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Definition
In a business context, a growth loop is the company uses the output as fuel for the next action which helps a company grow sustainably without needing consistent external fuel. This concept is inspired by the mechanical working of a flywheel that keeps spinning sustainably without external force.
How is it useful?
In case of acquisition, this acts as a feature to attract new users with little or no effort. For retention, it acts as a feature to keep an existing user engage with the product.
Ultimately, in both scenarios, product adoption is increased. With acquisition new users try out the product. And with retention, the existing user is able to explore more use-cases of the product.
Example
Growth loop used for acquisition
Typeform
A user creates a Typeform survey and distributes it to their friends, family, and colleagues to get responses. When these friends, family, and colleagues fill out their responses, they discover the Typeform branding. The next time they wish to create a survey, they create it on Typeform and it acts as an input fuel to restart the flywheel.
Growth loop used for retention
Netflix
When a user watches premium content on Netflix, the recommendation engine learns more about what the user likes and dislikes. This helps the engine recommend better content which helps the user discover more content that they like and end up watching more content.