Customer Acquisition: Growth Loops vs Funnels
While conversion funnels have long been the standard model for understanding the customer journey—comprising of Awareness (top), Consideration (mid), and Decision (bottom)—it's time for a change. We will work together to ensure your customer acquisition strategy is cyclical and not a top down funnel approach.
Let's dive in!
1. Funnels Foster Silos
Funnels can lead to departmental silos, where each department focuses on its part of the funnel (e.g., Marketing at the top, Sales at the bottom). This can result in each department optimizing its numbers without considering the overall customer journey. For example, while Marketing may be hitting its acquisition targets, the leads generated might be low quality – resulting in customers with a low LTV (lifetime value) due to things like heavy discounting. Marketing has hit its target but in a very siloed way.
2. Funnels Are One Directional
Funnels operate on a one-way street. Once a customer moves through the funnel, they're out. I think of this like pancake batter (yum)—you don't want to pour it back into the funnel because that would be messy. (And the pancake has already probably been consumed) Similarly, in conversion funnels, once a customer reaches the bottom, how does retention fit into this unified funnel vs entering a funnel of its own? Sounds more like a loop to me!
Introducing the Growth Loop!
1. Cyclical Approach: Growth loops see the customer journey as a continuous cycle rather than a linear path. Customers can enter the loop at any stage, engage with the brand through various touchpoints, and re-enter the loop multiple times.
2. Multiple Entry and Exit Points: Funnels have a single entry point and a single exit point, but growth loops have multiple entry and exit points. Customers can enter the loop through various channels or actions, and they can exit and re-enter based on their interactions with the brand.
3. Viral Growth: One of the key features of growth loops and company growth in general is the ability to drive viral growth! Customers who are in the loop can bring others into the loop through various actions, such as referrals, sharing on social media, or engaging with user-generated content. This is not only relevant in technology products, but also in consumer retail goods. How do you get your best customers – and any customers in general – fuel the engine by talking abut how amazing the product is?
4. Dynamic and Adaptable: Growth loops allow for a more dynamic and adaptable approach to customer engagement. Brands can easily modify their loop to incorporate new touchpoints, channels, or actions based on customer behavior and feedback.
5. Continuous Improvement: Because growth loops are cyclical, brands can continuously gather data and feedback to improve their loop. This iterative approach allows for constant optimization and refinement of customer acquisition, retention, and growth strategies.
And now, time to go find some pancakes!