Why growth marketing is more effective than funnel marketing?

Grow Grow Grow

What are all those terms?

Let’s start by explaining the difference between traditional marketing, funnel marketing, growth marketing and growth loops.

Turns out the easiest way to understand that is by doing a little history lesson:

Marketing has it’s origins in advertising.

For most of the 20th century, marketing and advertising were roughly the same things.

It’s about running campaigns to get people’s attention, and it’s mostly a one-way communication: businesses tell the consumers what to buy, mass-media at it’s best.

That’s where the traditional marketing comes from.

Growth marketing, on the other hand, started with essentially the open nature of the internet:

In the time of the TV, consumers couldn’t really communicate with each other much: big brands could speak to consumers and there was not much in terms of peer-to-peer communication. 

But the internet changed that. Big time!

So growth has its origins in the early days of the internet. Hotmail is probably the best example of how growth was born:

Hotmail was the first web-based email service and instead of running marketing campaigns, they added a short line to the bottom of every email:  “P.S. we love you. Get your free email at Hotmail.com”

That single line drove all their marketing. People would receive that email and click through on that footer link which would take them to a page where they could get their own Hotmail account, too.

Those new users would also start sending out emails… and that would bring even more people on board.

All that growth happened systematically, almost on autopilotand in the traditional sense, it doesn’t really look like marketing at all.

In fact, this is one of the different systems used in Growth Marketing. Those systems are called growth loops.

Not much later—around 2008 or so—the social platforms and the notion of the “sharing economy” really took off. Companies like Facebook, Dropbox, AirBnB and Spotify  they all leveraged similar viral mechanics to get their users on board.

So really you can think of growth as “systems-based marketing”.

Explosive user growth happens when you find these systems, rather than depending on traditional marketing campaigns.

So in summary marketing comes from advertising and growth comes from the early days of the internet and early notion of virality.

 

Why growth marketing is more effective than funnel marketing

Many marketers still believe that funnel marketing (we will explain funnel marketing later on) is the way to acquire customers and get more sales. However, that has changed since the introduction of growth marketing.

Organization like Pinterest and Survey Monkey have employed the growth loops marketing tactics to increase their users and engagement.

So what is growth loop and why it is more effective in the long run than funnel marketing? We will provide the desired answer in this post. Keep reading to find out!

What are growth loops?

Growth loop can be defined as an unopened system whereby input in one stage of the loop brings about a positive outcome at other stages of the loop. The result achieved at each step of the loop can be reinvested to the initial stage to get more positive outcomes.

Growth loops are composed of systems. Every step has a system to make sure that step A translates to step B, and step B drives step C, and step C drives step A again.

And each step must be automated, so that it always happens reliably —on autopilot.

The essence of growth loops is to achieve compound effect fast, unlike the funnel system where you invest more at the top to get more results at the bottom. Growth loops can serve different value creation like new users, returning users, efficiency, or defensibility.

The most crucial point to note about the growth loops strategy is it’s compounding effect. The compounding effect is critical to the business growth, and it enables the marketer to reap huge rewards from the small and smart choices made in the marketing process.

What is funnel marketing?

Funnel marketing is one of the oldest tools in the internet marketing world. It was developed in the late 20th century. Marketing funnel explains the customer’s journey; it describes how customers first notice a product to the stage in which such customer makes a purchase. The AIDA model best explains the funnel marketing even if you’re a novice.

A- Awareness

I- interest

D- Desire

A- Action

Awareness: This is the stages in which the potential customer comes in contact with the product. It might be through TV adverts, social media advert, or podcast advert. The potential customer is aware of their problems and how the product can help to solve them.

Interest: This is the stage where the prospect or potential customer shows an interest in product or service.

Desire: This is the stage in which the potential customer shows his/her desire to buy the product. He/she may visit the product landing page or search for more information about the product or service on the internet.

Action: This is the stage in which the prospect finally makes a purchase. He/she eventually bought the product after doing research. Some believe that this is the last stage of the funnel marketing, while others believe that the last step is the after-sales service stage.

After Sales Service: This is the stage in which the seller sends a thank you message to the buyer and notify them that they are available to solve any problem that may arise with the product. The seller can also use it as an avenue to introduce related products to the customer.

Why growth loops are better

Each stage of the growth loop brings about growth to the company marketing goals, unlike the funnel marketing, which depends on the final stage of the funnel to achieve the desired result. Growth loop is the best way to go for big organizations and has been proved to work in the software and tech industry.

How growth loops work

It is believed that the fastest-growing products are represented as a system of growth loops. Here are some examples of how growth loops work.

SurveyMonkey

The following loop is one of the driving forces of SurveyMonkey’s growth:

  • A new user signs up
  • % creates a survey
  • % send that survey to others
  • As people finish the survey, they see a Survey Monkey landing page
  • % of those sign up over time repeating step 1

Pinterest

The loop below is the driving force behind Pinterest’s growth:

  • A new user signs up (or returns)
  • They activate you on the product with relevant/specific content
  • User save new content or repin existing content that gives Pinterest quality signals
  • Pinterest distributes the quality content to search engines
  • Another user finds the content via search engines and either signs up/returns (see step 1)

Combining funnel marketing and growth loops strategy for better results

Funnel marketing isn’t enough to achieve the desired results in the modern world of online marketing. Hence it is advisable to combine both the growth loops and marketing funnel to attract leads and get conversation at each stage of the funnel. The growth loops will help you to get results at the next stage to reinvest in the initial stage. That will bring about a compound effect and skyrocket your growth.

According to the explanation above, you must have understood the difference between growth loops and funnel marketing. Also, you now realize that growth loops are the best way to get compound results from your marketing system.

Please let me know in a comment below what’s your experience with growth loops and if you need any guidance on how to apply growth loops to your business!

While if you’re interested to know more about Growth Marketing strategies for any kind of Startup, check the Doc Web Marketing Academy by clicking here!

All the best

Bruno Morris