When building products, we spend a lot of time talking about and examining funnels when discussing how to make something grow. Acquisition funnels, conversion funnels, you name it - it’s a standard method of looking at growth.
I have started thinking about growth in terms of Growth Loops. Check out this article from Reforge for a more precise definition, but in summary Growth Loops are closed systems that consider how inputs generate outputs that can be reinvested in the input, leading to sustainable compounding growth.
Understanding the growth loops in your product can be challenging, but when you find one it can become remarkably defensible from competitors - behavioral inputs from your users that drive the loop are often unique to your product! I also find that thinking in growth loops helps bring a long term perspective to growth because it challenges you to think beyond quick hit, short term gains.
Consider this example of a growth loop. When I was at Dutchie, an ecommerce platform for cannabis dispensaries, one of the PMs on my team was focused on using promotions to grow the total sales volume flowing through our platform. The biggest challenge we faced was getting retailers to understand return on investment for any promotion they ran.
We broke things down and designed a growth loop; our components ended up looking like this:
Input: Retailers build promotions that require customers to spend a certain amount in order to earn a discount on their next order (Ex: Spend $150 and earn $15 off your next order)
Action: Customers check out with larger cart sizes as they buy more products to qualify for the discount
Output: Customers come back to purchase again to earn their discount
Check out this Reforge article for more and to learn how you can identify growth loops in your own product.
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