Software is no longer sold; it's adopted

Software is no longer sold; it's adopted

Business
Patrick Woods
Co-Founder & CEO
Software is no longer sold; it's adopted
Welcome to The Observatory, the community newsletter from Orbit.

I'm Rosie, and I'll be your guide for this mission. Each week I'll go down rabbit holes so you don't have to. I'm here to share tactics, trends and valuable resources I've observed in the world of community building.

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It used to be commonplace for B2B tools to be slow, complicated, and require dedicated training to use them. The software came on CDs and required much customization and an orchestrated rollout. 

This was in the sales-led era when software tools were imposed upon teams who had little say in the matter. When decisions were made after long purchasing processes run by CIOs, who would never use the software they'd agree to buy.

Thankfully, since then, we've seen the switch from licensed software to SaaS and from on-premise to cloud. This consumerization of software has meant a fundamental change in the expectations of end-users. 

In this product-led world, folks won't simply use whatever tool they're given. They want to use the same tools at work as they choose to use in their own time.

Users expect to make a choice themselves, and the experience has to be stellar - they'll ditch products just as quickly if they aren't working for them. So lengthy buying cycles have gone. Now, software just shows up. It's no longer sold but adopted.

As purchasing power has become decentralized, vendors have had to adapt to this new landscape. Go-to-market strategies have changed with sales-led replaced with product-led. Paywalls have been replaced with trials or free tiers, and 'call us' pricing replaced with self-serve plans. 

For those attuned to this shift in buyer behavior, they've adjusted their budgets accordingly. Take Atlassian, for example; in 2020, their Sales and Marketing spend was 18.6% of revenue compared to an industry average of 38.7%, while their Research and Development spend was 47.3% compared to 21.1%.

This shift can be seen at an operational level too. There's been a growing focus on the importance of product onboarding and a rise in product analytics and growth teams, blending a mix of marketing, product, and engineering into one team to make the most of these product insights. These teams run regular experiments, squeezing out improvements across common product flows, and deploy specific tactics like in-app referrals to help drive recommendations, which together deliver big changes in a product's growth trajectory. 

Broken funnels in the land of adoption 

Inherent in a product-led approach is a user-centricity based around empathy and understanding for the end-user, their problems, and workflows. 

However, it's this holistic consideration of an end-user that's lacking in the approaches still taken by customer-facing teams within many product-led companies. They continue to operate solely around the traditional buying funnel. 

The problem is, the funnel was pioneered in a time when adoption, as a concept, didn’t exist. In fact, it was first introduced in 1898! 

The funnel is binary—a person is either a lead, or they’re not. It assumes the only value a person has can be measured by their likelihood of purchasing. And it imposes a tidy linear process that all prospects must move through. 

It induces a kind of myopia, where everyone is seen through the sole lens of conversion, preventing folks from seeing the full value of a channel, a campaign, or a person. 

But in a person-centric and product-led world, where software is no longer sold but adopted, people's online behaviors are more fluid than the funnel was built to cater for. 

This is a big reason why we created the Orbit Model, an open framework for measuring community growth. We learned from countless conversations, and our own experience, that a new metaphor was needed to understand communities. It’s based on the idea of Gravity, that great communities pull people towards the center, as opposed to pushing someone through stages of a funnel.  

How community drives software adoption

Just as Levitt's seminal article, 'Marketing Myopia,' was in the 60s a timely reminder to concentrate on customers’ needs rather than on selling products, we've had a similar reminder thrust upon us with COVID-19.

The global pandemic has forced through years of digital transformation in just a few short months (although, at times, we know it felt like a lifetime). As all work has moved online, we're now seeing an unprecedented focus on community. 

That's because software adoption doesn't happen in a vacuum. Folks decide upon products based on what they know and love or based on the recommendation of friends, colleagues, peers they know on social media, or even complete strangers. 

Users trust other users over marketing. They want to try before they buy, read reviews and guides created by users, not the marketing team, and get advice from others on how to avoid pitfalls. So it's common for the first touch-point for an end-user, and most interactions after that, to not be with sales or marketing but with the community around a product. 

These community members (and the assets they create) educate other users on navigating the landscape, overcoming objections, onboarding the product, customizing it, and more.

In other words, community is the new pre-sales. 

The impact of a community-centric approach 

Some categories of products were predisposed to benefit from the pandemic's sudden, dramatic shift to online work. From online study platforms, e-signature software, web conferencing, and password managers to collaboration and remote development tools. 

But within those categories, some products have benefited more than others. Many of those that reaped the largest gains were already focused on community, like HubSpot, 1Password, Postman, and Salesforce. From Slack to Figma, Typeform to Twilio, Atlassian to Airtable... many of today's fastest-growing companies are those who are not only product-led but community-driven.

They're the vanguard of companies who are making community a key focus for growing and engaging their user base. Precipitating an evolution from traditional marketing and direct sales to community growth and post-sales.

They get that an online community is dynamic and distributed. That a community is not a funnel and building a community is not about conversions but making real connections. 

Although, being community-driven does not mean scrapping sales, marketing, and customer success. On the contrary, community is a force multiplier for those efforts, that unlocks the potential currently being squandered by a narrow view on who is important as determined by the funnel. 

Community enables you to deploy direct revenue-driving teams in a more focused way, leveraging product insights to only reach out to the right users at the right time when you've gotten a good understanding of what's important to them based on their product and community activity. Spearfishing versus casting a wide net. 

Of course, using a community to help grow a business isn't new. But what's been lacking over the years is a clear understanding of community and how to use it effectively to benefit not just the community itself, but to grow a business. 

So many will still fail to understand this current shift and will bolt on community motions to existing sales and marketing activities. It won't work. The winners will be those that are truly community-driven. 

Case in point, Salesforce has been one of the biggest winners in enterprise IT of late, seeing quarterly revenue growth of 29% and 20% towards the end of 2020. Their 3M+ strong Trailblazers community is a significant moat for them in the highly competitive CRM market. This was made possible by them making it a priority at a senior level, being one of the first to have a dedicated VP of Community, Erica Kuhl, back in 2008. But Kuhl's job wasn't an easy one, she had to fight to prove out the value of community before it was taken seriously.

Hopefully we're moving past such struggles with the pandemic helping to crystallize the importance of community in facilitating software adoption and its defining impact on the future of a business's growth. But how to evolve your business to become community-driven in order to make the most of the opportunity is the work ahead for many.

At the heart of this is understanding why value creation beats value capture.

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