Growth Loops: How to use them in Product Management

Growth loops are a framework to help fuel product growth and are seen by many as an evolution from traditional pirate metric acquisition funnels. Growth loops are touted as being a way to supercharge your product performance, turning your growth metrics from a flat, linear line to one that compounds and gets more results over time.

Sounds awesome right?

Growth loops are used in many fields, including marketing, but can be repurposed by product people to help them modernize their growth tactics. It’s all about creating a never-ending cycle, turning your outputs into fresh inputs.

The idea of growth loops spinning you around in circles? Here’s some insight to help you understand how this Product Management framework works and how to incorporate it into your growth tactics as a Product Manager. Let’s hit it. 

What are growth loops? 

Growth loops are an evolution from the idea of typical marketing funnels. It’s all built around maintaining a continuous cycle of input, action, and output.

See, imagine your typical growth funnel. For it to be effective, you need to shovel in loads of leads and users at the top. Once they reach the bottom, great – you’ve got a customer, but to keep the funnel effective you need to go out and get fresh input, otherwise, the funnel runs dry.

The idea of a growth loop is that the output is then fed back into the machine, being used to drive more acquisition or growth. Each cycle feeds into the next.

It’s like making flour. You take the wheat (input), grind it all up in a mill (action), and then get flour (output). Now, you could just stop there and shovel flour in your mouth, or you can put it into another loop where you turn that flour into the much tastier bread. The first output has become the next cycle’s input.

In its essence, the growth loop is pretty simple. Just three main sections:

• Input: This is the starting point where users entire the loop. Strategies to get them into the loop can include your marketing or product-led growth tactics. Essentially, it’s how new users discover your product or service.
• Action: Once users are in the loop, they take specific actions that allow them to engage with and extract the value proposition from your product. For example, signing up for a trial, sharing a link with their network, or trying out a new feature. This step is where the magic happens.
• Output: This is where the real power of the growth loop comes into play. Outputs often take the form of new users, additional engagement, or revenue, and they feed back into the loop to create more inputs.

Growth loops vs AAARR funnel

Growth loops have developed as a fresh alternative to pirate metrics and the funnel that they create, but what brought about this evolution? The AAARR framework has been the dominant model for analyzing user growth for years, breaking down the customer journey into five linear stages:

1. Acquisition
2. Activation 
3. Retention 
4. Referral 
5. Revenue

It’s a great way to measure and optimize the key points in a traditional funnel. But as in life, things change – users are now more complex and behave differently and require a different framework that reflects this.

Growth loops are designed to tackle several core weaknesses of the AAARR funnel while offering benefits that suit the growing shift to product-led GTM. To understand this change, let’s break down the issues with pirate metrics.

What are the problems with the AAARR funnel?

Siloed team structures

One of the biggest challenges with the AAARR framework is how it creates functional silos within an organization. Each team, be it Marketing, Product, Sales, or Customer Success, is typically responsible for a single stage of the funnel, with their performance tied to metrics within that stage.

For instance, Marketing might focus on maximizing leads at the acquisition stage, while your Product Team focuses on keeping those leads in the product during the retention stage. This structure often results in a box-ticking mindset, where everyone is focused on individual metrics for their specific team and not the overall North Star metric that should be guiding everything that they do.

In short, this funnel approach can create disjointed teams.

One-directional growth

Funnels, by design, are linear and end at the revenue stage. Once a user has completed their journey through the funnel, their value to the company essentially plateaus.

Yeah, it’s great to have a customer chilling out, enjoying your product, and renewing every year, but if everyone is doing that you’re just treading water. You’re not using these potential champions to drive further growth.

There’s no built-in mechanism to harness these users to bring in others. This makes the model highly dependent on continually adding new users at the top – a costly and resource-intensive approach.

High maintenance costs

Maintaining momentum in an AAARR funnel requires constant effort and investment. Paid ads, cold outreach, and other acquisition-heavy tactics dominate the strategy, making growth dependent on how much you’re willing to spend. 

Without fresh inputs, the funnel slows to a halt, so you’re in a constant battle of making sure you’ve got enough leads at the top of the funnel to keep everyone else well-satiated. That’s a major cause of anxiety for marketing teams!

Thankfully, a growth loop can address these problems.

What makes growth loops so good? 

Self-sustaining, compounding growth

Growth loops are inherently circular. Instead of ending at a conversion point, they reinvest user actions and outputs back into the system to attract more users. 

For example, a common growth loop tactic is to encourage a satisfied customer to refer a new user, who then repeats the cycle. Over time, this creates a compounding effect, where each loop amplifies the next. The result? Sustainable growth that doesn’t rely on an ever-expanding budget.

Cost-effective acquisition

Unlike funnels, which prioritize top-heavy acquisition strategies, growth loops make use of existing users to fuel new growth. 

There are so many tactics to achieve this, such as tapping into mechanisms like referrals, user-generated content, or network effects, lowering the cost of acquisition. 

This approach aligns with the principle that retaining and engaging current users is far cheaper than constantly acquiring new ones and it turns these engaged customers into little sales reps of their own.

Breaking down silos

Growth loops encourage cross-functional collaboration. Instead of departments focusing solely on their slice of the funnel, teams must work together to optimize the entire loop. This means Product, Marketing, and Customer Success and Support work in unison, aligning on common goals rather than being blinkered to their team metric alone.

This unified alignment makes everyone more efficient, creating a cross-functional collaboration that works for all.

What are the different types of growth loops?

Growth loops can be unique to each and every company using them. That said, many conform to a certain type, depending on the desired goal, or the driving force behind the growth loop (i.e. what’s going to encourage that growth).

Here’s a look at the main types of growth loops you can deploy, with more information on some of the tactics associated with them: 

Product-led growth loops

Product-led growth (PLG) loops use the product itself as the main engine for user acquisition, retention, and expansion. The focus is on delivering exceptional value that drives users to adopt, engage, and recommend the product organically.

The product is both the driver and beneficiary of this loop, so consistent iteration is important. Metrics to track include product usage rates, feature adoption rate, and user feedback scores. 

Here are some examples of various product-led growth loops:

Acquisition growth loops

Acquisition growth loops focus on bringing in new users by capitalizing on the actions of existing ones. At its core, this loop relies on a cycle where users experience value from a product, share it with others, and attract more users who repeat the process.

To implement an acquisition loop:

• Make it easy for users to share your product or invite others.
• Highlight the value or benefits of sharing, such as enhancing collaboration or access to exclusive features.
• Create tools or prompts that naturally encourage sharing, like referral programs or social sharing buttons.

The success of this loop hinges on seamless user experiences and a compelling reason for users to spread the word, such as rewards and incentives for doing so. 

This type of growth loop works particularly well for products like collaboration or file-sharing tools, where one user may be using the product to share something with a colleague, inadvertently inviting them to engage with the product too.

Engagement and retention loops

Engagement and retention loops aim to deepen user satisfaction and reduce customer churn by keeping users actively engaged. These loops build momentum by ensuring users consistently experience value, fostering loyalty and advocacy.

To create engagement and retention loops:

• Identify your product’s wow moment and ensure users reach it quickly.
• Continuously add value through feature updates, personalized recommendations, or engaging content.
• Build mechanisms that reward consistent usage, such as streaks, progress tracking, or in-app achievements.
• Encourage these high-usage, well-engaged users to post reviews, share their experiences or work with you on case studies and testimonials.

To achieve this sort of growth loop you need to have a laser focus on user-centric design and pay extremely close attention to your customer feedback, making sure you’re responding to it and delivering exactly what your users need. 

Then, to close this loop and keep the process cycling through, you need to encourage the highly engaged users your efforts have created to spread the word with referrals and reviews, becoming your product advocates.

Expansion growth loops

Expansion growth loops focus on increasing revenue by selling more to your existing user base. These loops often rely on upselling, cross-selling, or introducing add-ons that complement the user’s current plan or usage level.

These loops work best when you have a tiered product pricing strategy or have a modular approach where users can pick and choose what features they want.

To develop expansion loops:

• Offer tiered pricing plans or premium features that scale with user needs.
• Analyze user behavior to identify when they’re likely to upgrade or purchase additional features.
• Use in-app messaging or targeted campaigns to promote relevant add-ons or higher-tier plans.

The key to a successful expansion loop is ensuring users see clear value in upgrading. You can show this value with a reverse trial and effective user onboarding techniques in your product tour. 

Viral growth loops

Viral growth loops are built around encouraging users to share your product widely, creating a self-sustaining cycle of user acquisition. This loop relies on human connections and the natural tendency to share experiences.

To design a viral growth loop:

• Make sharing effortless by integrating social sharing features or invite systems directly into your product.
• Leverage organic sharing and network effects into your product.
• Ensure the product offers inherent value that users want to share with their networks.

These sound pretty similar to acquisition growth loops don’t they, so what’s the difference here? Well, viral growth loops are designed where the product is spread naturally: sharing the product is part of its design. 

Acquisition growth loops are more deliberate, where you’re encouraging current users to bring in new users through things like incentives. 

So a SaaS product offering rewards for a referral is an acquisition growth loop, whereas communication products or social media platforms that need you to connect with other users to experience value will use a viral growth loop. 

Acquisition growth loops focus on consistently bringing in new users through intentional actions like referrals or incentives, creating a steady and repeatable growth cycle. In contrast, viral growth loops rely on existing users to share the product organically, leveraging network effects and natural behaviors to spread quickly, often with less control. 

While acquisition loops are predictable and incentive-driven, viral loops can scale faster but are harder to engineer

For a viral loop to succeed, the product must resonate strongly with users and have built-in mechanisms that amplify its spread. Metrics like viral coefficient (the number of new users brought in by existing users) and referral activity are key to measuring its effectiveness.

Content-led growth loops

Content-led growth loops harness the power of content to attract, engage, and retain users. This loop thrives on creating valuable, shareable, and discoverable content that connects with your target audience and aligns with their needs.

To create a content-led growth loop:

• Develop high-quality, relevant content that addresses your audience’s pain points or interests.
• Leverage distribution channels like search engines, social media, and newsletters to reach more users.
• Use your content to showcase the product’s value, embedding it naturally within the user’s journey.

Sustaining this loop requires a strong content strategy and consistent output. Key metrics to focus on through this growth loop include content engagement, website traffic, and conversion rates from content to product users.

Is a growth loop different from a flywheel? 

A flywheel is a concept borrowed from mechanics – think of a heavy wheel that takes significant effort to get moving. But once it gains momentum, it spins faster and more efficiently, requiring less energy to maintain. In growth terms, a flywheel describes the compounding effects of multiple systems (or loops) working together to create sustainable, long-term growth.

Here’s where growth loops come in: they’re the individual, self-sustaining cycles that fuel the flywheel. A growth loop has a clear input, a process, and an output which feeds back into the loop. For example, a user sharing content brings in new users, who then share more content, driving further growth.

Now, a flywheel connects multiple growth loops into a bigger, integrated system. Instead of relying on linear strategies, the flywheel leverages the combined momentum of loops to generate exponential growth. For example:

1. Content drives organic traffic 👉 new users join.
2. New users generate data 👉  better personalization.
3. Personalization improves user experience 👉 users stay longer and share.

These are linking separate growth loops into a combined system.

Initially, you need significant effort to build the loops and align them into a cohesive flywheel. But as these loops begin reinforcing one another, the flywheel builds momentum, requiring less energy to sustain growth.

The key difference? Growth loops are smaller, measurable cycles driving individual gains, while a flywheel is the holistic, compounding system that connects these loops into an unstoppable momentum. Loops are the parts, and the flywheel is the machine that turns them into lasting growth.

Examples of successful growth loops

It’s hard to talk about growth loops without exploring examples of them in practice. Each loop is unique to each company, so it’s tough to get a full understanding when generalizing the framework. 

Here’s a look at how three major companies that you’ll probably recognize used growth loops to massively influence their growth. 

Netflix 

Netflix’s retention-focused growth loop is a masterclass in using data to fuel engagement. The loop begins with a new user signing up. Once onboarded, Netflix uses its extensive recommendation engine to analyze viewing habits and suggest highly personalized recommendations based on what a user has engaged with before. 

This improves the value of the service, ensuring that users get a customized experience. This keeps them around and on the platform – boosting retention numbers – while also making them more likely to refer others.

The loop unfolds like this:

• Input: A new user joins Netflix and watches a few things.
• Action: Netflix analyzes viewing habits to suggest suitable content. 
• Output: The user enjoys recommended content and continues to use the platform.

The trick here is that each time a customer goes through this recommendation loop, the stronger it gets. The platform reinvests the data from user interactions to continuously refine its recommendation engine. 

The more users Netflix has, the better these algorithms perform, rewarding users who stick with the service by improving the experience they receive. This compounding effect not only sustains engagement but also ensures that Netflix remains top-of-mind in the competitive streaming market, feeding the growth loop. 

Slack 

Slack thrives on a viral growth loop powered by collaboration and invitation. At the heart of this loop is Slack Connect, a feature that allows users to join or invite others into shared channels. 

This approach reduces barriers for new users, as they don’t need their own team or organization to give Slack a go. By participating in other teams’ Slack channels, invited users naturally become familiar with the platform, building affinity and curiosity for using it in their own professional environments.

Here’s how the loop works:

• Input: Initial users start using Slack for better communication.
• Action: These users create channels and invite others, introducing Slack to new audiences.
• Output: Invited users try Slack, recognize its value, and later adopt it for their own teams.

From here, these new users can refer other users, and the cycle continues. With this method, every new user becomes a potential advocate, inviting even more users. 

This continuous loop of value discovery and sharing drives Slack’s viral adoption, compounding its growth in a way that wouldn’t be possible without using growth loops.

Pinterest

Pinterest makes use of search engines to create an acquisition growth loop to grow its user base and retain engagement. The process starts when a user signs up or returns to the platform and is greeted with a personalized feed of relevant content. This content inspires users to pin or save items, signaling their preferences to Pinterest’s algorithm. 

In turn, these actions enhance Pinterest’s content distribution across search engines, making the platform’s pins discoverable to a wider audience, which attracts even more users.

The loop functions as follows:

• Input: A user signs up or revisits Pinterest.
• Action: They interact with the platform by saving or repinning content, providing Pinterest with valuable quality signals.
• Output: Pinterest’s distribution algorithms surface this content to search engines, attracting more users who sign up or return.

Pinterest’s loop is a perfect example of user activity feeding into a broader ecosystem. By repurposing user interactions to optimize content visibility in search engines, Pinterest ensures that its platform and the content on it are always being discovered by new users. 

How to create your own growth loop 

The transition from AAARR funnels to growth loops is a tough one, and it can be scary to step away from something that you’ve tried and tested over the years. 

Here are some steps to help you build a powerful growth loop for your own product that has enough juice to fuel your entire growth strategy. 

Step 1: Understand your ideal users

Building an effective growth loop starts with a clear understanding of who you’re building for. After all, your loop is only going to work if the right people are in it.

Tools like user personas or customer segmentation can help clarify this. Without knowing your audience, any effort spent on growth loops will feel like trying to hit a bullseye while blindfolded.

Once you have a clear image of your ideal users, you can build your growth loop to meet their specific needs. 

For example, LinkedIn knew their ideal users – young professionals – valued expanding their networks and gaining visibility in their fields. This informed their decision to create growth loops centered around free content-sharing and networking tools. By matching the growth loop with what users already value, LinkedIn created an organic, user-driven cycle of engagement and growth.

Step 2: Map the user journey

Growth loops don’t exist in isolation, they should be in tune with your user journey. Start by identifying all the key touchpoints where users interact with your product. These touchpoints can include signing up, engaging with content, referring others, or even leaving reviews. 

The goal is to understand where users naturally spend their time and how you can optimize those interactions to trigger your growth loop.

By mapping these paths, you’ll see where the most significant opportunities lie. For example, if many users arrive via social media, you might prioritize creating a viral loop that encourages sharing on those platforms. This user story mapping ensures your growth loop ties in seamlessly into the broader user journey.

Step 3: Choose the right type of growth loop 

Choosing the right growth loop depends on your product and audience. Different loops work for different situations, so take the time to understand which type aligns with your goals. 

A viral loop, for instance, focuses on user-generated content or referrals, creating a cycle of new users bringing in more users. These loops work well for consumer products like social media platforms or content apps by encouraging easy sharing and delivering value to both the sharer and the recipient.

Engagement and retention loops, on the other hand, focus on keeping users active and loyal. Strategies like a gamified product tour, personalized recommendations, or exclusive content encourage repeated interactions. While viral loops drive growth, engagement loops ensure users stick around, so you need to choose what works for your users and what works for you.

Step 4: Define success metrics

Growth loops are about driving measurable results. Start by identifying the metrics that will indicate success. These might include referral rates, retention rates, or the number of new users generated per loop cycle. Output metrics serve as your compass, showing you whether your loop is doing what you want it to.

Establishing these product benchmarks not only helps you evaluate the loop’s success but also gives you a framework to optimize performance over time.

Step 5: Design the growth loop

Take the time to map out your chosen growth loop with your team. Collaboration tools like whiteboards or workflow software can help you model the steps and test assumptions. Be detailed: specify how each stage flows into the next, and identify any bottlenecks that could disrupt the cycle. 

A clearly defined loop ensures everyone on your team understands the mechanics behind your growth strategy, helping them to effectively contribute to its success. 

Step 6: Optimize time to value

Time to value (TTV) is the time it takes for a user to experience the core benefits of your product. A shorter TTV means a more effective growth loop. 

Identify the key moments in the user journey where value is found and focus on making those moments as seamless as possible.

For example, if your product makes use of onboarding software, streamline the process so users can achieve their first success quickly. This might mean simplifying signups, offering interactive tutorials, or providing templates that make their first use productive. 

The faster users experience value, the more likely they are to participate in actions that fuel the growth loop.

Step 7: Implement and test

Once your growth loop is designed, ship it. Start small. Choose a single segment of users to test the loop and observe its performance. 

This controlled rollout helps you gather insights without committing large resources to an untested strategy. For instance, you could target power users first, as they’re more likely to engage with new features or incentives.

Testing should include analyzing metrics and gathering qualitative feedback. Are users engaging with the loop as expected? Are there any drop-off points? Use this data to tweak the design and optimize performance. An iterative approach of continuous discovery makes sure your growth loop evolves alongside your users’ needs and behaviors.

Around and around we go

Growth loops are a great framework for building compounding growth. Unlike funnels that demand constant and fresh input, the idea of growth loops is that they’re self-sustaining. Each output isn’t the end; it’s the start of something new, feeding directly into the loop and propelling it forward.

There are many different types of growth loops, depending on your end goal. Be it acquisition, retention, or expansion, there are many tactics you can use to fuel this loop. 

For Product Managers, growth loops are a reminder to think beyond one-off wins. They challenge you to build strategies that deliver continuous value, ensuring every step of the process improves the next. 

Whether you’re refining user onboarding, designing a viral referral system, or using content to reach new audiences, growth loops create a cycle that keeps on giving. 

The loop keeps spinning, and from that, your product evolves and improves. 

Need a tool to help you build a product that keeps getting better and better? ProdPad will help you communicate your roadmaps, prioritize the best features, and keep your entire team aligned to deliver growth like never before. 

See for yourself with a personal demo.