What are Growth Loops and how can you use them?

What is a Growth Loop?

Loops are closed systems where the inputs through some process generates more of an output that can be reinvested in the input. There are growth loops that serve different value creation including new users, returning users, defensibility, or efficiency.

For example: The driving force behind Pinterest’s growth is the following loop:

1. User signs up (or returns)
2. They activate you on the product with specific/relevant content
3. You save new content or repin existing content which gives Pinterest quality signals
4. Pinterest distributes the quality content to search engines
5. A user finds the content via search engines and either signs up/returns (see step 1)

Growth loop of Pinterest

Or, let’s think of a newsletter that we created at Crework. It’s called 30 Days of PM.

Growth loop of “30 Days of PM” newsletter

1. User subscribes to 30 Days of PM
2. They post about starting their journey learning with the newsletter on Twitter
3. Twitter user sees the tweet and gets curious about it and visits our website
4. This new user subscribes to 30 Days of PM (back to step 1)

This little growth loop helped us reach 400 subscribers in 2 months without any sort of marketing. I am not even surprised.

Loops Provide Sustainable Compounding Growth

Loops force you to answer “How does one cohort of users lead to another cohort of users?” You focus on how you reinvest the output of one cycle of the loop into the next cycle of the loop to get more output. This creates a compounding effect that is more sustainable.

Not all loops are created equally. You’ll be tempted to draw a ton of loops for your product, but what that typically means is that you just have a ton of low-powered loops that aren’t sustainable. The fastest growing products are typically powered by 1- 2 major loops that transition over time. Measuring and understanding the power/health of your loops is critical to understanding where to focus.

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