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TG3 SaaS/Glossary/Growth loops
SaaS metrics glossary

Growth loops.

The model that replaced the funnel for products that compound. Here is what growth loops are, how they differ from funnels and how to build one.

Definition
A growth loop is a self-reinforcing system where the output of one cycle, new users, content or cash, feeds straight back in as the input for the next cycle.

A funnel is linear. You pour in at the top, some comes out the bottom and tomorrow you pour again. A loop reinvests its own output, so each cycle seeds the next and growth compounds instead of resetting to zero every morning.

How growth loops work

How growth loops work.

Output  →  reinvested as input  →  more output
Viral loopusers invite users, who invite more users
Content loopusers create content that ranks and brings more users
Paid looprevenue funds acquisition that produces more revenue

The referral version is measurable as a K-factor, see viral coefficient.

Benchmarks

Growth loops versus funnels.

Funnels deplete. Every customer who exits the bottom does nothing for the next one, so growth costs the same effort forever. Loops compound, because each cohort of users, content or revenue partly produces the next.

Most healthy SaaS businesses run both, a funnel for capture and at least one loop quietly compounding underneath. The strategic question is which loop your product can credibly power, not whether loops are better in the abstract.

How to improve it

How to build growth loops.

01

Find your natural loop

Collaboration products loop through invites, content products through what users publish. Start where the product already points.

02

Shorten the cycle

A loop that turns in days compounds far faster than one that turns in quarters.

03

Instrument every step

A loop is only as strong as its weakest conversion. Measure each link.

04

Feed it patiently

Loops start slow and compound late. Cutting one early is the classic mistake.

Common questions

Questions about growth loops.

What is a growth loop?+

A self-reinforcing system where the output of one cycle, users, content or revenue, becomes the input that drives the next cycle.

How are growth loops different from funnels?+

Funnels are linear and reset daily, so growth always costs the same. Loops reinvest their own output, so growth compounds.

What are common SaaS growth loops?+

Viral loops where users invite users, content loops where user-generated content brings traffic and paid loops where revenue funds more acquisition.

How do you measure a growth loop?+

Instrument each step and track the cycle time and conversion at every link. The referral version is the viral coefficient.

Viral coefficientProduct-led growthNorth star metricAcquisition channels

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