As I covered in my last post on engagement and retention, I'm currently taking a Reforge course and summarizing my learnings here. Up this week is acquisition, a topic that I've learned a lot about since starting at Hugo and working on projects more towards the top of the funnel.

While I didn't come away with as many tactical learnings as the previous section, I found there to be a lot of helpful frameworks here for thinking about acquiring users. I can't cover everything in this post, but the following topics really stuck with me:

  • Thinking in loops: How successful companies are built on a series of compounding loops
  • Types of loops: Different types of loops e.g. Viral, Content, Paid, and Sales
  • Improving acquisition: Applying this framework to acquire more users

Thinking in Loops

When acquisition comes to mind, there's a decent chance that your mind gravitates towards a funnel. This isn't necessarily wrong, but it does introduce a few complications. Namely, funnels push us to invest in linear activities. This doesn't reflect how the fastest companies grow. Instead of funnels, the best companies are built on a system of compounding loops.

🔐  When thinking about loops, the key question is: How does one cohort of users lead to another cohort of users?

Operating with this question in mind results in self-reinforcing systems that enable exponential, rather than linear growth. The graphic from Reforge below shows this well:

Even better, as you start to combine these loops together, they make each other more efficient, increasing our sustainability and growth ceiling. This is all to lead to the next big question: What do these loops look like?

Types of Loops

Reforge thinks about acquisition loops in four categories: Viral, Content, Sales, and Paid. Different companies lean on different types of loops, but it's important to remember that the 80/20 principle applies here. Chances are that one or two loops will do most of the heavy lifting for acquisition.

🤝 Viral loops

There are several different subtypes of viral loops, and we need to understand them in order to create and optimize them. It's ultimately in their differences we find the key levers that make them effective:

  • Word of mouth: One person tells another about the product/service outside of the product
  • Organic: One user invites another to the product through natural usage
  • Casual contact: As one person uses the product they naturally, but indirectly, expose it to non-users
  • Incentivized: When inviting or sharing with friends is directly incentivized by some reward

Each of these loops works a little differently, but they can all be explained and optimized with roughly the same set of recurring steps:

  • New user: New users sign up and try the product
  • Invite/Action: What percentage of new users take the action? What's the value prop?
  • Branch: How many invitees per inviter or people exposed?
  • Channel: What channel is the invite sent through? What's the deliverability?
  • Response rate: What is the response rate to that exposure?
  • New user: What percentage of those that clicked on an invite convert to a new user?

Essentially, invites are delivered through some channel, and then we have a response rate to those invites, which produces new users, repeating the loops over and over again.

📝 Content Loops

As you might guess, content loops are simply where we create and distribute content in a way that attracts more users. Reforge breaks up content loops in two dimensions:

  • User-generated vs. Company-generated: Who is creating the content? Are you blogging about thought leadership like Hubspot or relying on users to post content like Pinterest?
  • SEO vs. Social: Who is distributing the content? In the examples above, Hubspot relies on search to distribute a good portion of their content while Pinterest leans on social sharing.

As you might have picked up in my two examples above, these categories aren't exclusive! Both Hubspot and Pinterest engage with both SEO and Social content loops to distribute their content.  While viral loops were fairly straightforward, let's examine the steps and how this is a loop:

  • New user: New users sign up and try the product
  • Content created: Content is created by users, suppliers, companies, or partners
  • Content distributed: Content is distributed by users, suppliers, companies, or partners
  • New user: Some percentage of people that view the content sign up and become users

You can see how one piece of content leads to more users, which then enables either more users to create content, or more resources for the company to create content.

💰 Paid Loops

Paid loops occur when a company distributes a paid ad that attracts more users and customers and that money can then be reinvested in more ads. This is a little more indirect than the previous loops, but you can map out steps the same:

  • New user: New users sign up and try the product
  • Convert to paid: Some percentage of users convert to pay you money
  • Buy more ads: Revenue from paying users is reinvested in more ads
  • New user: Some percentage that view the ad sign up and become users

💼 Sales Loops

Last but not least is sales loops. Similar to the paid loop, companies use sales loops to distribute the value prop via humans using a sales force to attract more customers. As they attract more customers, they can reinvest that capital into more humans:

  • New customer: Someone converts to pay you money
  • Add rep: Company uses profits from new customers to hire more sales reps
  • Rep works leads: New reps work to sell more leads
  • New customer: Some percentage of leads convert to paying customers

Improving Acquisition

Now it's time for the tactical bit. Given all this loop-goodness, how can you actually apply this knowledge to improve user acquisition? There are three strategies here:

  • Optimize: Optimize conversion to get more out of each step of the loop
  • Add loops: Create and combine new loops to enable new ceilings and increase efficiency
  • Increase linear: Increase the linear channels that are feeding your loops

In my opinion, most of the opportunity for a lot of teams sits in the optimize bucket. As I mentioned before, focus is important and more loops doesn't always mean better outcomes.

Once you find a loop or two that works, optimize rigorously for more output per cycle and faster cycles in general. Use data to build a detailed micro quantitative model for each loop, plug in hypothetical maxes to understand the largest levers, then begin brainstorming ways to lift those levers.

Wrapping up

Hope you found some of the stuff in here useful. As I mentioned earlier, this module was a bit light on tactics but I do feel that I've improved my understanding of how acquisition works and how to go from strategy to tactics. Stay tuned for the next summary post on monetization!

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