Community Strength: Your Lever to Business Growth
In coliving, everybody talks about community. Nonetheless, I do believe that community is one of the most misunderstood and underutilized concepts within our industry; with many failing to unlock the full potential of their community for their business performance.
So what’s the value of a community for a (coliving) business?
Currently, the answer seems to depend more on your beliefs than hard data, and it comes in two flavours: On one hand, there are the die-hard coliving enthusiasts, for whom the concept of actively connecting their people is deeply ingrained into their belief systems, and therefore does not require any further explanation. On the other hand, there are the real estate developers and investors who often overlook community as a priority as there are no traditional KPIs, funding, or known strategies for connecting and encouraging a thriving community to strengthen one’s business.
When done right, however, community can be so much more than ensuring your residents are having a good time. It can become your business growth engine, functioning as your very own acquisition channel, product feedback mechanism, and brand differentiator, and this in turn can drive your business performance and profitability in ways no other channel can.
Introducing community-led growth
Community-led growth is a business principle that puts your community in the front and centre of your business: It is the community that informs your business decisions, impacts how you develop your product, do your marketing, structure your processes, and drive customer growth. Community-led growth has originated in the software industry as an extension of product-led growth (a notion in which the product itself drives customer growth through free trials, user activation etc. instead of heavy marketing spend). Today, however, with an increasing amount of ad impressions, the credibility issue of traditional marketing messaging and an increase in customer insights and choices, many companies outside of the tech world are discovering the power of community-led growth. They start to understand that a thriving community is a company’s most valuable asset as communities scale your business, resources, and presence in ways that traditional marketing or advertising channels can’t — think reviews, testimonials, referrals. Looking again at the software world, this is exactly how companies like notion have been able to grow so fast.
What does this mean for coliving?
In coliving, community is not a marketing strategy; it is the product in itself. That means as an industry we have a heads-start when implementing community-led growth strategies, as we do have a community already. Perhaps this community is currently not as active as it could be, but when we succeed in nurturing, engaging and empowering our community, and giving them the tools to thrive, we will not only be helping our residents have a good time. Done right, this will also kick off a virtuous circle boosting our business results: improving the value and the quality of the product you have created, increasing retention rates and word-of-mouth publicity while also reducing acquisition, maintenance, and operational costs, empowering you to make your community the driver of your business’ growth.
Let’s break this down further.
The five growth levers that come with a strong community
A strong community translates into 5 powerful levers that will further propel your business growth:
- Improved quality of the experience — Being close to your community and truly understanding their wants and needs will help you improve the quality and value of the experience you are creating, this in turn reinforcing the flywheel that you are building.
- Increased engagement — A strong community will also lead to higher engagement of your individual members, which again reinforces the strength of your community and helps newcomers connect and integrate easily. This results in closer relationships among your residents which ultimately increases the loyalty and commitment of members to your brand.
- Higher satisfaction — As a coliving operator, you are promising current and future members a community experience. By fulfilling your promise you increase the satisfaction of your members, helping them to become brand ambassadors.
- Growing social proof — Providing an experience that exceeds your residents expectation will turn them into raving fans of your coliving concept, which increases the likelihood and their willingness to talk positively about you — leading to more social proof like word of mouth, referrals, and reviews.
- Increased reach — Being able to tap into the networks of your current members will give you an increased reach of prequalified and vetted candidates who are typically already further down in the funnel compared to other candidates that you acquire through traditional sales channels.
The four business outcomes that a strong community drives
Through these levers you are not only building a self-maintaining mechanism into your community; you are also significantly impacting your bottom line by achieving the following business outcomes:
- Reduced acquisition costs — A well-functioning community will be able to self-sustain as it is able to retain existing members and pull in new ones. And the good news is that those potential new members are already highly qualified leads and much further down the funnel before they’ve even started talking with you.
- Increased length of stay — Being a member of a strong community also increases loyalty and therefore functions as a powerful moat to keep your current members with you. Research shows that if you empower your new members to make a new friend within their first 2 weeks of their stay the probability to renew already increases by 40%. And that’s only 1 new friend within the first 2 weeks — imagine how much more stickiness you can create if your community is alive and buzzing.
- Reduced costs to operate — An engaged community also comes with the benefit of reduced costs to operate as your residents are first of all taking better care of their own environment reducing the maintenance, and secondly also more engaged in taking over community tasks, thus further reducing the costs to operate.
- Higher profitability — All this ultimately translates into higher profitability for your business, as you are tapping into the very core of your product offering to leverage it. Of course, a strongly engaged community is also a great audience to sell additional services or experiences to, but for this exercise, we will not even consider this.
Focusing on unleashing residential communities done right will in itself become a key for your growth as it kicks off a virtuous circle by increasing retention and word-of-mouth while also reducing acquisition, maintenance, and operational costs.
This is what we at Obeyo are all about helping you to bring your residential community come to life. If you are new to building residential communities, or would like to understand better how your own community is doing, have a look at our Community Strength Index Assessment here!
- About Michael: Michael is co-founder and CEO at Obeyo. Passionate about connecting people, he loves to explore ideas at the intersection between community, shared-living, and technology. Feel free to connect with him on LinkedIn.
- About Obeyo: Obeyo is the first all-in-one residential living platform built around the learnings from 100+ shared living operators.