Community-Led Growth: A Scientific Approach to Benchmarking Social Apps

Community-Led Growth: A Scientific Approach to Benchmarking Social Apps

In the world of technology and social apps, community-led growth is becoming a dominant force. People are not just using these apps for investments or entertainment; they are using them to connect with others and build communities. This shift towards community-first orientation is not unique to one app or platform. Companies are now valuing community as a core part of their business, rather than just adding a forum as an afterthought.

The key to building a successful community is to break down barriers and enable customers to interact with each other. It's about creating a space where customers can build relationships without the company's constant involvement. Community should exist for the sake of community, not just as a means to push product updates. The vibe and mindset of a community are what truly make it work.

But how do you know if your social app has the potential for lightning-fast growth? Benchmarking is the answer. While success in the consumer social space may seem random, there are early data points that can predict whether an app will plateau or go mainstream.

The first step in benchmarking growth is defining your core metric. For most consumer social apps, this is daily active users (DAUs). You want to see consistent growth in this metric, with the trend ideally moving upwards. Additionally, monthly user growth is crucial. A growth rate of 20% is considered okay, 35% is good, and 50% is great. It's important to focus on organic growth rather than relying too heavily on paid sources.

Engagement ratios also play a significant role in benchmarking social apps. The most popular ratio is DAU/MAU (daily active users divided by monthly active users). A ratio of 25% is okay, 40% is good, and 50% or higher is great. This ratio indicates how often users are using your app and making it a regular part of their lives.

Another important metric is the L-ness curve, which looks at the distribution of users by the number of days active over a certain period. Best-in-class social apps have an L-ness curve that "smiles" or skews to the right. This means that users are consistently using the app over time. A 30% L5+ performance is okay, 40% is good, and 50% or higher is great.

Retention is a crucial aspect of long-term success for social apps. N-day retention, or bounded retention, is a key metric to track. For example, d1 (day 1) retention of 50%, d7 (day 7) retention of 35%, and d30 (day 30) retention of 20% is considered okay. Higher percentages are better, with 70% d1 retention, 50% d7 retention, and 30% d30 retention being great.

It's also important to analyze how quickly the retention curve flattens out. A significant degradation of retention between d7 and d30, along with a lack of flattening by d30, can be a cause for concern. This suggests that longer-term retention may not hold up. Weekly retention benchmarks can help assess this, with w1 (week 1) retention of 40% being okay, 55% being good, and 75% being great.

When benchmarking social apps, the higher the engagement and retention metrics, the better. Early users are often the most engaged and have the highest retention rates. Additionally, longer time frames provide more valuable insights into the success of an app. It's common for acquisition and engagement to drop off after the initial spike, as apps often require iterations to find their true potential.

In conclusion, community-led growth and benchmarking are transforming the tech industry. Companies are recognizing the importance of building communities and valuing them as a core part of their business. Benchmarking metrics such as daily active users, monthly user growth, engagement ratios, L-ness curves, and retention rates provide valuable insights into an app's potential for success. By focusing on community and using benchmarking as a scientific approach, social apps can unlock their true growth potential.

Actionable Advice:

1. Prioritize community-building: Value community as a core part of your business, not just as an afterthought. Create spaces where customers can interact with each other and build relationships.
2. Focus on organic growth: Strive for consistent organic growth rather than relying heavily on paid sources. A strong community will naturally drive viral growth and user acquisition.
3. Continuously analyze and improve retention: Retention is crucial for long-term success. Monitor retention metrics closely and make adjustments to your app or platform to ensure users keep coming back.

By following these actionable advice and embracing community-led growth, social apps can thrive in the ever-evolving tech landscape.