Funnels, Loops, and Hooks: Deciding Which Shape Your Product Growth Will Take

Let’s try something out.

Get five people from your company together in front of a white board. Put a marker in each of their hands and have them answer this question...

How does your product grow?

Once you start comparing the answers, you might start to see the problem: different people focus on different metrics, framing product success in terms that relate to their specific areas of expertise while overlooking factors outside of their skillset. These are fragmented answers, incomplete snapshots of a complex and evolving product lifecycle.

This exercise, developed by Reforge and Brian Balfour, is meant to challenge established perceptions of product growth in the digital marketplace.

So how do you decide which growth strategies work best for your product?

The Funnel Model

Conventional wisdom tells us that growth can be measured through a funnel model, where resources poured into the uppermost success metrics (Awareness, Acquisition and Activation) trickle down and bolster the more difficult to attain benchmarks of success (Retention, Revenue and Referral).

customer-funnel

For companies still finding their role in the digital marketplace, the funnel model is a concise and effective starting point. The arithmetic here is easy to follow: casting a wide net by frontloading your marketing efforts makes it easier to draw in new users, giving them a chance to experience your product and find their “eureka” moments.

mobile-games

Mobile games rely heavily on the funnel model. Virality is the name of the game, and the quickest path to success lies in putting games in the hands of influential streamers or making a free-to-play base product that entices subsequent activation. These may be blunt tools, but the results speak for themselves: in 2018, 74% of all money spent on the app store came from mobile games.

Remember, though, that the funnel is the simplest growth model, and with that simplicity comes its own set of drawbacks. When you divide growth factors as arbitrarily as the funnel model does, you also run the risk of unnecessarily dividing your workforce. Think back to the exercise from earlier; narrow perceptions lead to muddied growth expectations.

So what can you do to better understand and improve your product’s growth metrics?

The Engagement Loop

The good news is that we’ve already talked through one of our favorite tools, the engagement loop.

engagement-loops

Engagement loops can help companies better understand their products by mapping out how users interact with them, breaking the process into five distinct milestones:

  1. Curiosity: The user first hears about the product and decides to check it out for themselves
  2. Eureka Moment: The user understands the value that the product provides
  3. Value Exchange: The user initiates a transaction between themselves and the product
  4. Trigger: The user is reminded of the products value and is drawn towards another value exchange
  5. Social Proof: The user communicates their satisfaction with the product to other potential users, starting the cycle anew

Engagement loops can be leveraged for any repeated-use product, from social media sites to razor subscription services.

Take HelloFresh, for example. By marketing prepackaged, healthy dining options, HelloFresh offers to save users time and energy after a long day of work. This convenience entices users into buying more of their meals through HelloFresh, repeating the initial value exchange and enforcing the user’s relationship with the brand.

Hello Fresh

Sometimes, however, engagement loops on their own aren’t enough to foster a product’s growth. Each product is unique, requiring a customized approach that can best conform to its structure, goals, and intended audience.

So what’s a more specialized approach that you can take to cultivate growth?

May I introduce:

The Hook Model

hook model

Used in conjunction with the engagement loop, Nir Eyal’s hook model can lead to wonderful things. This framework is best used with products that lean heavily on socializing aspects such as sharing original content and networking between accounts. Basically, it boils down to four steps:

  1. Trigger: Something that prompts the user to action
  2. Action: Behavior taken in anticipation of a reward
  3. Reward: Compensation for action that momentarily satisfies the user but pushes them towards repeated use
  4. Investment: The expectation of continuing rewards in the future

If you’re feeling a bit of déjà vu, that’s no accident: the hook model functions as a supplement to the core engagement loop steps. Think of it this way: if engagement loops draw in new users through external actions, then the hook model establishes user habits through internal triggers.

When used together, these frameworks act like two links in a chain, connected at the “value exchange” and “action” point.

hook-loop-combination

TikTok is a rock-solid example of loop and hook synergy.

Tik Tok

In the TikTok engagement loop:

  1. Curiosity: Users see viral videos and download the app
  2. Eureka Moment: Users create and submit content for viral challenges
  3. Value Exchange: Users gain recognition and comment on other videos
  4. Trigger: Users see more videos and are pushed towards further challenge participation
  5. Social Proof: Videos are compiled and spread across the internet

Simultaneously, within the hook framework:

  1. Action: Users create and submit content
  2. Variable Reward: Users view a wide variety of content, increasing their desire to participate further
  3. Investment: Users build up their video portfolios and specify their video preferences
  4. Trigger: Users view viral content and decide to create more videos

These frameworks build off each other so well because they leverage the platform’s users to spread product awareness at no additional cost to the company. Genius, isn’t it?

Which shape fits your product best?

You’ve read through three potential growth frameworks. Try slotting your product into each of the options described above and answer these questions:

  • Have certain growth metrics necessitated too much time and money with undersized returns?
  • Does your product’s inherent structure lend itself to internally driven growth?
  • Are you giving users the tools to spread awareness to your customer base?

No matter what shape your growth may take, it’s important to know the contours of what you’re offering to customers.

As any successful product launch or tuxedo enthusiast would tell you, the best results are always tailormade.