Product-led Growth vs. Community-led Growth

Product-led growth is a business model in which a company’s product drives adoption and growth, rather than traditional marketing or sales efforts. This can be achieved through offering a free or freemium version of the product that allows users to experience its value and then upgrade to a paid version for additional features or access.

Community-led growth, on the other hand, involves building and nurturing a community of users or customers around a product or brand. This can be achieved through activities such as hosting events, fostering online communities, and engaging with users on social media. The goal of community-led growth is to create a sense of belonging and connection among users, which can drive word-of-mouth referrals and advocacy.

Some key differences between product-led growth and community-led growth

Focus: Product-led growth focuses on the product itself as the main driver of adoption and growth, while community-led growth focuses on building a community of users around the product, most often developers.

Marketing approach: Product-led growth relies on the product itself to attract and retain users, while community-led growth relies on building relationships and engagement with users through activities like events and online communities.

Revenue model: Product-led growth often relies on a freemium or subscription-based revenue model, while community-led growth may generate revenue through events, merchandise, or has no revenue objectives at all.

In a product-led growth model, companies focus on attracting users with a free or introductory version of their product, with little opportunity for these users to connect with each other or contribute to the conversation around the product. In a community-led growth model, users are able to interact and build with each other, forming a community whose presence and usage benefits both the users and the business. Community-led growth allows for more organic sharing of feedback and offers a more comprehensive view of business impact through metrics such as community-attributed leads and revenue. Ownership of attracting leads is also more evenly distributed across the organization in a community-led model, with multiple teams participating in community management. Ultimately, both product-led and community-led growth strategies aim to improve metrics such as cost of acquisition, customer lifetime value, and retention rates.

How to get started with a PLG strategy

  1. Product quality: The quality of the product is crucial in PLG, as it is the main driver of growth. The product should be useful, easy to use, and provide value to the user.

  2. Onboarding process: A smooth and intuitive onboarding process is essential to retain users and encourage them to upgrade to a paid version.

  3. Freemium model: A freemium model, where users can access a basic version of the product for free but must pay for advanced features, can be effective in PLG. This allows users to try the product before committing to a purchase.

  4. User experience: A positive user experience is crucial in PLG, as it can lead to word-of-mouth marketing and encourage users to upgrade to a paid version.

  5. Metrics: It is important to track the right metrics in PLG, such as product qualified leads (PQLs) and conversion rates, to understand the effectiveness of the strategy.

  6. Marketing and sales alignment: The marketing and sales teams should be aligned in PLG to ensure that leads are efficiently converted into paying customers.

  7. Customer success: A focus on customer success can help to improve retention rates and encourage users to upgrade to a paid version.

How to get started with a CLG strategy

  1. Purpose: A CLG strategy should have a clear purpose and value proposition for the community. This could be to provide support, share knowledge, or facilitate networking.

  2. Culture: The culture of the community should be welcoming, inclusive, and supportive. This can be fostered through regular engagement and moderation.

  3. Platform: The platform used to host the community should be user-friendly and facilitate communication and collaboration.

  4. Engagement: Regular engagement with community members is important in CLG. This could include hosting events, facilitating discussions, and providing support.

  5. Metrics: It is important to track the right metrics in CLG, such as the number of new members, engagement levels, and community-attributed leads and revenue.

  6. Alignment with business goals: The CLG strategy should be aligned with the overall business goals, such as improving customer loyalty and driving revenue.

  7. Collaboration with other teams: CLG should involve collaboration with other teams, such as marketing, sales, and customer success, to ensure that the community is effectively integrated into the broader business strategy.

 How to leverage PLG and CLG

PLG focuses on creating a product that is so valuable and easy to use that it drives organic growth through word-of-mouth and referrals. CLG, on the other hand, involves building and nurturing a community of customers and enthusiasts around the product, who can help promote it and provide feedback and support. By combining these two strategies, a company can create a virtuous cycle of growth, where a strong product attracts more users, who in turn contribute to the product’s improvement and evangelize it to others.

CLG can be a valuable source of insights and ideas for PLG. By engaging with the community and listening to their needs and preferences, a company can learn about new features or improvements that can make the product more appealing and valuable. For example, a software company can use user feedback and suggestions to prioritize new features or bug fixes, or to design a more intuitive and user-friendly interface.

CLG can also help a company build brand loyalty and reputation, which can contribute to PLG. By fostering a sense of belonging and connection among its customers, a company can create advocates and ambassadors who will not only promote the product but also defend it against competitors or negative reviews.

Both PLG and CLG can be supported by data and analytics. By tracking key metrics such as retention, churn, referrals, and customer satisfaction, a company can measure the effectiveness of its growth strategies and make informed decisions about how to optimize them.