“How does the business/product grow?” - It is the top question in the mind of many people, irrespective of if you are a CEO, Business Head, Product Manager or Marketer. And if you are chasing non-linear growth, you need a system that systematically and continuously brings in news users. This is where ‘growth loops’ come in.
A growth loop is a closed system in which an input brings an output which can be reinvested as input and help the system grow. Let’s take an example. You just signed up on Linkedin and are asked to synchronise your email address book. With one user, you have captured other potential users who can sign up, i.e. new users.
There are 3 key elements of a growth loop:
- New user (input)
- The actions that the new users take (action)
- More users who join the system (output)
Growth loops can be categorized based on the objective (acquisition and engagement) or on design (viral growth loop and content growth loop).
🤑 Acquisition Growth Loop
The acquisition growth loop focuses on the key objective of acquiring more users. The entire system is designed to encourage users to continue inviting others to join the platform. This tactic works incredibly well for apps with network effects, whereby the more people who use the app, the better the overall experience. With an ever-increasing user base, the network effects can be further capitalized on, and the app can continue to grow and evolve.
Here’s how an acquisition loop works for Dropbox:
Input: A new user signs up for Dropbox.
Action: They start using Dropbox and wish to increase their space. They sync their contacts to send the invites.
Output: A percentage of the users sign up on Dropbox.
Acquisition loop is quite important and growth teams are anxious for these loops to deliver quickly.
🤝 Engagement Growth Loop
This loop is meant to engage more with the customer and bring them back to the product. By providing customers with an experience they can't get anywhere else, this loop can help increase customer retention and reduce churn. The goal is to get every user to their "aha moment" as quickly as possible and ensure their teammates have a great experience with the product. With this loop, we hope to deliver an enjoyable and memorable experience that will motivate customers to stay with us for the long term.
An engagement loop for Figma may look like this :
Input: A user signs up for Figma.
Action: The user checks out Figma, creates the first design (with the tutorials and community help), and shares it with team members for feedback.
Output: The user finds creating and collaborating with others easy and continues making designs. The team also eventually uses Figma.
🪴Viral Growth Loop
This growth loop has virality built into the product, and the user actions lead to an explosive growth. These growth loops are pretty tricky to design, but once you nail them, they can truly deliver. It might involve an influencer element too in the initial stages to propel growth. An exciting feature of Substack is the guest post, where a writer can have a guest post from someone. The guest is a strong candidate for becoming the next writer on substack.
Input: An influential writer signs up for Substack.
Action: The writer publishes a good article on Substack and invites readers to read the article on Substack.
Output: A percentage of readers sign up to write on Substack.
✍️ Content Growth Loop
Content-led growth loops are designed to amplify user-generated or company-generated content, where you use content to help discover the product.
While editorial content is usually high-quality, user-generated content can lead to scalable growth. Publishing platforms or social media platforms are well suited towards user-generated content, while SaaS platforms are suited for editorial content. Users create content for their benefit and, in the process, help these platforms to grow.
An example of a content growth loop:
Input: A user signs up for Quora.
Action: The user writes a helpful answer for one of the popular questions on Quora, which is indexed by Google. Other users get this answer on search results.
Output: A percentage of people who view the answer sign up on Quora.
Growth Loops work well for businesses with user-generated content, network effects (social media, learning apps etc.) and community-led growth.
How to Build Your Growth Loop
Step 1: To build a good growth loop, it is crucial to understand the primary value that it brings to customers. Consider the triggers that motivate customers to purchase or use your product and the critical pain point it solves. You must also consider the various actions to deliver this value to the user.
Step 2: When designing a growth loop, understand the user's psychology clearly. Consider their real-life scenarios and how they will interact with the product. Rather than attempting to change their behaviour, building a growth loop around their actions is far easier.
Key questions to answer:
- What is the user trying to get out of the action? (Make them happier by helping them to reach the goal faster.)
- How to save time for the user? (Get them to act with the least friction)
- Why will users invite their friends?
Step 3: Choose the appropriate growth loop for your product. Identify the right points of the user journey to trigger the growth loop and the right incentive for the users. Identify the key metrics of success or failure.
Step 4: Integrate the growth loop into your product/business. Ensure that the user actions in the loop are seamless and smoothly moving through the different stages.
Step 5: Measure and optimize the growth loop performance data. Check which part of the loop, the user is abandoning the desired action and smoothen the experience. Iterate and refine the loop. If, within a set timeline, the growth loop does not give the results, reset the loop and get to the drawing board.
📘 Building a Growth Loop: A simplified case study
Let me explain the process of building a growth loop via Loom, an asynchronous video messaging platform. It is a tool where you can share the screen and record a video to share with anyone.
Step 1: Primary value that Loom gives: Asynchronous messaging to save time on meetings. The trigger would be to reduce meetings and save time by recording a message.
Step 2: The user tries to save time spent in meeting by recording a video. (Loom makes recording the screen for a meeting very easy.) Users will invite other team members so that they too can record the video and reduce the time for meeting. (Gather the insights in Steps 1 & 2 through surveys and user feedback calls.)
Step 3: The right growth loop could be a viral or engagement loop. Let’s go with a viral loop. Users sign up, recording a video, and sharing with people can be a good example.
Step 4: Sharing is the crucial aspect. Make sharing seamless - automatically copy the video link to the clipboard once the recording is done. Make sharing easier for the user.
Step 5: On measuring, Loom realized that simply sharing a video did not help growth. An important component of the loop is to watch the video. Added the video watched notification to show that message reached the intended audience.
Tool of the Day
This is a really handy tool to use to create any organic growth loops. Just create the content - something that you want your audience to share! Use click to tweet to generate a unique link which your users can just click and share on their timelines.
Keep in mind that Twitter & most third-party tools count links as 23 characters—even when they're longer. 😞 No worries, though! Just use bitly to shorten your link before pasting it into your text.