations.
The constant engagement and creation of content can be tedious but the more and better it’s done the faster your COO will advance to the next stage. It helps to create a content schedule for the first 3 months to have a plan to stick to. It’s important for new members to find great content on the COO. That could be AMAs with the founder of the company, exclusive giveaways or influencers who are paid to spend time on the platform and answer questions, for example.
This stage can last 0-9 months.
Establishment. The goal is to scale the community by providing support and moderation. You should see signs of community feeling, like insider jokes. Growth and activity should steadily increase at this stage.
(Growthhackers sells software but also has a very strong community with weekly habits)
At this point, you, as a community manager, should do the following tasks:
- Focus more on moderation, less on acquisition and engagement.
- Create weekly “habits” for the community, like a day in which everyone shares their biggest accomplishments of the week or a day on which a famous person from the industry does an AMA. Habits create stability, increase engagement and retention.
- You can start to slowly benefit from your COO in the form of selling and advertising to them. Do not overdo it at this point. Shoot out about one offer or call-to-action per week. If users complain, pull back.
It’s important to identify the driving members of the community. The “rule of 1-9-90” says that 1% of your users create, 9% edit or comment and 90% consume. Focus on the 1%. Build a relationship with them and reward them.
This stage can last 2-4 months.
Maturity. The COO experiences a natural plateau in growth and activity; its potential is maximized. Focus on increasing user activity as much as possible.
Emphasise the following tasks as a community manager:
- Seek out members to moderate and engage the community. They will usually be the 1% of the previous stage.
- Keep an eye on “competitor” COOs. Look at what other communities are doing to keep members engaged.
- Have very open ears about the dissatisfaction of some of your members. You want your COO to stay in this stage as long as possible. Avoid members leaving to other communities at all cost, since this work like a snowball system. One member leaves and drags more and more with him.
- You can push out offers and call-to-actions more frequently. Every COO has its own tolerance in terms of frequency. There is a need to switch it up from time. The benefit will shrink if you repeat your offers and push them out at the same time (principle of diminishing returns).
- Bring out new features to keep the community alive.
This stage can last 3-24 months.
Mitosis. At this stage, the community segments into smaller communities. This increases the feeling of a community again because after some size it’s difficult for all members to feel connected (source). But it can also break the community altogether if the transition into sub-communities isn’t smooth. It’s a very tricky stage.
Your tasks as a community manager are:
- Train managers of sub-communities, which can be members/moderators of the community.
- Develop own habits for each sub-community but keep some habits for all to keep members feeling connected.
- Keep a picture on the macro development and make sure no sub-community dries out or migrates somewhere else. Just as there’s a power law for the most active users driving most of your growth, there’s also one for the most active sub-communities.
This stage can last 1 month to infinity.
Tl;dr - COOs need some effort to get started but pay off big time in the long-run
Controlled online communities (COOs) are the growth lever nobody speaks about. They help you grow the product and monitor your product-market fit. The four main platforms for COOs are messengers, social network groups, public messaging boards and online forums. The right platform for your COO depends on your product and market size. Be aware of the four basic stages: Inception, Establishment, Maturity, and Mitosis. At each stage, you need to do different things to advance to the next stage. If done right controlled online communities push product development, market research, customer support, evangelization and customer acquisition.