Growth loops
Definition
Growth loops
Growth loops are mechanisms where the output of one cycle becomes the input of the next. A user joins, does something that brings in another user, and the second user repeats it, so the system feeds itself instead of running down.
The shape is the difference. A funnel narrows to an end and stops, while a loop returns to its own start and runs again with new people.
A flywheel is not a loop either. A loop is one mechanism you can name, draw and measure — a flywheel is several of them compounding across a whole business, and that word describes momentum rather than a named mechanism.
Most companies already have a weak loop running somewhere. A growth marketer usually finds it inside the product rather than inventing one, then works on a single turn until it closes faster or more often.
Key takeaways
- A growth loop feeds itself: the output of one turn becomes the input of the next turn.
- A loop is one named mechanism, while a flywheel is several of them compounding across a business.
- Every loop has a cycle time and a branching factor, and both are worth measuring separately.
- Loops that run on email or reviews carry legal duties that no diagram of the loop will show you.
How it works
A growth loop works when three things are true: a user takes an action, the action produces something of value to a non user, and that value brings the non user in to repeat the action.
| Loop type | What one turn produces | What starts the next turn |
|---|---|---|
| Viral | An invitation or a shared file | The recipient signs up |
| Content | A page that ranks in search | A searcher arrives and publishes |
| Paid | Revenue from a new customer | Revenue buys the next advertisement |
| Marketplace | A seller listing | Buyers attract more sellers |
| Review | A public rating | Ratings persuade the next buyer |
Two numbers describe any loop. Cycle time is how long one turn takes, and the branching factor is how many new turns each one starts — a loop with a branching factor under one is a leaky funnel wearing a circle.
Every loop needs an input that does not run out. A referral loop inside a market of two hundred buyers finishes within a year, so count the audience before you count the turns.
Engagement rate is the usual early warning. When it falls, the loop is still spinning on old momentum, and the slowdown reaches new signups a month or two later.
Loops break rules more easily than funnels do, because they run without supervision.
An email loop must honour an opt out within 10 business days. The Federal Trade Commission (FTC) also warns that hiring an agency to send your mail does not contract away your legal responsibility.
Social media automation makes a loop cheaper to run and easier to break, because the same scheduled post goes out whether or not anyone is still reading it.
Examples
Five loops cover most of what you will meet in practice, and each one fails in its own way. Naming which one you are running is far more useful than calling the whole thing growth.
File sharing is the clean case. Someone sends a document to a colleague outside the company, the colleague opens it and needs an account to edit, and that account later sends its own documents out.
That is one complete turn, and it cost the vendor nothing.
Review loops are the most tempting to fake. The FTC rule on consumer reviews makes it an unfair or deceptive act to sell a fake review, and it covers reviews procured from your own employees.
Marketplaces run the slowest loop and the strongest one. Each new seller widens the range, the range pulls in buyers, and buyers make the next listing worth creating, which is why customer share matters more there than raw signups.
Content loops are the slowest to start and the hardest to kill. A page that ranks keeps bringing readers in for years, and a few of those readers publish pages of their own that point back at it.
A paid loop looks like the others but is not self feeding — revenue buys the next advertisement, so the loop only closes while the margin holds, and a firm in hypergrowth often discovers that when the margin moves.
Offshore support teams sit inside more loops than they are credited for. Fast resolution produces the public ratings that persuade the next buyer, which is a review loop running on service quality rather than on marketing spend.
Every one of these loops has a ceiling. The honest question is not whether a loop works, but how many turns are left before the audience it draws on runs out.
Related terms
- Customer satisfaction index: a scored measure of how customers feel, which predicts whether a referral loop keeps turning.
- Net customer effort: how hard customers find it to get things done, and the usual reason a loop stalls.
- Growth marketer: the person who finds and tunes loops rather than running campaigns.
- Hypergrowth: what a working loop produces once nothing is constraining it.
- Engagement rate: the early signal that a loop is slowing, well before signups show it.
FAQ
What are growth loops?
They are mechanisms where one turn’s output becomes the next turn’s input, so growth feeds itself. A user action produces something that brings in another user who repeats the action.
How do growth loops differ from a funnel?
A funnel narrows to an end and each cohort passes through once. A loop returns to its own start, so the same mechanism runs again with new people.
Are growth loops the same as a flywheel?
No — a loop is one named mechanism with a cycle time you can measure. A flywheel is the compounding of several loops across a whole business.
How do you measure a growth loop?
Measure cycle time and branching factor separately. Cycle time tells you how fast one turn completes, and the branching factor tells you how many new turns each one starts.
What stops a growth loop?
Saturation and friction, usually in that order. A regulator can also switch off an email or review loop.
Browse provider research at Outsource Accelerator when a loop needs a team behind it.
Independent
