January 16, 2024

Using Growth Loops to Fuel Your Startup or Solopreneur Business

Michel Gagnon
Michel Gagnon
CEO of Stun&Awe

What if your business could operate like a perpetual motion machine—never-ending, self-propelled, and self-sustained? Imagine generating a constant flow of happy customers without having to add any additional sales and marketing energy.

Seems like a dream, right? Well, I'm here to tell you that you can harness this physics concept to make your business thrive.

And that secret gear, dear friends, is what we call Growth Loops.

In our Growth Marketing course, we encourage our students to forget about marketing funnels and rather build a flywheel or Growth Loop. That's because funnels put your customers at the end instead of at the center of what you do.

The goal is to establish a feedback loop or a cycle, linking the diverse dimensions of your business. Each move nudges more users, more customers your way, causing a swell in your revenue. This dough doesn't just chill in your bank account—it gets to work, funding your marketing drives and hustles.

Simply put, you’re taking your gains—monetary, audience-wise, or market-wise—and getting them right back on the job, paving the way for a never-ending, self-fueling, growth journey. No mega investments needed upfront. Smart, huh?

In this article, we'll look at good and bad examples of growth loops from real life so that you can learn how to create one for your venture.

We'll also discuss the common challenges entrepreneurs face when implementing a growth loop and provide tips on overcoming them. Soon, you can use your momentum to fuel your growth, creating a self-sustaining cycle that will take you from startup to success.

What are Growth Loops?

A growth loop is a process or cycle of activities that help you generate more leads and convert them into customers. It's the cycle of acquiring, engaging, and retaining users - over and over again. There are many types of growth loops, from product-led to customer engagement. Let’s examine some growth loops examples:

  1. When creators join Substack, publish their first newsletter, and share it with their audience via built-in tools, it drives sign-ups. Some of the new subscribers catch the Substack bug, creating newsletters of their own. Others subscribe to more newsletters, fueling Substack's momentum. And so, the growth cycle turns—a clear-cut demonstration of Substack's efficient, perpetuating growth loop in action.
  2. LinkedIn is another good example. When you sign up, LinkedIn offers to sync with your contacts and throws potential connections your way. Not stopping there, it nudges you to loop in more folks from your contact list onto the platform, setting off a self-sustaining cycle. A classic case of LinkedIn's growth loop doing its magic.

But let's go one step further and break a growth loop down into its distinctive components, using these examples to further our explanation:

  • Input: The input for both examples is the same - users. People sign up and create a new account or return to the platform.
  • Action: This step seeks to incentivize the user to do X, Y, or Z. With Substack, creators publish and promote their newsletter. LinkedIn offers to sync your contacts and suggests potential connections.
  • Output: For Substack, the output is either someone having the option to create his own newsletter or signing up for other newsletters. For LinkedIn, it's the connection requests sent to non-users or existing ones who will return to the platform.

And here's the critical part - these outputs become inputs for future loops!

Substack's loop leads to the growth of both creators and newsletter subscribers as well as an increase in their respective satisfaction levels.

For LinkedIn, every new signup generates additional users while growing their daily average users (DAU), because existing users return to the platform to accept connection requests.Growth loops are a compelling way of driving continuous growth for startups and solopreneurs alike. With a good understanding of how they work, you will surely be well on your way toward success!

Growth Loops - 3 steps to consider in growth marketing

The Different Types of Growth Loops

  • Viral Loops
  • User-Generated Content Loops
  • Product-Led Loops
  • Paid LoopsThere are many growth loops that you can build.

The following three are the most common.

1. Viral Loops

Viral loops use our innate social tendencies to share experiences with friends and colleagues. This golden key to growth capitalizes on the social creature within us all, feeding on our love for chit-chat and waving a flag of recommendation for our inner circles. It's just word-of-mouth on steroids.

You want people who enjoy your product/service to share or invite others to join. We can break down viral loops into sub-categories.

Activation Viral Loop

In this loop, people share or invite others to gain more value from your product. For example, you invite others to Dropbox to get more space. You invite friends to Uber to split the fare. When you refer Wise to your friends, they don't pay any fees on their first transactions while you get a money reward.Nobody is forcing anybody to share. It happens as part of the user's organic customer journey.Of course, you can also nudge your users to share and bring in new customers offering incentives.

These could be:

  • Monetary: offer cash or discounts for each new activated user
  • Feature: give users access to premium features for referrals
  • Content: give access to special content
  • Status: add users to an 'elite' group (i.e. mastermind) of people when they bring in a certain amount of new users

Awareness Viral Loop (a.k.a. casual contact)

The Awareness Viral Loop does what its name says: give you increased awareness through virality.

Hotmail (for those of you old enough) gave people an email account with 2MB of free storage. Each email sent by Hotmail users ended with the line: “PS: I love you. Get your free email at Hotmail.”

Each user became a brand advocate. There are many other more recent examples:

  • Mailchimp's logo at the bottom of emails sent by creators.
  • Survey Monkey's end of survey page says: "Powered by SurveyMonkey. See how easy it is to create a survey.”
  • Typeform’s end page encourages people to create their own typeform.

2. Content-led Loops

Content-led growth loops essentially encourage businesses to leverage their own content and user-generated content to improve the user experience or showcase the product. This adds a hint of viral marketing to the loop, and lets it spin on its own.

YouTube, Instagram, and TikTok all surf on user-generated content growth loops. The more content created, the better.Here are other examples:

  • GoPro: The company uses videos uploaded by users, which showcase the action-camera maker's products and create a community of loyal customers.
  • LEGO Ideas: LEGO Ideas is an online platform where fans submit and vote on LEGO set ideas. This drives engagement and generates product ideas with a guaranteed audience.
  • Medium: Medium fosters UGC with inclusive writing opportunities and features like comments and claps. It curates content, incentivizes writers (also with paid opportunities), promotes sharing, and utilizes SEO, to drive a healthy growth loop.
  • Spotify: Spotify uses UGC in its playlist feature, where users create and share their own playlists. This not only keeps users engaged with the platform but also helps other users discover new music, creating a community of music lovers.

Lego Ideas - user generated products

3. Paid Loops

Paid loops include strategies that use marketing budgets to attract new customers and recycle revenue from these new customers into further advertising campaigns.Paid loops usually generate faster results than a UGC viral loop for instance although they are rather unsustainable. Ad fatigue, platform changes, and trends all affect advertising campaigns.

You cannot really put it on and let it fly.

Your better option might be to combine paid loops with other growth loops to get better, more sustainable results.

How to Build Your Own Growth Loops

Now here's the real deal. Let's build your own growth loops.

Just before getting started, the underlying assumption is that you are making your customers happy. If you have a bad product or service, no growth loop will save you. You also need to keep the user at the center of what you do and stay focused on your North Star. A growth loop should strengthen your business, not make you lose your focus.

For SaaS companies

If you run a SaaS company, there's a few questions you'll want to ask yourself to build your loop.

  1. What channels are you currently using to acquire new users?
  2. What are the core features that drive user engagement and satisfaction?
  3. How likely are your users to recommend your product to others?
  4. Do users have a better experience with your product if there are more users?
  5. What incentives could motivate your users to refer others?6. How can you make the referral process as easy and attractive as possible?

Think about where users come from and at what stage it would make sense for them to share their experience or invite others. Ideally, they would benefit from being part of your loop.

For freelancers

It's not because you sell your services that you cannot have your own growth loop. There's a couple of ideas you could put into action.After each project, you could ask your satisfied clients to give you a video review using a tool like Add it to your website and share it on your social networks.You could ask clients for referrals and offer them a discount on their future services for each successful referral.

If some of your clients are very active (or want to be more active) on social media, you could send them weekly pre-written social media posts that they could share. Create posts that are related to you and them and that would make them look like thought leaders (e.g. how to work successfully with freelance graphic designers). Make sure you add a link back to your profile somewhere.

Analyze and Iterate

In our Growth Marketing course, we teach our students the four-step growth process that includes a serious dose of data analysis. Every ideas that you test should be measured. That's the same thing with growth loops.

Once you're done designing your loop, you must figure out how you will track its success or failure. You can use UTM links to track events linked to your growth loops, like "invite a friend", "share to get a discount", "add members to your team".

Ultimately, you want your growth loop to improve awareness, acquisition, activation, or retention. If you don't nail it the first time, don't worry. Iterate and repeat.If you want to learn more about growth loops and how to use a structured growth process, join 3,050+ students in our Growth Marketing Course: How to win, onboard, and retain more customers.