Repeatable virality? But how?

I just read up on Growth Loops by Brian Balfour at Reforge and boy am I excited to share.

In a nutshell:

• marketing funnels are top-down in nature. Growth is dependent on budget (if paid) and you have to pour more in to get more out

• marketing tactics alone are not a sustainable, long-term acquisition strategy due to diminishing marginal returns and channel saturation as competitors enter - plateauing growth

• growth loops - which leverage your existing userbase to generate more users - are unique to your product and therefore harder for competitors to replicate, resulting in longer-term sustainability and compounding your existing users into more users - typically for free

Examples of growth loops:

• vision-boarder signs up for Pinterest > she engages with content, providing quality signals to Pinterest > she contributes to the platform with new content > Pinterest distributes quality content to search engines > new aspiring interior designer sees Pinterest in organic results > new aspiring interior designer signs up > repeat

• knowledge seeker signs up for Reddit > upvotes / comments / posts content > Reddit content ranks in organic search > new internet-stranger sees Reddit content in organic results > new internet-stranger signs up > repeat

• cutting edge teenager signs up for TikTok > shares a funny TikTok with their friend via iMessage > friend signs up for TikTok account > repeat

  • TikTok really nailed their growth model and I feel like they almost designed their product intentionally to fit instagram as a channel. The cross-post to IG button spread TikTok content all over instagram, and the presence of the TikTok logo in all content was a perfect branding moment to get awareness up across instagram’s userbase. In a strange way this is justice as Instagram did the same to Snapchat years ago with stories

Expressed another way - growth loops are slow-burning, sustainable, intentional virality.

The initial thought I had was “wow - as a marketer...am I obsolete”?

Then the second thought I had was a resounding NO.

While it’s true that growth loops can be amazingly powerful nuclear reactors for your business:

• growth loops are harder to apply for certain types of businesses (ie. ecommerce)

• they still need to ingest users to get started and to grow faster

which is where funnels still matter. I’d also argue that not only do they still matter, but growth loops can actually widen your funnels.

For example:

• Loop-less environment:

  • If your total CAC to acquire a user in a loop-less environment is $10, your CAC is $10

• Loop environment:

  • If every 1 user you acquire is taking some action that results in another 1 user joining the platform, let’s say through sharing content with their friends or creating content that gets re-seeded on organic search, you’re initial $10 spend is now getting you 2 users. That’s a $5 CAC

• This is insane. Obviously a 1:1 ratio is ambitious but even a smaller contribution rate of 0.2 additional users per 1 user will result in $10/1.2 = $8.33 CAC

• As this compounds, the effect becomes larger and larger. The finance world has always known this

This saving on CAC actually allows you to invest more deeply in your marketing channels - allowing you to bid a bit more in each auction to get a little bit more market share, or even bankroll some new tests into other channels or audiences.

So while loops and funnels are two different steps in the process, they are mutually beneficial and when combined, can drive exponential growth.

The most common iteration of loops that I see today are referral programs - but most consumers at this point are probably numb to “$10 off your next purchase”. I wonder if there are more creative and organic ways to incentivize sharing.

A tangentially related hypothetical thought exercise

How do we incentivize customers of a beauty brand to share their usage of the product more widely with their social following?

• Can we assume that a non-zero segment of the population would like more followers? Since they’re beauty customers - a few may be aspiring influencers

• What if we offer to highlight a different user on a weekly basis in the brand’s organic feed and story? The perceived value is exposure and potential follower count increases

• To get highlighted, we tell the community to post themselves using the product and to tag the brand

• The ones that are interested in building a following (who may already have large reach and high follower count) may self-select and participate

• Awareness of the brand increases with each user post

• Highlight selected user at end of week. Make this evergreen by continuing to push the program in stories and posts

What other creative ways have you seen brands and products leverage their users?