The ever-evolving role of growth teams is full of challenges, and whether the teams themselves hail from B2C or B2B (or B2B2C, or H2H, etc 😉) companies, it’s always a tremendous help when growth effortlessly happens from within. I’m talking about growth loops.
You see, in recent years, the relevance of marketing funnels in general have lessened, in favor of growth loops. In this post, I’ll talk about how growth teams behind B2B subscription companies are, in turn, using their internal data, flows, and product itself to substantially fuel growth and acquisition efforts. By the time you’re done reading this, you will better understand the value of building a holistic growth loop, and how the data from it can be used to power acquisition efforts.
A series of developments have made growth loops more appealing than funnels, because the funnel methodology itself is lacking in numerous areas. For starters, funnels are all about lead generation. While that does sound good initially, the problem here is that there isn’t any focus on what happens after acquisition. Meanwhile, growth loops, as the name suggests, are about keeping activities and events going in full circle, like clockwork. Growth loops do not end at acquisition.
The funnels of the past also lost their edge in terms of competitive advantages. Growth loops meanwhile provide a series of competitive advantages, especially with PLG loops, when the loop-element itself needs to be integrated into the product’s core functionality to drive re-engagement/retention or referral.
Growth loops open the doors to true scalability, because they aren’t nearly as linear as funnels are, and can also help reduce acquisition costs to further propel growth. And let’s not forget the fact that paid acquisition costs have significantly increased in recent years. With this in mind, the importance of maximizing the value of each potential customer has increased, and growth loops support that.
Building a holistic growth loop does more than just keep users engaged and hungry for more. It can also help your company collect significantly more data about your users. In turn, that will allow you to fine-tune, and improve your growth and marketing initiatives—simply by using the collected zero- and first-party data as a starting point.
As you can see in the image below, when your user acquisition campaigns are focused on acquiring high-value users that are also super engaged with your company—that really gets the gears running. That’s what you need to fuel your acquisition and retention loops, in order to support further growth.
Of course, it goes without saying that one size doesn’t fit all when it comes to such models. That depends on your business. However, by blending growth loops into your elements of your marketing funnels, you can ramp up the momentum and drive some seriously explosive growth. Your funnel will come into play with the acquisition loop, up until the point of going past the threshold of self-perpetuation. That’s the point in which the acquisition loop continues acting as the main driver of growth. Meanwhile the retention loop (which is secondary, but nonetheless important!) keeps spinning to prevent churn, while also building on the momentum that is coming from the acquisition loop.
As you can expect, operations will get more complex as more loops are added, but I’m sure you get the jist. The point is that none of the loops here are solo agents. They all help reinforce each other.
Once you have a good process set in place with your user acquisition that enables it to be leveraged to a growth loop, your company can grow exponentially. The fun doesn’t stop there! By taking this route, you will have a lot of data on your users, and you can adjust your user acquisition campaigns for the good users that will be more likely to further fuel the growth loop.
All this can be made better when your company is able to see future foresight, such as looking at how campaigns are predicted to perform, or by sending ad networks signals of the good users who demonstrate high LTV. This contributes to the creation of a new loop—by acquiring users that will fuel your exponential growth.
Many B2B PLG companies have seen great organic growth by taking this approach, and spicing it up with the addition of predictive modeling. We have seen it with some of our own clients, which had insane organic growth because of their PLG growth loops, with the addition of the LTV-optimized UA element. If your user acquisition efforts are not aligned with the PLG loop, it will end up just bringing you a mixed bag of less-optimal users, and you won’t be able to make important campaign decisions, or scale based on the less-optimal data that comes from it.
All this goes to show that your user acquisition strategy has to align with users who will further fuel your growth loop. Curious about how to go about doing it? This is most easily and efficiently done by using predictive marketing to focus on high value, and highly engaged users, and further strengthening your growth loop with the addition of a traffic source or channel.
There’s a wealth of data that stems from PLG loop strategies, and these data points will collectively make your growth, marketing, and data science team drool. 🤤
For starters, there are the familiar metrics, such as acquisition, activation, retention, referral, CAC, growth rates, and revenue. Additional metrics that come up include natural rate of growth, expansion revenue, product qualified leads, and free to paid conversion rates.
Those are just a sample of data points, and they are collectively a treasure trove of zero- and first-party data that growth teams behind more sophisticated companies are beginning to use to create LTV-optimized acquisition campaigns, down to the individual-user-level. As said by our CEO, “LTV based optimization is what makes acquiring VALUABLE users AT SCALE feasible.”
But hold on—who on earth has all the time in the world to do all the work that goes behind that? No one. That’s where the convenience and brilliance of AI and ML technologies come into play, as seen in the case of predictive marketing solutions which do all the heavy-lifting. Predictive marketing solutions can take that zero- and first-party data, and weave it into optimized campaigns that fuel sustainable growth and profitability, all in a future-proofed manner.
If getting started in-house is more your cup of tea, you can easily use LTV projections as part of the value-based acquisition process, by following steps we highlighted in a previous post. When taking on the value-modeling approach, your marketing team will be able to make more informed campaign decisions, including keep/kill decisions, and your company will pay for cohorts in accordance with their LTV. It’s a win-win situation for all!
At this point, the growth teams behind all data-driven B2B companies best get on board with using data from their growth loops, to activate and further maximize growth and profitability in a scalable manner. Not only does not doing so leave money on the table—because if anything it ends up costing more in terms of acquisition costs, and misinformed budget allocation.