Growth loops, what are they?
Posted: Wed Jan 22, 2025 4:49 am
If you want to build a company that grows quickly and sustainably, you should consider establishing growth cycles within your product or service. From here you should consider growth loops. Do you know what they are?
The concept of growth loops was first revealed by the Reforge team in 2018 when they declared that “growth loops are the new funnels.” Growth loops are, however, nothing new. It is simply a name for a pattern discovered in many fast-growing companies. When we look at how the fastest-growing companies around us grow, in most cases, they will have one or more growth loops built into their products.
Understanding the theory behind growth loops can help us build successful products and services, but how can you implement these loops yourself? Below we explain the key elements of establishing growth loops and how clinical nurse specialist email database you can make them work for your business.
What will we talk about in this post?
What are growth loops?
How to put growth loops into practice
Strengthening loops
The growth loop process never stops
And so the cycle of innovation continues.
By the end of this post, we hope we have provided you with enough knowledge and inspiration to put growth loops into practice in your own company.
What are Growth Loops?
A growth loop is a cycle of actions that build on each other. It's when an input (in the form of a new or returning user) leads to an output that can be reinvested to generate more input.
Growth loop
Growth loops are essential because:
They create compound growth (which is the most sustainable form of growth over the long term) as opposed to linear growth.
Look at the entire ecosystem of KPIs through the interaction between acquisition, engagement and monetization metrics, rather than thinking in silo (where product and acquisition strategies are thought of separately).
It may be harder to replicate if it's created explicitly for your business.
There are two types of growth loops that are important to consider for your business: acquisition loops and retention loops.
Acquisition loops
Acquisition loops are a system in which the actions of new users attract more new users. Either because they are somehow encouraged to do so, or the revenue a new user has generated can be directly reinvested into new acquisition campaigns. A company can have several types of acquisition loops. The most common acquisition loops are:
Viral loops – when existing customers bring in new customers through sharing, referral, or word of mouth. Great examples are the well-known incentivized referral campaigns from Dropbox , Uber , and Airbnb , where their users are required to refer their friends in exchange for discounts. Although if you can get people talking about your product or service without the need to incentivize them, even better!
User generated content loops: When a user finds your product through a search engine, they create more content that gets indexed and new users find you through that new content. Companies that do this well include Quora , Wikipedia , and Pinterest.
Retention Loop Example
Paid loops: When new customers are acquired through paid ads and generate revenue that can be reinvested in more paid ads.
growth-loop-paid
Sales loops: When new customers are acquired through sales actions and generate revenue that can be reinvested in more sales actions.
Ideally, your business should have multiple growth loops. The most powerful loops are organic or through owned channels for greater defensibility. For example, it could be dangerous if you rely on SEO as your only growth loop. As soon as Google changes its algorithm or product, your SEO content loop could be destroyed.
When you need to decide which acquisition channels are best suited for your business, you can help yourself by creating an acquisition channel matrix. List all potential channels on the left-hand side and rank each channel according to criteria such as:
The concept of growth loops was first revealed by the Reforge team in 2018 when they declared that “growth loops are the new funnels.” Growth loops are, however, nothing new. It is simply a name for a pattern discovered in many fast-growing companies. When we look at how the fastest-growing companies around us grow, in most cases, they will have one or more growth loops built into their products.
Understanding the theory behind growth loops can help us build successful products and services, but how can you implement these loops yourself? Below we explain the key elements of establishing growth loops and how clinical nurse specialist email database you can make them work for your business.
What will we talk about in this post?
What are growth loops?
How to put growth loops into practice
Strengthening loops
The growth loop process never stops
And so the cycle of innovation continues.
By the end of this post, we hope we have provided you with enough knowledge and inspiration to put growth loops into practice in your own company.
What are Growth Loops?
A growth loop is a cycle of actions that build on each other. It's when an input (in the form of a new or returning user) leads to an output that can be reinvested to generate more input.
Growth loop
Growth loops are essential because:
They create compound growth (which is the most sustainable form of growth over the long term) as opposed to linear growth.
Look at the entire ecosystem of KPIs through the interaction between acquisition, engagement and monetization metrics, rather than thinking in silo (where product and acquisition strategies are thought of separately).
It may be harder to replicate if it's created explicitly for your business.
There are two types of growth loops that are important to consider for your business: acquisition loops and retention loops.
Acquisition loops
Acquisition loops are a system in which the actions of new users attract more new users. Either because they are somehow encouraged to do so, or the revenue a new user has generated can be directly reinvested into new acquisition campaigns. A company can have several types of acquisition loops. The most common acquisition loops are:
Viral loops – when existing customers bring in new customers through sharing, referral, or word of mouth. Great examples are the well-known incentivized referral campaigns from Dropbox , Uber , and Airbnb , where their users are required to refer their friends in exchange for discounts. Although if you can get people talking about your product or service without the need to incentivize them, even better!
User generated content loops: When a user finds your product through a search engine, they create more content that gets indexed and new users find you through that new content. Companies that do this well include Quora , Wikipedia , and Pinterest.
Retention Loop Example
Paid loops: When new customers are acquired through paid ads and generate revenue that can be reinvested in more paid ads.
growth-loop-paid
Sales loops: When new customers are acquired through sales actions and generate revenue that can be reinvested in more sales actions.
Ideally, your business should have multiple growth loops. The most powerful loops are organic or through owned channels for greater defensibility. For example, it could be dangerous if you rely on SEO as your only growth loop. As soon as Google changes its algorithm or product, your SEO content loop could be destroyed.
When you need to decide which acquisition channels are best suited for your business, you can help yourself by creating an acquisition channel matrix. List all potential channels on the left-hand side and rank each channel according to criteria such as: