Why marketers should focus on growth loops, not funnels in customer journey orchestration
Find out how these strategic cycles can level up your marketing, break down team silos and drive better results.
Putting together and analyzing a customer acquisition funnel is a big part of a marketer’s work within Customer Journey Orchestration (CJO). After all, funnels are supposed to map the sequential steps a customer takes from awareness through conversion and advocacy. However, the concept of marketing funnels has some important limitations.
In this article, we explore an alternative approach that challenges these limitations, offering more dynamic, efficient growth — the concept of growth loops.
The limitations of marketing funnels
Traditional marketing strategies have long leaned on the concept of CJO funnels. However, it’s essential to recognize its limitations. First, funnels assume a linear trajectory for the buyer’s journey. In reality, it is often a dynamic cycle, with customers seamlessly moving between stages before conversion.
Buying funnels can also create silos among teams meant to collaborate in helping customers through their buying cycle (whatever “format” this cycle may take!). This disconnect can be exemplified by the silos usually found between product and marketing teams.
- The product team has its own product strategy.
- The marketing team creates its acquisition/activation strategy.
This results in each team optimizing at the expense of the other teams. For instance, marketing teams might bring in unqualified leads as their main metric is lead quantity, not quality. It can also lead to other marketing inefficiencies, including under-utilizing a company’s martech stack.
Funnels work in one direction, with no re-investment, only adding more at the top to get more at the bottom. So, which could be a better approach if traditional funnels are flawed?
Marketers could learn from their growth colleagues and replace funnels with growth loops. This approach unifies product, channels and monetization in a single system and focuses on compounding growth rather than linear growth.
Dig deeper: If it’s not a sales funnel, what is it?
What are growth loops?
The concept of growth loops is deeply rooted in the discipline of product growth and applied by companies with fast-growing digital products, such as Pinterest, SurveyMonkey and Figma.
With this model, growth relies on a system of loops closely connected to the company’s overall business strategies, thus aligning the business vision with the customer journey and how it is orchestrated. Growth loops can also be very useful to all types marketing activities and companies.
A growth loop looks like this:
- Step 1: Input from new or existing users (i.e., acquiring a new customer or having an existing customer visit your store or website again).
- Step 2: A series of actions/steps done by the users that generate the output. (Think user/customer data, such as attributes collected via campaigns and/or behaviors from email marketing or app usage.)
- Step 3: The actions/steps above generate some outputs that can be directly invested as input. For example, by collecting data in Step 2, the company can use it to create a better acquisition campaign that will bring new customers or create customized campaigns that bring existing users back to the company’s digital properties, thus going again to Step 1.
Some loops may have a fourth step (as shown in the example below). Because it is a loop, the last step will always feed back into the first step.
Companies can craft various growth loops tailored to their business model and aligned with objectives like attracting new users, engaging returning users and enhancing efficiency. However, it’s vital to avoid too many low-power growth loops sapping your team’s time and energy. Focusing on one or two major loops is key.
Growth loops in marketing: An example
Most of my professional experience has been in B2B2C companies. With this business model, the first B (manufacturing company) does not know the C (end-user, consumer). These companies sell products they manufacture to other companies (retailers and distributors) who, in turn, sell to the consumer, the person actually buying and using the product.
All the customers’ purchase data stays at the retailer/distributor level and does not go back to the manufacturing company. Therefore, the manufacturing company (the first B in B2B2C) does not have information on customers and their purchases since retailers and distributors only share aggregated sales data (e.g., how many of your products were sold).
With this information, companies can foster a direct relationship with the people buying and using their products while also helping generate demand for their distributors and retailers.
B2B2C companies can overcome this challenge by creating their own end-user (customer) database. There are different ways of doing this, from incentivizing product registration to using paid media. Companies can use different marketing activities to acquire and analyze this data.
Enter the end-user (customer) growth loop.
This growth loop helps B2B2C companies better organize the appropriate marketing teams and activities around acquiring and using customer data for demand generation.
1. New / returning customer
- New customer data acquisition campaign or re-targeting existing customers (paid media, etc.).
- Collects zero and first-party data.
- Includes customer’s self-reported attributes and behaviors.
2. Activate and engage customer
- Welcome email messages to new customers / promotional webpage for existing customers.
- Leverage customer zero and first-party to customize customer experience.
- Use both customer attributes and behaviors to personalize communication (from using customer names to nudging on recent customer behavior).
3. Enrich customer data
- Customer data generated in activation/engagement (above) is captured.
- Segment customers in the database using both attributes and behaviors.
- Send customer data to appropriate activation platforms (i.e., email marketing, CRM, paid media).
4. Customer data for campaigns
- Enriched customer data can be used to further improve customer communication (email, website page, message, etc.)
- Enriched customer data can be used to improve campaign targeting.
Rethinking customer acquisition with growth loops
The customer data growth loop described above produces an output, customer-enriched data, that becomes an input in the loop by helping optimize the campaigns listed in the first steps of the loop — making for a sustainable model.
This approach also aligns all the teams involved (marketing, digital, brand, content, ecommerce, support) in the same customer-centric activities and KPIs while also reaching the company’s goal of generating more demand for its distributors and retailers.
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Opinions expressed in this article are those of the guest author and not necessarily MarTech. Staff authors are listed here.