Why Your Community Strategy Shouldn't Look Like a Marketing Funnel

How the most effective brands are building belonging instead of optimizing conversions

The marketing funnel—awareness, consideration, conversion, retention—has shaped campaign planning for decades. It’s linear, measurable, and maps cleanly to budget allocation. Awareness spending goes here, conversion optimization goes there, and retention programs get whatever’s left.

But watch how e.l.f. Beauty actually operates, and you’ll notice they’re doing something different. When they launched the Halo Glow Lip Kit, it wasn’t because market research identified a gap. They listened to community signals, saw what people wanted, and moved fast. When they decided to sponsor a NASCAR car, it wasn’t to “reach NASCAR demographics.” They noticed their community was already engaged with the sport on platforms like Twitch and went where the conversation was happening.

This isn’t funnel thinking. It’s community thinking. And research suggests it’s measurably more effective. According to Circle’s 2025 Community Trends Report, one engaged community member equals 234 social media followers in total engagement actions. Community members are 6.2x more likely to share brand content than non-community followers.

Those aren’t incremental improvements. They represent a fundamentally different relationship between brands and customers.

The Funnel Model’s Inherent Limitations

The marketing funnel assumes a one-way flow: brand creates message, message reaches audience, audience moves through stages, some portion converts. It’s transactional by design. Each stage has a clear objective measured by conversion rate.

This model works for products bought infrequently based on rational evaluation. Considering insurance providers? You’ll probably research options, compare prices, and make a deliberate choice. The funnel fits.

But most consumer brands don’t work that way anymore. People don’t “consider” which beauty brand to follow on TikTok. They don’t “evaluate” which fitness app community to join. They participate based on whether it feels authentic, whether the brand shares their values, and whether other community members are people they want to engage with.

McKinsey found that 71% of consumers expect companies to deliver personalized experiences, with 76% expressing frustration when this expectation isn’t met. But personalization isn’t about serving targeted ads. It’s about making people feel understood and valued—which is fundamentally a community function, not a funnel optimization.

The funnel also assumes customers move through stages linearly. In reality, someone might become a vocal brand advocate before making their first purchase. They might convert, churn, then re-engage through community connection years later. They might never personally buy but influence dozens of others who do.

Traditional funnel metrics can’t capture this complexity. Community engagement metrics—depth of participation, peer-to-peer interactions, user-generated content, organic advocacy—surface patterns that conversion funnels miss.

What Community-Led Actually Means

“Community marketing” has become a buzzword, often conflated with building a Facebook group or Discord server. But those are platforms, not strategies. The strategy is fundamentally different from traditional marketing.

Community-led marketing starts with listening. e.l.f.’s entry into Italy began when they noticed social buzz about their Power Grip Primer from Italian consumers. They didn’t run market research, test messaging, or launch a pilot program. They engaged with the existing conversation, built on the organic excitement, and launched. The product became Italy’s top-selling primer.

Traditional marketing would have moved differently: identify market opportunity, develop entry strategy, create localized messaging, run awareness campaigns, measure conversion. That takes 12-18 months and significant investment. e.l.f. moved in weeks because they followed community signals rather than formal processes.

This requires different organizational capabilities. Marketing teams need social listening tools, real-time response protocols, and decision-making authority. You can’t move at the speed of community if every action requires approval chains and legal review.

Lululemon built its community through ambassador programs that gave regular customers platform to share their fitness journeys. These aren’t influencers with massive followings. They’re community members who embody the brand’s values and bring authenticity to the relationship. The company invests in these relationships not to drive immediate conversions but to strengthen community bonds.

That investment probably looks inefficient in traditional ROI calculations. How many sales did that local yoga teacher drive last quarter? But it’s the wrong question. The right question is: how strong are the community connections, and how sustainable is the relationship?

The Economics Are Actually Better

The community approach seems more expensive—investing in long-term relationships, supporting user-generated content, building platforms for peer interaction. But the unit economics often favor community over traditional marketing.

Brands that excel at personalization generate 40% more revenue from those efforts than competitors, according to research. Community enables personalization at scale that targeted advertising can’t match. When community members know each other and share experiences, they personalize for each other—recommending products, answering questions, solving problems.

Customer acquisition costs drop substantially. Friends or family recommend a brand, and customers are 84% more likely to trust it than advertising. A strong community generates organic word-of-mouth that reaches people who don’t respond to ads. This costs far less than paid acquisition.

Customer lifetime value increases. Community members stay longer, buy more frequently, and are less price-sensitive. Peloton’s success stems largely from the connected fitness community that keeps users engaged. The retention rates justify the premium pricing and hardware investment.

One concrete comparison: Circle’s research found that community-driven content receives 4.5x higher comment rates than traditional marketing content. Comments represent depth of engagement—the willingness to invest time and thought in response. That engagement predicts future behavior better than clicks or impressions.

For brands with limited budgets, the choice between broad reach through advertising and deep engagement through community increasingly favors community. You can’t compete on paid media spend with incumbents who have enormous budgets. But you can build community relationships that established brands struggle to replicate.

What This Looks Like in Practice

Nike shifted from selling shoes to facilitating a lifestyle community. The Nike Run Club app connects runners, provides training plans, celebrates achievements, and enables social competition. Nike still sells shoes, but the relationship starts with community participation rather than product features.

This required massive investment in technology, content, and community management. The payoff shows in brand loyalty metrics and pricing power. Nike isn’t the cheapest running shoe, but community members don’t comparison shop on price—they buy Nike because they’re part of the Nike running community.

Patagonia built community around environmental activism. Customers aren’t buying jackets; they’re joining a movement. Patagonia’s “Don’t Buy This Jacket” campaign explicitly told people to buy less, contradicting basic marketing principles. But it strengthened community bonds around shared values, which drove long-term loyalty that more than offset near-term sales impact.

These examples are large brands with substantial resources. But the principles scale. Smaller brands can build engaged communities even more effectively because they can move faster and maintain authenticity more easily.

Glossier built its entire business on community engagement. The company started as a beauty blog with engaged readers, evolved into a product line developed based on community input, and scaled through community advocacy. At peak, over 70% of customers came through peer referrals rather than paid acquisition.

The company eventually faced challenges scaling this model, but the early success demonstrated that community-first can work at venture scale. The issues weren’t with the community approach; they were with operational execution during rapid growth.

The Measurement Challenge

Traditional marketing measurement is mature. We have attribution models, media mix modeling, conversion tracking, and incrementality testing. We can quantify exactly what each dollar of ad spend generates.

Community measurement is murkier. How do you value a Reddit thread where community members enthusiastically discuss your product? What’s the ROI of sponsoring a local event that strengthens community bonds but doesn’t drive immediate sales?

Some metrics are emerging as standards. Khoros outlines 11 key community KPIs including active members, engagement rates, content creation, peer-to-peer support, and net promoter scores within the community. These measure community health rather than immediate commercial outcomes.

The challenge is connecting community health to business results. Finance teams understand CAC payback periods and LTV:CAC ratios. They’re less comfortable with “community engagement increased 40% this quarter.”

This measurement gap creates budget challenges. Community investments often come from discretionary spending rather than performance marketing budgets. When companies face pressure to cut costs, community programs get eliminated because their ROI isn’t clearly demonstrated.

The solution is building better bridges between community metrics and business outcomes. Track purchase patterns among community members versus non-members. Measure referral rates. Calculate support cost savings from peer-to-peer help. Quantify reduced churn among active community participants.

These connections exist; they’re just not always measured systematically. Brands that build rigorous community measurement frameworks can justify investment even in difficult economic environments.

Where Traditional Marketing Still Matters

This isn’t an argument for eliminating traditional marketing. Mass reach still matters for some objectives. Brand awareness campaigns work. Performance marketing drives measurable results.

The most effective approach combines both. Use traditional marketing to build broad awareness and drive initial consideration. Use community to deepen relationships and enable organic growth.

According to Popular Pays analysis, community-driven content receives substantially higher engagement, but traditional marketing still excels at creating broad awareness and communicating simple value propositions. The question isn’t which approach is better—it’s how to integrate them effectively.

Spotify uses traditional marketing for major product launches and artist promotions. But the platform’s core stickiness comes from community-created playlists, collaborative filtering, and social sharing. Both matter; they serve different functions.

The balance shifts based on product category, target audience, and business model. For commodity products sold primarily on price, traditional performance marketing may remain dominant. For lifestyle brands where values and identity matter, community becomes central.

Implementation Challenges

Building authentic community is harder than running ad campaigns. It requires patience—communities develop over time rather than spinning up on demand. It requires authenticity—people detect and reject corporate manipulation quickly. It requires relinquishing control—communities develop their own norms and conversations that brands can’t fully direct.

These aren’t impossible challenges, but they require different organizational capabilities. Marketing teams trained in campaign management and funnel optimization need new skills: community management, real-time engagement, conflict resolution, platform moderation.

There are also cultural barriers. Senior executives trained on funnel marketing may struggle to evaluate community initiatives. The metrics look different, the timeline is longer, and the ROI is less immediately clear.

For publicly traded companies with quarterly earnings pressure, investing in multi-year community building over near-term performance marketing requires conviction. Leadership needs to believe in the community approach enough to withstand periods where traditional metrics look weaker.

The shift also affects organizational structure. Community management often sits uncomfortably between marketing, customer service, and product teams. Who owns community? Who gets budget? How do you coordinate across functions?

Brands that succeed establish community as a first-class function with clear ownership, dedicated resources, and executive sponsorship. It can’t be an afterthought managed by whoever has spare capacity.

Looking Forward

Several trends suggest community-led approaches will become more central:

First, younger consumers expect it. Gen Z doesn’t just want products; they want brands that reflect their values and facilitate connection. According to multiple studies, they actively seek brands taking meaningful stances on social issues and contributing to real-world impact.

Second, paid reach is declining in effectiveness. Ad blocking, privacy changes, and platform algorithm shifts are making traditional advertising less effective. Community-driven organic reach becomes more valuable as paid reach becomes more expensive.

Third, AI enables better community management at scale. Tools can identify trending topics, flag issues requiring attention, and suggest engagement opportunities. This makes community management more efficient and scalable.

Fourth, competition is intensifying everywhere. Most categories are crowded with similar products at similar prices. Community becomes a defensible competitive advantage that’s hard to replicate.

The brands winning in this environment won’t be those with the biggest ad budgets. They’ll be those building the strongest communities—creating spaces where customers connect with each other, share experiences, solve problems, and advocate organically.

That requires thinking beyond the funnel. Not abandoning measurement or strategic discipline, but recognizing that the most valuable customer relationships can’t be reduced to conversion rates and click-through percentages.

The funnel optimizes transactions. Community builds belonging. For an increasing number of brands, belonging matters more.