HOW TO DESIGN A GROWTH LOOP

How to design a successful product-led growth (PLG) loop that increase users, sales and retain customers. Top growth loop ideas and examples.

Brought to you by Mau, a Senior Digital Marketing Specialist at eDigital.

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HOW TO DESIGN A GROWTH LOOP

What is a growth loop?

A Product-Led Growth (PLG) Loop is a strategy where the product itself drives user acquisition, engagement, and retention, minimising the reliance on traditional advertising or sales teams. This approach relies heavily on the product’s value being self-evident and easily shared, driving viral growth.

Another popular way of describing a growth loop is that it’s a self-reinforcing cycle where each user’s action within a product or service generates more users and engagement, leading to a snowball effect of growth.

Unlike traditional funnels, where users may drop off, growth loops are circular and create a continuous flow of new users and interactions. This loop is driven by user actions that contribute to the product’s growth, rather than solely relying on external marketing efforts.

Key aspects of a successful Growth Loop

Self-Reinforcing Cycle: Each user’s interaction within the product (e.g., creating content, sharing, referring a friend) triggers a sequence of actions that lead to further engagement and ultimately, more users.
Continuous Growth: Unlike traditional funnels that focus on acquiring new users, growth loops are designed to sustain and amplify growth organically.
User-Driven: Growth loops rely on the actions of existing users to generate new users and engagement, rather than solely relying on external marketing efforts.

Why Growth Loops are effective

Reduced churn: By keeping users engaged and active, growth loops can reduce churn and improve retention.
Scalability: Growth loops can scale effectively as they rely on user-driven growth rather than solely on marketing budgets.
Increased user acquisition: By leveraging user-generated content, referrals, and other engagement mechanisms, growth loops can drive significant user acquisition.
Focus on user experience: Growth loops emphasise the importance of creating a positive user experience that encourages engagement and participation.

Here’s a simple example of a PLG loop using a freemium model with built-in viral referral mechanisms:

Example: Slack’s Product-Led Growth Loop

Step 1: Free Product Offering

Slack offers a freemium version of its software where anyone can sign up, create a workspace, and start using it with limited features. The product is easy to use and allows teams to communicate effectively, which leads to high engagement.

Goal: Attract users who are looking for simple communication tools.

Result: Users experience the value of Slack without any upfront cost, lowering the barrier to entry.

Step 2: Viral Invites & Collaboration

Once a user sets up their Slack workspace, they can invite teammates or colleagues to join. The more people who join the workspace, the more valuable the platform becomes for the user. As new users join, they are likely to invite others.

Goal: Leverage the existing user base to bring in new users.

Result: As the team grows, the product gets stickier and more integrated into their daily workflows.

Step 3: Upgrade Incentives

Slack’s free tier provides limited functionality (like storage space or integration with third-party apps), encouraging users to upgrade to paid plans for more advanced features. However, the free plan itself is still powerful enough to retain users.

Goal: Upsell users to a paid tier after they experience value from the free version.

Result: Paid plans offer better team collaboration features, leading to more users transitioning from free to paid.

Step 4: Feedback & Product Improvements

Slack actively collects user feedback, which helps to refine the product and make it more indispensable. With more engaged users, Slack can prioritize features based on customer needs, driving even greater engagement.

Goal: Use user insights to improve the product, which in turn makes the product even more attractive to new users.

Result: Product improvements make the tool more useful and attractive to both existing and new users.

Step 5: Community Engagement & Advocacy

As Slack grows, users become advocates of the platform. Slack has cultivated an online community (like the Slack Community or Slack User Groups) where users can share tips and ideas. This community serves as a support network that brings even more visibility to Slack.

Goal: Create a self-sustaining cycle where users promote Slack to others.

Result: The product becomes so integrated into users’ daily workflows that they actively recommend it to others.

Loop in Action

Free user signs up →
Invites team members to collaborate →
Team members start using it and invite others →
Engaged teams upgrade to paid plans for more features →
Product gets better based on feedback →
Product becomes more indispensable and attracts more users

This loop continues to scale, and the more users that sign up and engage, the faster the growth. The key here is that Slack’s product itself drives the acquisition and retention process—users discover the value, share it with others, and upgrade when necessary.

Other PLG loop examples:

Dropbox: The “refer a friend” feature allows users to earn additional storage space by inviting others. This creates a viral loop where users share Dropbox with their friends, and Dropbox grows as a result.
Notion: The product’s intuitive nature makes it easy for people to share templates, workflows, and use cases, leading to organic growth through user recommendations.

Why Does This Work?

Low Acquisition Cost: The product itself is the best marketing tool, requiring no additional ad spend to bring in new customers.
Viral Growth: Users invite others to improve their experience, creating a snowball effect.
High Retention: Users are more likely to stick with products they’ve tried and experienced value from.
Self-Sustaining: The more people use the product, the better it becomes, leading to even more users.

By designing your product with these loops in mind, you can create a system where your users become the primary drivers of customer acquisition and retention, all without needing to spend more money on ads.

Example: Product-Led Growth Loop for Travel Insurance

For a travel insurance product, creating a Product-Led Growth (PLG) Loop could be a little more nuanced than for a SaaS tool like Slack, but it’s entirely possible! Travel insurance tends to be a one-time purchase, but there’s still plenty of opportunity to leverage the product experience to drive growth through referrals, partnerships, and repeat customers.

Step 1: Simple, Transparent, & Free Quotes

Allow potential customers to get free, instant quotes on your website or app based on their travel plans (destination, trip duration, number of travelers, etc.). This offers immediate value without requiring any commitment, making it easy for potential users to discover your service.

Goal: Lower the barrier to entry and build trust by providing clear, easy-to-understand pricing and coverage.

Result: Travellers engage with the platform, which helps them realize they need travel insurance.

Step 2: Seamless Purchase & Coverage Options

Once they’ve received a quote, offer a simple and fast purchase experience. Let users buy insurance instantly through an easy-to-navigate interface. Provide flexible plans (e.g., basic, comprehensive, family, adventure, etc.) that cater to different customer segments.

Goal: Make it as easy as possible to buy with clear explanations of benefits.

Result: Users feel confident and comfortable purchasing travel insurance through your platform because they trust it’s hassle-free.

Step 3: Instant Digital Documents & Easy Claim Process

After purchase, provide travellers with instant digital insurance cards and a streamlined claims process (perhaps through an app) that allows them to file claims easily if something goes wrong during their trip.

Goal: Provide a great post-purchase experience that minimises friction and builds trust.

Result: travelers are more likely to recommend the product to others if the experience is convenient and simple.

Step 4: Referral Program & Social Proof

After a customer purchases insurance, prompt them to share their travel insurance purchase with friends or family via social media, email, or SMS, in exchange for a referral reward (e.g., a discount on future insurance or a gift card). You could even gamify this with rewards for multiple referrals.

Goal: Leverage word-of-mouth by incentivising happy customers to spread the word.

Result: Referrals will bring in new customers who trust recommendations from their peers.

Step 5: Educational Content & Tools (Travel Prep Resources)

Offer useful tools and content on your website or app that help travelers plan their trips better—like packing checklists, destination guides, or emergency travel tips. You can also include insurance-related educational content to show why travel insurance is essential for every trip.

Goal: Provide ongoing value beyond just the transaction.

Result: Travellers who engage with this content will be more likely to trust your brand and recommend it to others. The more they engage with your tools, the more likely they are to purchase from you again on future trips.

Step 6: Partnerships with Travel Brands (Viral Distribution)

Create strategic partnerships with airlines, travel agencies, or tour operators, so they automatically offer your travel insurance to customers during booking or planning. This ensures that users are exposed to your product at the right moment when they’re already in “travel mode.”

Goal: Get your product in front of customers when they’re already making decisions about their trips.

Result: Partner referrals can act as high-conversion leads because users are already engaged in the travel process and trust the brand recommending your insurance.

Step 7: Repeat Business & Lifetime Value

Encourage repeat customers by offering discounts or incentives for future bookings (e.g., “Get 10% off your next insurance policy when you book another trip within the next 12 months”). Since travel insurance is often needed for each new trip, customers can be incentivized to use your platform for every journey.

Goal: Keep customers engaged with the brand long-term through incentives and reminders.

Result: Customers return to purchase insurance for their next trip, and they may recommend you to others in the process.

PLG Loop in Action for Travel Insurance:

User visits website → gets an instant, free quote for insurance.
User purchases the insurance plan through an easy process.
User receives instant digital documents and experiences a seamless claims process (if needed).
User is prompted to share a referral link for a discount on future trips.
User shares the product with friends/family, leading to new customers.
New customers buy insurance through the same easy process.
User engages with travel planning content and tools, and is reminded of upcoming trips, leading to repeat purchases.
Customer is incentivised to buy travel insurance again for their next trip.

Why This Could Work

Trust: Travel insurance is something travelers want to be confident in. Making the process easy, transparent, and rewarding builds trust and reduces friction.
Viral Growth: Referrals and social sharing can drive new customers at little to no extra cost, as satisfied customers pass on your brand to others.
High Repeat Rate: Travelers tend to need insurance for each trip, providing opportunities to create loyal customers who return time and time again.
Partnerships: Tapping into existing travel networks (airlines, booking platforms) brings your product to the right audience at the right time.

This PLG loop works by ensuring that once users engage with your product, they are so satisfied that they share it with others, continue to use it for future trips, and become advocates for your brand. Plus, the viral loops can scale as your platform gains more credibility and trust in the travel community.

Referral programs, especially those that offer discounts for the next purchase, are a highly effective way to build a Product-Led Growth (PLG) loop. The idea is that satisfied users will bring in new users by offering them an incentive to join, and in turn, both the referrer and referee benefit from discounts or rewards.

What it is the best software for growth loops?

Here are 5 popular software platforms that are often used to implement referral-based PLG loops to earn discounts on future purchases:

5. ReferralCandy

ReferralCandy is a powerful and popular referral marketing tool that helps e-commerce businesses drive customer referrals in exchange for rewards like discounts, gift cards, or cash. The platform is simple to set up and integrates with popular e-commerce platforms like Shopify, BigCommerce, and WooCommerce.

How ReferralCandy works: After making a purchase, customers are encouraged to share a referral link with their network. When someone uses the referral link and makes a purchase, the original customer receives a discount on their next purchase.

Popular use: Often used by e-commerce brands (fashion, health, beauty, etc.) to increase sales and drive brand awareness.

ReferralCandy – Key features:

Fully customisable reward structures (e.g., flat discounts or percentage discounts).
Automated email reminders to encourage referrals.
Real-time tracking of referrals and reward redemptions.

Example: A customer buys a product from an online store, shares the referral link with friends, and both the referrer and the referred friend get discounts on their next purchases.

4. Yotpo

Yotpo is a comprehensive customer review and referral software that allows businesses to create referral programs integrated with user-generated content, reviews, and ratings. Yotpo makes it easy to incentivize referrals with discounts and rewards, making it ideal for brands aiming to combine social proof and referrals.

How Yotpo works: Yotpo’s referral program allows customers to share a referral link with their network, earning discounts on their next purchase when the referred friend makes a purchase.

Popular use: It’s widely used by e-commerce businesses, particularly in industries like fashion, beauty, and consumer goods.

Yotpo – Key features:

Seamless integration with e-commerce platforms.
Ability to add reviews and ratings to the referral process.
Rewards options, including discount codes and loyalty points.

Example: A customer leaves a review for a product they purchased and shares a referral link that gives them a discount on their next purchase when someone buys using that link.

3. Friendbuy

Friendbuy is a robust referral marketing software that helps companies run referral campaigns that reward customers with discounts, gift cards, and other incentives for referring friends. It’s particularly well-suited for e-commerce and SaaS businesses.

How Friendbuy works: After making a purchase, customers are prompted to refer friends using a unique referral link. When a friend signs up and makes a purchase, both the referrer and referee earn a discount or other reward for the next purchase.

Popular use: Ideal for companies with a focus on online retail and subscription-based services.

Friendbuy – Key Features:

Seamless integration with Shopify, BigCommerce, WooCommerce, and other platforms.
Flexible reward structures with both customer incentives and referrer benefits.
Customisable email templates to promote referral programs.

Example: A customer buys a subscription to a meal kit service and shares their referral link with friends. When the referred friend subscribes, both the referrer and referee get discounts on their next subscription renewal.

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2. Post Affiliate Pro

Post Affiliate Pro is a popular affiliate and referral marketing software that offers a range of tools for e-commerce businesses to create rewarding referral programs. It supports commissions or discounts on next purchases for both the referrer and the referred.

How Post Affiliate Pro works: Customers who refer friends or family members are given a unique affiliate link, and once the referred customer makes a purchase, the referrer earns a reward, which could be in the form of discounts, credit, or even cash.

Popular use: Post Affiliate Pro is often used by both small businesses and larger e-commerce companies that have more complex affiliate or referral structures.

Post Affiliate Pro – key features:

Real-time tracking of affiliate and referral performance.
Different reward models, including both cash-based and discount-based systems.
Integration with leading e-commerce platforms and payment systems.

Example: A customer refers a friend to an online store. Once the friend makes a purchase using the referral link, the referrer gets a discount on their next purchase.

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1. Viral-Loops.com

Viral-Loops.com is a software designed for creating viral referral programs and customer acquisition campaigns. It helps businesses build referral loops that reward users for sharing and bringing in new customers, often with discounts on future purchases.

How Viral-Loops.com works: After making a purchase or interacting with the brand, customers are invited to share their unique referral link with others. If their referred friends sign up or make a purchase, the original customer receives a reward (usually a discount) on their next purchase.

Popular use: E-commerce, SaaS, and subscription-based businesses use Viral Loops to grow their customer base quickly.

Viral loops – key features:

Multiple referral templates (including the “Give $10, Get $10” model).
Automated emails and social sharing prompts to increase referrals.
Integration with platforms like Shopify, WooCommerce, and Mailchimp.

Example of a viral loop: A customer purchases a product and gets a referral link to share. When their friends purchase the product, the original customer gets a discount code for their next purchase.

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How these tools facilitate PLG Loops through referrals

ReferralCandy: Primarily for e-commerce, focuses on simple referral-based discounts or rewards after purchases.
Yotpo: Adds social proof (reviews + referrals), so users not only get discounts for referrals but also contribute to product credibility.
Friendbuy: Focuses on e-commerce and SaaS, provides flexible and customisable referral campaigns.
Post Affiliate Pro: More advanced features for affiliate marketers and those seeking a mix of referrals and affiliate sales tracking.
Viral Loops: Offers various templates for creating viral referral loops and gamified experiences, ideal for businesses looking for quick, scalable growth.

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Why These Tools Work for PLG Loops

Engaged Customers: Referral programs turn your current customers into your most loyal marketers. They’re incentivised to share the product with their network because they earn benefits.
Viral Effect: If the product or service is good and the rewards are attractive, users will share your product, leading to a snowball effect of new customers.
Cost-Efficient: Instead of relying on paid ads, referral programs offer organic growth driven by word-of-mouth, which can be far more cost-effective in the long run.
Lifetime Value: Users who have been referred tend to have higher lifetime value (LTV) because they’ve been brought in through a personal recommendation and are already familiar with the brand’s value proposition.

These platforms are designed to leverage the power of referrals to drive repeat business and grow your user base without needing to rely heavily on paid marketing.

THE 7 TYPES OF GROWTH LOOPS USED IN DIGITAL MARKETING

In digital marketing or growth marketing, Product-Led Growth (PLG) loops are sometimes referred to by other terms or concepts that focus on specific aspects of the strategy.

Some of these terms are used interchangeably or focus on different elements of the growth process.

Here are a few other terms or phrases you might encounter:

1. Viral Loops

What is a Viral Loop?

A viral loop is often used to describe a self-reinforcing cycle where users spread the product by sharing it with others. As users invite others to try the product, more people sign up or make a purchase, which then leads to even more invitations and sign-ups.

How a Growth Loop is different to other loops?

While similar to PLG, viral loops emphasise the organic, exponential growth aspect where the product becomes viral through word-of-mouth or sharing.

Example: Dropbox’s referral program, where both the referrer and the referred get more storage space for free.

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2. Growth Loops

What is a Growth Loop?

A growth loop is a general term that refers to a cycle of actions that drives compounding growth. It can refer to any business process or system, not just the product itself, but many times it involves using the product to encourage repeat engagement or acquisition.

How a Growth Loop is different to other loops?

While PLG specifically ties to product experiences that drive growth, growth loops can also include other factors such as marketing campaigns, sales efforts, or community-building activities that work in harmony with the product.

Example: A SaaS product that has a growth loop might offer incentives (like free months or features) to users who refer others, creating a cycle where users promote the product, leading to more signups, and thus more referrals.

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3. Referral Loops

What is a Referral Loop?

A referral loop refers specifically to a growth strategy where users are incentivised to refer new users to a product, often by receiving rewards like discounts, credits, or access to premium features.

How a Referral Loop is different to other growth loops?

This term focuses on referral as the central driver of growth. While it’s part of PLG, it doesn’t necessarily cover the entire product experience; it’s more about the specific referral mechanism.

Example: Uber’s referral program, where existing users invite new users to join in exchange for ride credits.

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4. Flywheel Growth

What is a Flywheel Growth?

The flywheel concept in marketing refers to a business model where the momentum generated by existing customers or users drives additional customer acquisition, resulting in continuous, scalable growth. In a PLG flywheel, the product itself fuels the growth by constantly improving customer experiences and driving word-of-mouth referrals.

How a Flywheel Growth Loop is different to other growth loops?

A flywheel emphasises the ongoing momentum that continues once it’s started, whereas PLG loops may focus more on specific actions that trigger growth. The flywheel can also include aspects like customer service, feedback, and product improvement as integral parts of the loop.

Example: HubSpot’s marketing platform, which uses content, tools, and educational resources to bring in customers who then refer others, leading to a self-sustaining growth cycle.

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5. User Acquisition Loops

What is a User-Acquisition Loop?

This term highlights the use of existing users to acquire new users. It focuses on the process where current users invite or influence new users, and it can include social sharing, referral programs, or other methods that help convert satisfied users into advocates who drive further acquisition.

How a User Acquisition Growth Loop is different to other growth loops?

User acquisition loops focus more on the acquisition side of the funnel, whereas PLG loops often integrate acquisition with retention and expansion strategies.

Example: A mobile game where players are encouraged to invite their friends by offering in-game bonuses or advantages.

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6. Customer-Led Growth

What is a Customer-led Growth?

Customer-led growth focuses on empowering existing customers to be the primary drivers of business expansion. This can take the form of referrals, testimonials, reviews, or any other customer-driven activity that helps attract new users.

How a Customer-led growth is different to other growth loops?

While similar to PLG, customer-led growth often highlights the importance of customer advocacy and feedback loops rather than product features driving growth.

Example: An online service where customers who share positive reviews on social media or in online communities get rewards for their advocacy.

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7. Network Effect Growth

What is a network effect growth?

Network effect growth occurs when the product becomes more valuable as more people use it, creating a self-perpetuating cycle of adoption. This is especially true in digital products where the value of the product increases with a growing user base.

How a Network Effect Growth Loop is different to other growth loops?

Network effects often emphasise the value increase with user adoption, whereas PLG loops focus on the product driving engagement and growth without necessarily needing a growing user base to enhance value.

Example: Social media platforms like Facebook or Instagram, where the value of the product increases for users as more of their friends join.

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Product-led Growth Alternatives in Digital Marketing

Viral Loops: Emphasise the viral, word-of-mouth spread.
Growth Loops: Broader term that includes any cycle of actions driving compounding growth.
Referral Loops: Focus specifically on user referrals and incentives.
Flywheel Growth: Refers to the momentum of continuous, self-sustaining growth.
User Acquisition Loops: Focus on using existing users to attract new users.
Customer-Led Growth: Highlights customer advocacy and actions driving growth.
Network Effect Growth: Product value increases with more users.

These terms may overlap with Product-Led Growth, but they emphasise different mechanisms or aspects of the same concept.

PLG is a broader strategy, while some of these other terms may focus more on specific tactics within the overall growth cycle, such as referrals, viral sharing, or network-driven value.

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THE TOP 10 COMPANIES SUCCESSFULLY EXECUTING GROWTH LOOPS

Many companies (specially tech companies) are recognised for their successful implementation of product-led growth (PLG), a strategy where the product itself drives acquisition, expansion, and retention.

Some leading examples include:

Slack: Known for its strong community and viral growth, Slack’s product’s built-in features encourage user-to-user communication and collaboration, leading to organic expansion.
Figma: Figma’s collaborative design tool and user-friendly interface have made it a popular choice for teams, fostering a sense of virality and user-generated content.
HubSpot: HubSpot has successfully pivoted to a PLG model, leveraging its free tools and marketing resources to drive user acquisition and conversion.
Calendly: Calendly’s simple and intuitive interface has made it easy for users to schedule meetings and appointments, leading to widespread adoption and viral marketing.
Zoom: Zoom’s focus on ease of use and seamless communication has made it a go-to platform for remote meetings and collaboration.
Grammarly: Grammarly’s product offers value through its free tools and user-friendly interface, driving user acquisition and engagement.
ClickUp: ClickUp’s versatility and user feedback-driven approach have allowed it to adapt to various needs and build a strong PLG strategy.
Zapier: Zapier’s product-led SEO and automation tools have made it a popular choice for connecting various applications and platforms.
SurveyMonkey: SurveyMonkey’s viral marketing and user-friendly interface have made it a popular choice for conducting surveys and gathering data.
MongoDB: MongoDB’s focus on guiding users through their objectives and providing value quickly has helped it establish a strong PLG foundation.

Conclusion

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HOW TO DESIGN A GROWTH LOOP

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