Traditional marketing funnels are linear; you pour money and effort into the top, and a small percentage of customers come out the bottom. Growth loops, however, are closed systems where the output of one cycle becomes the input for the next, creating a compounding effect that allows Australian businesses to scale without exponentially increasing their ad spend.
At Local Marketing Group, we see far too many Brisbane businesses hitting a 'growth ceiling' because they rely solely on paid ads. By designing growth loops, you turn your existing users into your most effective acquisition channel, ensuring that as you get bigger, growing gets easier (and cheaper).
Prerequisites
Before you begin, ensure you have the following:- A product or service that already provides value (loops won't fix a 'leaky bucket' product).
- Access to your website analytics (Google Analytics 4) or CRM data.
- A clear understanding of your primary customer persona.
- A basic mapping of your current customer journey.
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Step 1: Shift Your Mindset from Funnels to Loops
Before drawing any diagrams, you must stop thinking of your marketing as a straight line (Awareness > Interest > Desire > Action). In a funnel, the 'Action' is the end. In a loop, the 'Action' must trigger a new 'Awareness' phase for a new user. Visualise this: Imagine a circle. At the bottom is your new customer. What specific action can that customer take that naturally leads to a new person discovering your business?Step 2: Identify Your Core Value Exchange
Every successful growth loop is powered by a 'value exchange'. You need to identify what value the user gets by participating in the loop.For example, in a Viral Loop (like Dropbox), the user gets more storage for inviting a friend. In a Content Loop (like Pinterest), the user saves a 'Pin' for their own benefit, which then becomes searchable content for a new user. Ask yourself: What is the 'fuel' that keeps this loop spinning?
Step 3: Choose Your Primary Loop Type
Don't try to build five loops at once. Start with one of the following three proven models:- Viral Loops: User A brings in User B through an invitation or referral (e.g., a 'Refer a Friend' discount on a local services app).
- Content Loops: User A creates content (reviews, profiles, forum posts) that is indexed by Google, leading User B to the site via SEO.
- Paid Loops: You spend money to acquire User A. User A generates enough profit to immediately reinvest into acquiring User B and User C.
Step 4: Map the 'Input' Phase
Identify the exact moment a user enters the loop. This is your 'Input'.- Screenshot Description: If you are using a whiteboard tool like Miro, draw a circle and label the top 'Input'. This might be 'New User Signs Up' or 'Customer Completes a Purchase'.
Step 5: Define the 'Action' Phase
What is the specific action the user takes that creates an output? This must be as frictionless as possible. If you are a Brisbane-based accountant, the action might be 'Sharing a tax-saving checklist with a colleague' or 'Leaving a Google Review'. Pro Tip: The action should ideally be a natural part of using the product, not an annoying 'extra' step.Step 6: Design the 'Output' Phase
The action must lead to an 'Output' that reaches a non-user.- If the Action is 'Inviting a colleague', the Output is an 'Email Invitation'.
- If the Action is 'Writing a public review', the Output is 'Search Engine Visibility'.
Step 7: Optimise the 'Re-investment' Phase
This is where the magic happens. How does the 'Output' lead back to a new 'Input'?For a local service business, this might look like this:
- Input: Client books a house wash.
- Action: Client is prompted to share a 'Before & After' photo on Facebook to get 10% off their next service.
- Output: Their Brisbane-based friends see the post.
- Re-investment: A friend clicks the link in the post and becomes a New Input.
Step 8: Calculate Your Loop's Viral Coefficient (K)
To see if your loop is compounding, calculate your 'K' factor. K = (Number of invites sent per user) x (Conversion rate of those invites).If K is greater than 1, your business will grow exponentially without any additional marketing spend. Even a K of 0.2 is powerful, as it reduces your Customer Acquisition Cost (CAC) by 20%.
Step 9: Minimise Friction at Every Junction
Review your loop and look for 'drop-off' points. If a user has to fill out a 10-field form to refer a friend, the loop will break.- Australian Context: Ensure your referral or sign-up forms are mobile-optimised. Most Australians browse on their phones while commuting or at lunch. Use 'Magic Links' or Google One-Tap sign-ins to keep the loop moving.
Step 10: Test and Iterate
Run a small experiment. For the next 30 days, focus entirely on increasing the 'Action' rate of your loop. Use A/B testing on your calls-to-action (CTAs). Does 'Invite a Mate' work better than 'Refer a Professional'? In the Australian market, a casual, friendly tone often outperforms corporate jargon.---
Common Mistakes to Avoid
- The 'Incentive-Only' Trap: If people only share your business because you're paying them, the loop stops the moment you stop the reward. The best loops provide social capital or functional value.
- Ignoring Retention: If users enter the loop but leave your business after one week, your loop is just a faster way to burn through your reputation. Focus on retention first.
- Complexity: If you can't explain your growth loop to a friend in two sentences, it's too complicated for your customers to participate in.
Troubleshooting
- Low Participation: If users aren't taking the 'Action', the reward might be too small, or the prompt is happening at the wrong time. Try moving the prompt to the 'Moment of Delight' (e.g., right after they receive a great result).
- Low Conversion: If people are being invited but not signing up, your landing page is likely the problem. Ensure the 'Output' leads to a page that specifically welcomes the new user and explains the value clearly.
- Loop Decay: Sometimes loops get 'tired'. Refresh your creative assets, update your incentives, or find a new 'Output' channel (like moving from Facebook to Instagram/TikTok).
Next Steps
Now that you've mapped your first growth loop, it's time to build the infrastructure to track it.- Set up 'Event Tracking' in GA4 for your loop actions.
- Review your email automation sequences to ensure they encourage the 'Action' phase.
- If you need help technicality implementing these loops or want a professional audit of your growth strategy, contact the team at Local Marketing Group.
Building a compounding growth engine takes time, but once it starts spinning, it is the most powerful asset your Brisbane business can own.