The Case for Free Communities
I had a rare honor last week to give a talk on how to “Build a Profitable Community.” It gave me time to connect with several founders about different ways to monetize their own communities.
In speaking with them, one key question emerged: Was it better to start free and then transition to a paid community later on or just start out paid? It’s a great question. One that I hear a lot of community managers disagree about often.
Free communities can work, yet there’s a specific way that they need to be run in order for them to lead to ROI. The free nature of the community doesn’t mean there’s no return on your investment, it just means that the return has to look different than direct revenue.
Free can be a Pro Move.
Here’s why:
Brand Expansion:
Building a free online community for your business can significantly expand your brand's reach. Suddenly, people who may have never encountered your brand are becoming aware of it. The community then acts as a powerful demand generation tool, driving interest in the other revenue-generating aspects of your business. In this sense, your community acts like a highly personal marketing tool. People get a feel for what your company does, what your brand believes in and they get to determine if you are someone worth buying from.Consumer Behavior & Value Perception: In today's oversaturated market, consumer behavior is shifting. Ads cost more, consumers are experiencing growing ad fatigue, with people feeling less inclined to click on ads that don't offer immediate, tangible benefits. While ads still work, their effectiveness seems to be waning; even I find myself clicking on them less frequently. By contrast, joining a community feels different. It’s a step towards self-improvement, offering a taste of what your brand can deliver. This engagement gives consumers the confidence that they're making a smart choice by exploring what your brand has to offer. The ultimate goal of this value exchange is to build trust, converting that initial interest into a lasting relationship with your brand.
Audience Segmentation and Community Engagement: Those who join your free community may or may not ever buy anything from you. However, if you create a valuable, engaging space that exists to serve them, you create new opportunities. They may not be able to afford what you sell, but perhaps they’ll refer others to you. Compared to traditional advertising, the percentage of irrelevant audience engagement is significantly lower. Your community will naturally filter and attract a blend of the wrong people, the right people, and those who are on the fence, creating an environment where engagement is more meaningful and targeted.
Maximizing the Right Audience: The key to a successful community lies in maximizing your reach with the right audience—those who resonate with your brand and are open to being persuaded. By addressing their pain points and offering solutions, you create a powerful draw that turns casual participants into loyal customers. This community allows you to connect with new prospects who might never have considered your brand otherwise, expanding your customer base in ways that traditional marketing methods might never achieve.
| “Good rule of thumb: If you sell a physical product, aim for a free community.”
A Theoretical Example: Spikeball
Let's take a physical product, like "Spikeball" for instance. They have a "free community" that's called the "Inner Circle." Clever name (if you know the game). But after I joined, I was disappointed. What they pitched as a "community" is merely a rewards program. Missed opportunity. Here's how they could make a huge difference instead:
Identify what the business goal for the community is: i.e. Boost Collegiate sales by 15% in Q4 of 2024.
Niche down (segment) their audience to focus on male college students across Ivy League schools in the USA.
Create a community (using Circle's Business/Enterprise Plan) that’s fully branded with Spikeball’s brand.
Test potential features with this niche. Ideas could include:
Create a swipe file of rules, tips, tricks, links to instruction videos on how to improve your gameplay, etc.
Create a scheduling feature that uses a college student’s availability, skill level, and college to match new players together.
Sell unique merch within the community (leveraging their existing “Inner Circle”)
Sponsor an inter-collegiate tournament with a big cash prize. Promote this like crazy.
If successful, utilize influencer marketing to grow the community which drives demand generation and new interest in the game leading to more units sold.
Test it. See if it performed it better than ads.
Create a Revenue Generating Community or Go Free. No In-Between.
It’s an important note to recognize that investing in a community costs money. But so do direct ads. So does marketing. So does your time in writing your next blog.
While not every community should charge, I highly suggest against the temptation of a compromising decision (i.e. charging a low-ticket $9/mo. for 25 people to access your community).
If you charge, go big. If not, go free.
Don’t water down the value your brand offers by charging a nominal fee to recoup the costs of the community.
Either make it a significant enough revenue generator for your business (i.e. at least 10% of your overall business revenue) or just make it an extension of your brand for free. They’re both good investments, but don’t run the risk of charging too little which causes your audience to distrust the value you have to offer.
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This blog contains affiliate links. I only provide links to brands I believe in. And no, Spikeball doesn’t contain an affiliate link, I just love the game :)
