Marketing in the modern world faces new challenges. Acquisition costs have increased, competition is severe, talent is scarce, and distribution is becoming increasingly difficult.
If you’re a marketer in today’s downturn era, you might find that growth is slowing down, leads are of low quality, and conversions aren’t coming easy.
If your tried-and-tested marketing funnel model struggles to provide answers, it’s time to consider an alternative—perhaps the growth loop.
Read on to learn more about the new framework in town and how companies are implementing them in their marketing plans.
How to Use Growth Loops (With Examples)
Summarize this article for me pleaseUnderstanding the Core Concepts of Growth Loops
Imagine this. A prospect sees your ad or your post on LinkedIn. Intrigued, they sign up for your product. They read your newsletters, share a review online, and give a testimonial. Backstage, they refer a friend, that user signs up, and the cycle repeats.
In the above scenario, you have kickstarted a self-reinforcing cycle that will drive continuous growth for your business. You have put together a growth loop!
What is a growth loop?
A growth loop is a framework for driving sustainable and scalable growth by creating a self-perpetuating cycle of customer acquisition, engagement, retention, and advocacy. They are characterized by the following.
User-led: While the initial user is acquired through ads, SEO, etc., the rest of the cycle is user-led. Users take action within the product, leading to output. The compounding effect of user actions leads to more new users and growth.
Compounding: Growth loops are circular and iterative. They create a self-sustaining feedback loop where the output of one cycle generates new inputs for the next cycle. This allows exponential growth due to compounding over time.
Cross-functional: Growth loops encourage input and participation from multiple teams. By combining various channels and activities, the system brings the team together instead of having them work in silos.
How do they compare: Growth loops vs AARRR funnels?
AARRR represents the five stages of the customer journey—Acquisition, Activation, Retention, Referral, and Revenue. It was designed as a simple and comprehensive approach to managing customer lifecycle marketing.
AARRR, when introduced, had its advantages. It helped in validating product-market fit, improving customer experience, and making data-driven decisions about the product. Although extremely popular even today and widely useful, some marketing teams began finding the framework inadequate for the following reasons.
AARRR funnels create silos: Different teams work in different segments of growth funnels. For example, digital marketing is responsible for the top of the funnel, sales development representative might be in charge of conversions, and customer advocacy teams take over retention.
This led to teams thinking and working in silos, with no incentive to optimize the entire journey for the customer.
Funnels are expensive: AARRR model solves growth-related problems by feeding more at the top, increasing customer acquisition costs. The more expensive it is to acquire a customer, the fewer you can bring down your funnel.
Funnels are unidirectional: While more leads at the top mean more chance of conversion further down the road, there is no compounding, reinvesting or sustainable growth. The budgets are allocated for that one time, either to acquire or convert. In many ways, the expectations of linear growth from funnels pull the investment into the abyss.
Growth loops address all these concerns and provide a more powerful alternative. Here’s how they’re different from—and more effective than—AARRR funnels.
Growth loops eliminate silos: The circular, self-reinforcing loop goes through various stages or teams, bringing them together and eliminating siloes. The non-sequential movement adapts better to the nature of the customer.
Growth loops are better for ROI: The compounding nature of the of the loops-based growth model increases the customer lifetime value (CLV) of everyone joining the loop. By using effectiveness-based metrics like virality coefficient or loop velocity, marketing teams focus on driving greater value from the loop.
Growth loops are multi-dimensional: Unlike the one-way user flow in AARRR funnels, growth loops are multi-directional. In fact, it is also possible for the journeys of different users to overlap or intersect, creating larger loops.
Why must you consider using growth loops?
In addition to reducing customer acquisition costs, enabling self-reinforcing marketing, and sustainable processes, growth loops contribute significantly in three areas.
Software adoption
Software-as-a-service (SaaS) is a highly competitive space. Prospects make decisions primarily based on recommendations and reviews from peers. Modern software companies understand this. So, they design SaaS marketing strategies to:
- Ease up the consideration phase with free trials and demos or even custom proofs of concept (PoCs)
- Use testimonials and case studies for social proof
- Leverage existing users as advocates through incentives and social capital
- Conduct webinars and events to encourage personal viral loops
Content creation
The biggest impact of growth loops is in user-generated content, such as reviews, comments, testimonials, social updates, etc. But that’s not all. The model also creates a certain content loop for all kinds of brand communications.
For example, client experiences can be converted to case studies. Top customers can write guest posts. Key customers/partners can join webinars and other growth marketing events. Repurposing and using this content perpetuates the growth loop. And rank high on search engines, all channels feeding off one another.
Customer experience
A biggest part of the growth loop model is customer advocacy. The model depends on the customer being happy and persuaded to recommend it widely. This means that customer experience is a primary goal.
The growth team—i.e., marketing, sales, and customer success—works in tandem to deliver a consistent, engaging, and persuasive customer experience.
To do that well, they need to choose the right type of growth loop from the many that serve different purposes and support different goals. Let’s look at them.
Summarize this article for me pleaseTypes of Growth Loops
Fundamentally, a growth loop ensures that your product gains with each new user. More users, more people see the output, and more people sign up, thus restarting the loop. Therefore, growth loops revolve around the understanding of:
- How the product is expected to grow
- What are the places in the loop that have the most impact
- What are the metrics the team is aiming for
With that in mind, here are a few examples of business growth loops.
Personal viral loop
Users beget users! The personal viral growth loop is driven by existing users who spread the word about a product or service, leading to more users.
A customer buys the product. They get a referral code that they post online or share with friends. A friend uses the referral code to demo the product. They like it, buy it, and get their own referral code, creating a self-sustaining cycle of growth.
Online multiplayer games are a great example of personal viral loops, where the experience is better with more people.
Four things are essential for a personal viral loop.
- Incentives: Rewards, discounts, and exclusive access to encourage referrals
- Customer advocacy: Tapping into the user’s desire to gain financial, social, or personal capital by making content go viral
- User experience: A smooth and intuitive user experience that attracts each referred prospect to try and buy the product
- Integration: Connections with social platforms that make it easy to share and amplify content
User-generated content (UGC) loop
UGC loop is when a product or platform leverages content created by its users to attract and retain more users. The content could be reviews, discussions, or video content, which is indexed by Google and the product features on their channels.
New users engage with the content, purchase the product, and go on to create their own content, continuing the loop. Hashtag-based social campaigns, freebies/giveaways, and reviews on platforms like G2 are great examples of starting this kind of loop.
Three things are essential for a UGC loop.
- User-driven: UGC loops are reliant on users creating content with the potential to go viral (this dramatically reduces customer acquisition cost)
- Experience-centric: The centrality of the product/experience means that the product gains more value as more users participate
- Incentives: Product companies may incentivize users (like offering gift cards/discounts for reviews), however, this is not essential
Financial viral loop
Financial viral loop is when the product offers financial incentives to begin or perpetuate a growth loop. For instance, Fiverr offers $500 worth of credits for successful referrals. T-Mobile, Spanx, Venmo, and several other organizations do this.
Three things are essential for the financial viral loop.
- Monetary incentive: The reward needs to be cash or cash equivalent
- Ease of use: It must be easy for the customer to refer, the prospect to sign up, the referrer to accumulate rewards and redeem them
- Caution: While offering financial rewards, there is a possibility of negative virality, which must be carefully considered
Physical content loop
Physical content loop takes digital virality to the real world. Artifacts, such as flyers, brochures, or physical products are used to create desirability for the product. This leads to increased visibility and word-of-mouth promotion.
Two things are essential for a physical content loop.
- Physical branding: Artifacts need to be physical and tangible
- Innovation: While a regular flyer can start a growth loop, better virality is achieved through innovative campaigns
Human-to-human referral loop
At its simplest, a human-to-human referral loop is another version of word-of-mouth marketing. However, it doesn’t have to be limited to that. When the referring human is an influential entity, they can have an impact at every stage in the loop.
For instance, they might introduce a prospect to the product, talk about specific use cases, offer support in solving problems, enable wider adoption, and encourage upgrades.
Whichever type of growth loop you choose, implementation is key in ensuring success. Here’s how you can get that right.
Summarize this article for me pleaseHow to Implement Growth Loops
While it can be tempting to start entirely fresh, it is more efficient to begin by looking at your AARRR funnel. With that context, ask yourself:
- How are leads discovering your product?
- What percentage of your leads are inbound?
- What are the lead’s touchpoints before converting?
- How long does it take for a lead to convert from start to finish?
- How are users retained?
- What are your successful customer management strategies?
Use this knowledge for implementing growth loops, using a robust project management tool like ClickUp.
1. Get your basics right
Set your growth goals: It helps to break this down into targets for different stages of the loop, so you can allocate budgets accordingly.
Plan your budgets: For instance, if you’re a new organization, you might invest your budgets in client acquisition strategies, such as advertising and lead generation. If you already have thousands of customers, you would redirect the budgets to retention and advocacy efforts.
Establish customer personas: Growth loops depend on retention and referrals. Understand what each persona needs to continue using your product and recommending them.
ClickUp for Sales is designed to give you the tools to do all this and more. Use ClickUp Goals for setting targets and ClickUp Docs for planning or customer personas. Build your growth loops foundation.
2. Identify touchpoints
All customer touchpoints form the nodes of a growth loop. So, identify touchpoints across advertising, email, and social media where the customer interacts with the product. If you’re using ClickUp for Marketing, you’re likely to have all this data handy.
3. Map user journey
Unlike the linear journey of the marketing funnel, growth loops go up and down. A prospect might take a demo but not be ready to buy until six months later. Some customers might be excited to share their first thoughts online immediately. Others might want to take their time to refer a friend.
Understand the various ways in which this works. See how the customer engages in each channel.
ClickUp’s Customer Journey Map Template is a great starting point. It gives you a visual guide to explore customer pain points, actions, touchpoints, experiences, and more.
Here are more customer journey templates for your unique needs.
4. Choose a growth loop type
The next step is identifying the growth loop type that aligns with your product and your goals. If you have a new, and habit-changing product, you might create a financial growth loop. For instance, e-commerce or investment apps offer points/credits as financial reward for referring friends and family.
On the other hand, enterprise products might perform better with human-to-human referral loops. Choose one that’s right for you.
5. Design the loop
Sit with your team and design your growth loop. ClickUp’s Whiteboard is a great way to brainstorm, iterate, and collaborate on growth loops. You can also create tasks directly from here to get your work started.
6. Experiment and iterate
Experiment with different triggers, actions, or outcomes to optimize performance and improve user flow in the loop. Collect feedback and document the lessons.
Monitor the results of your campaigns in parallel. Establish key performance indicators (KPIs) for each loop. Analyze data regularly to identify trends and patterns. ClickUp Dashboards can help with customizable widgets and real-time reporting.
Before we leave, let’s see some real-life examples of how teams use growth loops.
Summarize this article for me pleaseReal-Life Growth Loop Examples
Dropbox’s story is a great example of PLG companies using referrals and word-of-mouth as a way to create growth loops. As one of the first cloud-based file-sharing services, Dropbox made it exciting for their users to refer.
The kicker here is the double incentive, which means both the referrer and the one who is referred (i.e., new customer) get free storage. This eliminates any suspicions new customers may have about the intentions of the referrer. Genius, right?
One of the most widely known content-led growth loop initiatives. It is exemplary in its simplicity and ingenuity. It takes data about what people are listening to and creates interactive reports that listeners can share and be proud of.
This does two things: It encourages new users to check Spotify out. It also brings back users who’ve stopped using Spotify to re-energize their account. Win-win!
Duolingo’s freemium model lowers the entry barrier and encourages rapid sign-ups. Personalized learning and gamified features like the sassy owl mascot, mini-challenges, and daily streaks are great client retention strategies.
The growth loop accelerates when users earn and share their achievement badges on social media, encouraging other language learners to try. The community within Duolingo further drives engagement.
In an unexpected case, we saw something similar happen with Wordle as well!
Summarize this article for me pleaseGet Out of the Funnel and Into the Loop With ClickUp
Modern marketing needs modern methods. While the AARRR model worked for a whole generation of successful organizations, it doesn’t meet the demands of high-growth startups of today.
Growth loops offer a powerful alternative. The loop’s self-reinforcing nature helps provide continuous feedback and a better understanding of user behavior. The data-driven approach to decision-making also fuels growth.
As a marketing specialist or business owner, you are convinced that growth loops are the way to drive growth. Adding ClickUp to the loop will empower you with a single platform that helps you strategize, build and track growth across your company.
No more going in circles! Implement growth loops with ClickUp today!
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