309. Growth loops ๐ผ
A library of resources for understanding SaaS growth
Hi there ๐
Twice a year, I teach a growth marketing course at the university here in town. Itโs a quick seven-week course all about the basics of digital marketing. I just wrapped up this semesterโs teaching, and I thought Iโd share with you all a small collection of the types of resources I pass along to students who are interested in further developing their growth marketing skills. My course is very basic; these resources are next level.
Wishing you a great week ahead,
Kevan
(แตแดฅแต)
Thank you for being part of this newsletter. Each week, I share playbooks, case studies, stories, and links from inside the startup marketing world and my time at Oyster, Buffer, and more.
Say hi anytime at hello@kevanlee.com. Iโd love to hear from you.
All about growth loops
"If you wish to make an apple pie from scratch, you must first invent the universe.โ
Was Carl Sagan a growth marketer?
Probably not. But his famous apple-pie-ism makes for a good starting point for a discussion on growth marketing. In order to talk about growth marketing, you must first invent marketing.
The way I tend to frame things when Iโm talking to my team, to tech companies, or to university students is like this: Marketing is connecting your company with your customers. And within this definition, marketing can be divided into three houses (sometimes I insert a Harry Potter Hogwarts joke here.)
Brand marketing
Product marketing
and Growth marketing
Brand marketing tells the story of who you are. This includes your brand strategy, your mission and vision and values, and the visual identity of your company (things like logos and color palette and style). Brand marketing is measured by how much mindshare and market share you can win. When you think of cool sneakers, which companies come to mind? Thatโs brand marketing.
Product marketing is all about what you sell. Itโs the way you talk about your product with your potential buyers, the name and category and description of what youโre selling. Itโs the price you set, and the way you package it โ sometimes with literal packaging and other times, like in the case of software, how you combine different features together. You measure product marketing through numbers like feature adoption or product usage or win rate.
And growth marketing is how you sell it.ย
In some businesses, growth marketing may go by a different name: demand gen or performance marketing or user acquisition or Growth (with a capital G). Whatever you call it, growth marketing tends to be the marketing arm most closely tied to revenue goals and outcomes โฆ and all the different ways you can achieve them.
Thatโs where growth loops come in.
More and more, SaaS businesses are beginning to engineer growth loops into their products or to identify growth channels that form sustainable loops to keep new users coming. We had a word-of-mouth growth loop at Buffer for years. We have a paid ads growth loop at Oyster today (and are building out several others).
What are growth loops? Good question. Essentially, a growth loop is any type of system where what you put in generates enough output that you can reinvest it to get more and more output. For instance, with a word-of-mouth loop:
A user has a wonderful experience with your product and brand
They tell others how great you are, which brings you new customers
New customers have a wonderful experience and tell others, etc etc
Or with a paid ads loop:
You put capital into paid ads
Paid ads bring you new customers
Customers generate revenue, which you can reinvest into paid ads to bring new customers etc etc
But this is just scratching the surface. Let me point you to my Growth Loops Library for all the best resources Iโve bookmarked on growth loops over the past five years. If you know of any new resources youโd add to this list, please let me know. Iโm always up for an update.
Growth loops are the new funnels
https://www.reforge.com/blog/growth-loops
This blog post is the foundation to the loops idea. As youโll see, loops are an idea best implemented across the entire company and entire customer journey. That being said, if you donโt have full buy-in, I still think there is value for just acquisition/marketing.
After reading this article, I immediately thought: What current loops can we identify in our company? What loops can we find and build next in order to keep our growth going?
Hereโs a tl;dr Twitter thread from the author (Brian Balfour):
There are only a few ways to scale user growth and hereโs the list
https://andrewchen.co/theres-only-a-few-ways-to-scale-user-growth-and-heres-the-list/
This is an old one but relevant to the topic of loops. The author (Andrew Chen) mentions that one of the key qualities of scalable user growth is feedback loops, which is the same idea as growth loops. At Buffer, we were doing two of the โfew ways to scale growthโ: virality and SEO.
Follow-up articles by Andrew Chen:
A podcast with Andrew Chen about growth [Intercom blog]
He talks specifically about built-in virality
To optimize high-consideration, high-intent signup flows, you simplify or shorten the process. Similar idea to HubSpotโs โreduce frictionโ aspect of the flywheel.
The 5 crucial stages of designing a viral loop [Andrew Chen blog]
One of the original articles about viral loops, from 2007 [Andrew Chen blog]
What to do if your product isnโt growing
https://medium.com/initialized-capital/what-to-do-if-your-product-isnt-growing-7eb9d158fc
Key takeaway: Map out your Critical User Journey. I think this would be an awesome exercise for a new growth marketer at a company or for an existing growth team / leadership team at an on-site.
Pinterest and Grubhubโs Former Growth Lead on Building Content Loops
https://firstround.com/review/pinterest-and-grubhubs-former-growth-lead-on-building-content-loops/
This article takes the initial idea of growth loops and applies it to content, with a neat, specific example of how this worked at Pinterest.
How the Flywheel Killed HubSpot's Funnel
https://blog.hubspot.com/marketing/our-flywheel
A few key takeaways:
โFlywheels represent a circular process where customers feed growth.โ Same concept as a loop.
I see flywheels as the combination of multiple loops: e.g. a flywheel is a macro loop comprised of micro loops.
P.S. I think the โhomeworkโ that is mentioned in the article would be an awesome exercise to work through at a leadership meeting.
Podcast: Kevin Kwok: How Systems Work
http://www.perell.com/podcast/kevin-kwok
10:27 Kevin defines his theory of loops and how they are a pattern that can be seen in the most successful businesses
14:03 Kevinโs observation on how successful businesses use loops to scale
The One Growth Metric that Moves Acquisition, Monetization, and Virality
https://www.reforge.com/blog/growth-metric-acquisition-monetization-virality
Key quote for me:ย
Retention Drives Your Acquisition
Itโs obvious that the more you improve your retention, the more active users or customers you will have over time. Whatโs less obvious is that as you improve retention you will simultaneously increase the number of new customers you can acquire.
This dynamic creates a multiplier effect. As you increase retention in your product, youโll acquire more users. This is a virtuous cycle that continually feeds itself over time to compound acquisition efforts.
Because a number of acquisition channels, such as virality and UGC, work when existing users take an action that introduces new users to the product (via inviting friends, sharing, word-of mouth, or creating new content), a larger base of active users leads to better acquisition metrics.
The Content Growth Cycle
https://www.animalz.co/blog/the-content-growth-cycle/
A good example of a loop in action for content marketing.
Youโve Got Product/Market Fitโฆ What About Marketing/Market Fit?
https://sparktoro.com/blog/youve-got-product-market-fit-what-about-marketing-market-fit/
How to optimize your loops:
If you have product/market fit, improving your marketing/market fit might be the highest ROI investment you can make
Better targeting of more resonant messages will yield more customers at a lower cost of acquisition
The only thing stopping you from fixing this is the will to do the work and the approval from your boss/team/leadership/client
If the marketing flywheel youโre building is finding friction, slowing down, or scaling more slowly than your competition despite a great product, consider investing in marketing/market fit. Just like P/M fit, itโs never done; itโs a cyclical process with constant opportunity for refinement and improvement.
Strategic decisions to find the next growth lever
https://www.kevin-indig.com/strategic-decisions-to-find-the-next-growth-lever/
The red flags and magic numbers that investors look for in your startupโs metrics
The loops part begins about 1/3 of the way into the article.
Misc.
Sliteโs fair pay model and salary calculator. Salary formula? Iโm here for it. Sliteโs formula is nice and straightforward, and they even give out a spreadsheet calculator. Here is how they solve a couple of traditionally stickier elements of salary formulas:
Geo: In most countries we pay based on the capital or main tech hub. In the US and Canada, we split the country in zones from 1 to 5 (from highest paid to lowest, respectively).
Leveling: Each level has an area of impact, of ownership and key attributes. We discuss the combination of these 3 components when running our Performance Reviews. School director paid more than our kids teacher? Not in our home. We're against having People Manager sit on top of our salary grid. So we created 2 paths: the Individual Contributor path and the People Manager one. There's no specific incentive for managing people over being an exceptional contributor.
Luna Park: a new game weโre thinking of trying with our remote team
Contra: beautiful design and interesting new concept for a professional community
About this newsletter โฆ
Hi, Iโm Kevan, a marketing exec based in Boise, Idaho, who specializes in startup marketing and brand-building. I currently lead the marketing team at Oyster (weโre hiring!). I previously built brands at Buffer, Vox, and Polly. Each week, I share playbooks, case studies, stories, and links from inside the startup marketing world. Not yet subscribed? No worries. You can check out the archive, or sign up below:
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