Innovative Insights

Death of Product Market Fit (& Emergence Of Community Market Fit)

January 17, 2022
 | by 
min read

Think of Community Market Fit as an extension of Product Market Fit. But what is it even? And how do you find it?

Death of Product Market Fit (& Emergence Of Community Market Fit)
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We’ve all heard the term ‘product-market-fit’. It’s one of the most important things for most start-ups. It’s also where most start-ups fail. In essence, it means finding a product that the market wants, and is willing to pay for.

When a startup raises their first round of capital, their goal is to find product-market-fit (PMF). Basically, a market need for what they're selling. But what is community market fit?

"Community Market Fit is gravity. When you're far it feels like you're grasping blindly in the dark. You're not sure where to go. The closer you get, the stronger the pull. You start feeling acceleration. You're seeing more people join your events, your conversations, and more conversions to paid users. There's no feeling quite like it."

"The center of the gravity well is narrative. Your distance from the center is how well your community appeals to the ideals of the user. As you get closer to the perfect narrative, you should feel the pull of members joining and engaging, accelerating your progress."

The Scenes Community Engine

This engine is the primary framework we used to grow the best Scenes communities, and our very own Discord community (needless to say, it’s a fool-proof strategy for community growth). 

The Scenes Community Engine

Let me break this down for you. First, you need a top of the funnel. It could be YouTube, it could be ads, it could be you sponsoring other newsletters or creators.

Then, you need events. With products, you always send people to "Download app" or "visit this website". With communities, redirecting people to a forum or a chat they aren't familiar with is a recipe for disaster. Events are a better landing page — this is also why events have been inbuilt into Scenes despite how hard and expensive it is to do so. Since events can't be a daily occurrence (exhausting to do + overwhelming for existing users + hard to plan), you'll have to plan out your ads/inbound channels over the week for a weekend event.

Right after the event, people are also quickly briefed about using the chat and other asynchronous interaction channels. This creates lots of engagement until the next event.

Once engagement has been secured, you can proceed to give roles to engaged members and focus on monetization and referrals.

Now let’s put some numbers into this engine: 

Let's say you spend $1, let's call this initial CAC (ICAC). Let's say you have an attendee joining an event at this cost. Let's say 1 in 2 event attendees convert and join your community. That's a cost of $2 for a new community member. Now let's say 10% of your members are active at least once a month, even if that engagement is simply lurking around the community.  Essentially, it costs you $5 for an active, engaged member. You also want to use the referral math presented here:

viral factor for Community engagement

If you can keep a K factor of >0.5, your cost of acquisition per engaged member is now halved, to $2.5. Remember, this is the cost for an engaged member, not just a member. Engaged members are almost always going to use your product over a competitor's. Now reverse the math, find out your customer lifetime value (LTV), and work backwards to find your maximum allowable ICAC.

You know you've hit CMF when your ICAC < LTV, allowing for some increase in ICAC over time.

With our own Discord community, we ran hundreds of giveaways, contests, private events, just for folks who were willing to invite other members. Don't underestimate the power of users inviting other users; fast growth startups like Dropbox and Clubhouse witnessed massive community growth primarily because of referrals.

This is also why I recommend ALL communities to start invite-only. The cool-factor aside, viral factor  (k) sharply goes up when the only way to get into a community is by invite. Paradoxically, making a community open makes people less likely to join it and refer others, at least in the initial days.

Real-life examples of how businesses achieved community-market fit

After learning about community-market fit, I am sure you would be wondering how you can apply the principles to your business.

Fret not, I am going to give you a list of cool examples of how some well-known enterprises achieved the same. Are you ready?

1) Moz

  • Moz is a Saas (software as a service) tool that helps you do SEO (search engine optimization)
  • The people working at Moz found out that Moz is a fairly technical tool and the customers of the tool needed some support to use the tool efficiently. 
  • To give you context, imagine if you bought a new washing machine, you would need a user's manual to operate it.
  • The dynamics of the industry are such that every time Google launched an update, the best practices of SEO changed.
  • So, Moz built a community of customers (and potential customers) of its tool who discussed best practices of SEO and how to use the tool efficiently.
  • They asked questions, provided insights, helped the community and so much more.
  • Every person who practised SEO wanted to be a part of the community just for the sheer value of the community.
  • The community alone helped Moz in the acquisition and retention of thousands of new customers.

Pro-mantra: If you want to build a community around your Saas tool, Scenes gives you a white labeled solution. Book a demo today

2) Lululemon

  • Lululemon is an athleisure brand selling clothes, athletic wear, lifestyle apparel, accessories and a lot more.
  • It created a community of its local exercise leaders. People who wanted to practice a healthy lifestyle became a part of that community. 
  • It associated the community as a medium to promote a healthy lifestyle and in turn increased the sale of its products.

Have you ever bought something from Lululemon? Do you now understand the value of a community? 

Hopefully, this article has given you a clearer idea on how to make a community that meets expectations, and rakes in the numbers. If you face any hurdles while trying to find your community market fit, the team at Scenes is more than happy to help.

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