Growth loop

A growth loop is a repeating cycle in which the output of one round of user or company activity becomes the input for the next round, so growth compounds instead of ending at a single conversion. A user signs up, takes an action, and that action brings in more users or revenue, which starts the cycle again.

How it is measured

Start with the action at the center of the loop and count what each cycle produces. A plain-text check: loop ratio = new inputs created in one cycle / inputs that started that cycle. The loop sustains itself only if the output is greater than the input.

For a paid loop, the check is unit economics. Revenue can go back into paid acquisition when lifetime revenue per user beats acquisition cost, meaning a positive ratio of lifetime value (LTV) to customer acquisition cost (CAC). Speed matters too. A shorter payback period means each cycle finishes sooner.

A concrete case

Write the loop as three answers: who acts, why, and what they do. Strava's loop rests on the pride users take in sharing their performance on social networks. Each shared workout is seen by people who are not yet users, and some of them join and share their own.

Loops are not only viral. In a sales-led loop, customers grow revenue, and that revenue pays for a better product and more salespeople.

Usual mistakes

• Calling a funnel a loop. Funnels are linear and loops are cyclical. If nothing from the end of your process feeds the start, it is a funnel.
• No reason to act. Users need an incentive, such as status, attention or money.
• Treating network effects as the same thing. A network effect can be part of a loop, but a loop does not need one.
• Building on a weak product. No loop will help a product that does not solve a real problem.

When it matters to you

It matters when you choose where this quarter's budget and build time go. Pick one loop and write down who acts, why and what they do. Measure one full cycle, then put the weakest step into your experiment backlog. For loop types, see our growth loops guide. For an invite loop, use the referral program playbook.