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September 24, 2022

How Start-ups Use Growth Loops - 5 Examples

Staggering growth rates and ever-increasing engagement rates... Rather than thinking in linear funnels, marketeers and entrepreneurs increasingly think in loops. And for good reasons... Here is why

Roald Larsen

Viral growth loops are characterized by a system where users sign up and recommend the product to their friends. Let’s look at some examples:

1. PicNic - Market expansion strategy

Picnic - Supermarket shopping delivered to your doorstep

Imagine ordering online and having your locally sourced groceries delivered by a cute electric 🚐 at your doorstep every week. Sounds like a dream right? 😊☁️

Well, not for Dutch and German consumers across 100+ cities. PicNic is revolutionizing the online grocery market one region at a time. Their differentiation strategy combines regular delivery routes with regional expansion based on waiting lists that make routes profitable when they hit a certain threshold.  

PicNic was the fastest-growing company in the Netherlands in 2019. It seems that well thought acquisition loops yield results.  📈👏

  1. User joins waiting list in given region
  2. PicNic expands to given region once threshold is reached
  3. User places order at a low delivery cost
  4. User recommends PicNic to a friend in a new region

Picnic - Growth loops for Market expansion

2. Netflix - The recommendation engine

Netflix and chill 📺. It sounds effortless right? Not for Netflix. They have been working hard 💪over the past decade to grow and retain their 160 million user base globally 🌎.

Netflix's recommendation engine is among the crown jewels of the company. It even used to award one million dollars to anyone who could increase the accuracy of the algorithm by 10%.

Why did they see so much value in it? 🤔Well, because it is a great retention loop!

  1. Customer consumes more content
  2. Netflix learns about the customer’s tastes and preferences
  3. Netflix tailors catalogue (home and third party productions) according to wider audiences watching patterns
  4. Netflix recommends curated content

The Netflix' recommendations engine at work

3. LinkedIn - The "new-user acquisition" loop

The social media network designed for the business community 🧑🏻💼👨🏼💻 grew its user base from 37 million to 660 million users across 200 countries over the past decade.  I invite you to read that again and let those numbers sink in... Those figures are just crazy, right? how did they do it? Yes, you guessed right: exponential growth loops... After a lot of experimentation 👩🔬in the early days, the acquisition loop based on suggesting users to invite their contacts 📓to the platform, as proven essential for LinkedIn’s sustained growth.  

  1. New user creates account
  2. LinkedIn suggests you to synchronise your account with your email list  
  3. LinkedIn suggests connections based on your profile & contacts
  4. LinkedIn suggests you to invite people from your contact list to join LinkedIn
  5. Your contact makes a post, you get a notification (e-mail or via website,..)
  6. You check the post and engage
  7. Your contact gets a notification
  8. The rest is history :-)

Viral growth loops for new user acquisition

4. Uber - Balancing Supply and demand

“Never get into a 🚗with a stranger!” My mom used to say. ☝️👩🏻  Remember the time? Well, not if you ask Uber.  40 million car rides per month just in the US. Getting a ride was never as convenient as today, all thanks to Uber.  Over the past decade, the ride-hailing service completed over 5 billion rides and has over 3 million Uber drivers worldwide. Andrew Chen explains the virtuous loop that enabled Uber to attract more drivers to the platform to meet increasing demand while maintaining competitive fares. That’s what I call a balancing act! 🤹‍♀️

  1. New or returning user uses the Uber app to call for a driver increasing demand in a given location/region
  2. New drivers join the platform to cover the increased demand
  3. A given location/region increases the number of available drivers until a point of saturation is reached
  4. The increased availability of drivers speeds up the pickup times and lowers prices as drivers spend less time without rides

Uber - Balancing supply and demand

5. Revolut - Money, but better

Send money abroad for free or split a dinner bill with your friends seamlessly. Yap, that’s Revolut! 🤩

These days, the challenger bank is adding 10.000 users a day to their 10 million user base across the globe. They claim that the first 1.5 million users were acquired without any spending on marketing.

You can call it magic! 🧙‍♀️Revolut’s Head of Growth for UK/IE calls it Offline → Offline to Online → Online acquisition loops:

  1. Offline: User receives Revolut card at home in a stylish, creative package with simple activation instructions
  2. Offline to Online: User shares the unboxing experience on social media creating awareness for the brand
  3. Online: User completes registration in 1/2 minutes. Engagement is nurtured through helpful activity notifications and perks
  4. Online to Offline: User gets rewarded by signing up new users

Revolut - Engagement Growth loop

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