Growth Loops and the Viral Growth Model

As the customer journey evolves, consultancies and small businesses are challenged on how to boost customer numbers economically. The answer is growth loops.

Boost Your Business to Exponential Growth

I suspect you’ve heard of viral videos and viral posts. A piece of content that is shared and shared again, until it appears pretty much everywhere. Imagine if you could do the same with your content marketing. You can. Welcome to viral growth loops and the viral growth model.

Challenging the traditional customer journey

Before we start, it’s worth you reading our article, ‘How the customer journey is evolving'. In that article, we discuss what this evolution means for consultants and other small businesses. The three top takeaways of our piece are that you should:

By embedding growth loops in this process, you will create a marketing loop that boosts customer acquisition, sales, revenues, and profits.

Why your business needs growth loops

The biggest killer of businesses, especially smaller, niche ones, is startup costs and poor cash flow.

Consulting and coaching can be very lucrative. You are giving insight into your experience with people and helping them achieve their goals. It’s high value to your target audience. But the key to success is to acquire customers. Traditional marketing methods are expensive – and it’s this cost that prevents most small businesses from reaching their potential.

The cost of customer acquisition can be easily calculated for any method of marketing. If you run a newspaper ad that costs $1,000 and you gain two customers, then your customer acquisition cost is $500. 

Spending too much on acquiring (and retaining) customers will cause you cashflow problems, decimate your margins, and crush your profits. So you spend less on marketing and grow far slower than you could.

Fast growth is possible with viral loops. This will help save money, maximize the ROI of your marketing budget, and promote the organic growth of your business.

What are growth loops?

The traditional way of charting a customer journey is to use the sales funnel. You publish content designed to pull people into the top of the funnel. You deliver iterated content to pull them down the funnel, hoping to keep as many as possible through to the purchase stage.

The result? Sales to those customers stick with you to the narrow end of the funnel. The trouble is that this can be an inefficient sales model, because:

  • The output (sales) is dictated wholly by the input (prospects)
  • This type of sales funnel doesn’t focus on developing sustainable growth
  • Funnels create silo thinking within organizations

The way a funnel works also works against your business. People operate in their silos, because of how the business is structured and its people and teams are motivated and rewarded:

  • Marketing teams create leads
  • Sales teams are tasked to convert those leads
  • Product teams develop products and services that customers desire

With this silo approach to business, there is little to no dovetailing of efforts. Your marketing team creates huge numbers of leads because they are paid to do so. Most of these leads are of poor quality.

The problem with poor quality leads?

First, you get poor-quality information for your development team. Thus, the products and services you create aren’t wanted or fall short of the expectations of your real customers.

Second, your sales team must work harder to sell. They become demotivated, and sales drop.

Third, you now operate as a numbers game. You work harder to generate more leads, which are poor quality, etc., etc. It’s a spiral downhill. It’s a mentality of throwing spaghetti at the wall and hoping some will stick.

The answer to this is loops because viral loops deliver more output from the funnel than there is input into it. Let’s explore how this happens.

How growth loops work

Growth loops work because they drive organic growth, like a viral video. They loop the output back to the input. Along the way, they create more new inputs, without further high costs: the perfect marketing loop.

You develop a marketing loop by:

  1. Creating high-value content – the type of content that your target audience really wants
  2. Providing incentives for people to share your content (and making sharing easy)
  3. Converting visitors by offering value propositions, such as free eBooks, courses, surveys, and so on

Four key growth loops

Now you understand the basics, let’s look at four of the key growth loops used today.

Viral loop

Thanks to Covid-19, we all have a far better understanding of how viruses spread rapidly. You get infected and share the virus with others. Viral loops work in a similar way.

Users share the content with friends or contacts, leading to an exponential increase in exposure. Very quickly, you could have access to tens of thousands of potential customers and followers. Zero to hero in no time, because your content is shared and shared again. 

Each person who receives your content becomes a potential marketer of your services and products. Why? Because your content, service, or offer is simply too good not to share.

Of course, this doesn’t just happen. You must promote sharing with tactics like:

  • Offering more for sharing (e.g. a free consultation when five friends sign up to your basic service)
  • Providing a monetary incentive to get others to sign up
  • Creating a social experience (for example, forums where users can help others and discuss problems and issues)

Once that loop starts spinning, it’s unstoppable.

Paid loop

The paid loop is similar to the viral loop, except that the first step is to pay for visitors to visit your site. It is then up to the quality of your content to motivate people to share it and bring in more visitors organically. There are four steps:

  1. Pay for visitors (e.g., via pay-per-click advertising or Facebook ads)
  2. Provide great content and encourage visitors to sign up and share
  3. These new users transact on your site
  4. Rinse and repeat

In a nutshell, pay once, convert many.

Acquisition loop

A user acquisition loop will encourage a new user to sign up and become active before you encourage them to share with others. 

It’s important to know that external forces may affect how well acquisition loops work. For example, if you are using Facebook as a publishing channel and Facebook changes how it shares your content with Facebook users, your strategy will alter.

A simple acquisition loop may work as follows:

  • You post an article on LinkedIn
  • This article gets ranked by search engines
  • A web surfer finds your article (because they are searching for content)
  • That surfer is prompted to sign up and share

Retention loop

Retention loops are a powerful tool that can help marketers connect with their customers over and again. It’s especially useful when the marketer has already acquired interest from their audience, returning the user to your core product and resulting in repeated purchases. Here’s how it works:

  • A trigger encourages an action; for example, someone comments on your Facebook post.
  • The trigger is delivered to you via a channel – for example, email, SMS, or instant messenger, etc.
  • You receive a reward – a ‘good feeling’ for replying to a comment.
  • You act to gain the reward, perhaps replying to the comment left for you or adding a new comment. This action opens new retention loops.

This model works best when the reward is variable. For example, the user doesn’t know how many comments, shares, or likes they will receive. This encourages more interaction to receive a greater reward.

The benefits of growth loops

Growth loops help businesses grow faster as they move away from thinking about each business function separately. Instead, you consider your business as a whole. 

This enables big-picture strategizing – instead of considering the sale, you consider how to generate the content that encourages ‘word-of-mouth’ marketing. In this way, you develop your users and customers into a huge marketing department.

Additionally, as you delve deeper into employing loops in marketing strategy, you will discover that you can transfer users from one loop to another, thus adding more fuel to each loop strategy and within an overarching and sustainable strategy.

Marketing strategies can be streamlined by using loops, and you can change users from one loop to another. They can also be used on an ongoing basis to sustain a marketing strategy.

Growth loops are ideal for smaller businesses

You may think that loop marketing strategies work best with established organizations, products, and services. Of course, large organizations use viral loops, but this doesn’t mean you shouldn’t. In fact, they work exceptionally well for businesses with niche products and services.

Growth loops are one of the key tools that will enable you to scale your website traffic. The key to unlock their potential and go viral is to create great content and use the right approach. You’ll soon benefit from exponential growth in visitors who are convertible to become customers. 

Don’t take our word for it – startups such as Facebook and LinkedIn began their lives by targeting small, niche segments and employing loop tactics.

Have you found your content isn’t converting as expected? Tell us why in the comments.

What have you found to be your biggest challenge when starting to build your content marketing strategy? Get in touch, and we’ll help you find the solution:

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