Everything is a loop
You have four types of loops: Viral loops, content loops, paid loops and sales loops.
Viral loops are based on people sharing your product. Content loops are either content marketing or involve packaging user generated content for search engines. Paid loops and sales loops involve buying ads or hiring sales reps and then reinvesting a portion of the profits to hire more reps or buy more ads.
So how is content marketing, buying ads and hiring sales reps a loop? Isn’t that just conventional marketing?
The key here is that something is only loop if you can reinvest the output into the top of the funnel in a repeatable way.
The emphasis being on ‘in a repeatable way’. If I spend a week working on content for our product, it may well bring in a bunch of new users. The problem is that we can’t use any profit from the work to hire another me. If I’m working on content then I can’t work on anything else.
If we hire an agency or commission someone to write the content and it results in a bunch of new signups then we can use a portion of the profits to hire them to do the same thing again. I’m free to work on more important stuff and the process pays for itself and some.
It’s important that the profits used to pay for the loop come from that particular loop though. In the ads example, we invest a bunch of money into ads, people buy subscription and then we reinvest a portion of the profits into new ads. What we cannot do is allocate a portion of our month’s overall profits into ads. Us just spending x amount on ads every months, is not a paid loop. It’s only a loop if the profits from a specific campaign are high enough to fund the next round of ads.
This way we build up a menu of different acquisition loops that we can treat like levers that can be turned on and off. The better the loop performs the more we invest in it. Once it stops performing we can stop investing in it.Sometimes it make more to invest in certain loops and not in others, depending on seasonality or how saturated the channel is, etc.
All loops and tactics decay over time, so we’re never going to find one killer loops that we rely on forever. For example, ads might be great to start with but once we exhaust our target audience we will start advertising to less and less ideal customers, and the ROI diminishes fast. So the idea is to lean into the best loops we have but constantly explore new opportunities so that we have options when the tides change.