Steal the Growth Model That Unicorns and IPOs Are Secretly Using 🤫

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Alright, my fellow nerds, in the last post, you laid the foundation for your Growth Strategy by defining those essential Growth Principles. Now, we're gonna strap ourselves in and blast off into the exciting world of the Growth Base Model! 🚀

But first, a quick recap of what you learn in the last post (because even marketing superheroes need a cheat sheet sometimes):

1️⃣ Growth Principles

The foundation of your growth fortress.

• Value Proposition: Define your Primary Value Promise (PVP). Are you boosting users' Personal, Financial, or Social Capital?

• Company Context & Financials: Clarify your goals—profit maximization, rapid growth, or market domination. Identify your North-Star Metric and understand your financial limits: max CAC (Customer Acquisition Cost), target CLV (Customer Lifetime Value), and payback periods. You can read more about it here.

Today you are going to dive deeper into the second pillar, the Growth Base Model, which involves mapping the qualitative properties of your product, identifying the Growth Loops you will use, and finally drawing your Consumer Decision Journey.

2️⃣ Growth Base Model

This is where the magic happens! It's time to map out the Growth Loops that'll lead you to victory! (Think of it like designing the blueprints for your marketing machine.)

• Set Your Qualitative Properties: Define the players in your game (customers, partners, influencers—the whole growth squad!) and figure out what makes them tick.

• Define Your User Journey: Understand how your users move from curious newbies to loyal fans (and maybe even brand evangelists, if you're really good).

• Map Out Growth Loops: Identify those growth-hacking loops (Paid, Viral, Content, or a delicious combo of all three) that'll drive success.

1st) Set Your Qualitative Properties

It's time to get tactical! We need to define the Qualitative Properties that will make your product a success.

Now, "Qualitative Properties" might sound a bit theoretical, but trust me, by the end of this post, it will be extremely helpful—especially for defining your Growth Loops.

Having this clarity will prevent you from wasting precious time and money on Growth Loops that are about as effective as a leaky bucket (and we hate leaky buckets!).

At this stage, we want to write down the key players involved (your customers, partners, influencers – the whole growth squad) and understand their motivations.

How do we do this? By understanding the three key roles in a Growth Loop:

1. Value Receivers: The awesome folks who benefit from your product or service (they're the real heroes here!).

2. Value Generators: The people or systems that create that awesome value (the masterminds behind the magic).

3. Value Distributors: The people or systems that spread the word about your value (they're like your marketing megaphones! 📣).

Value Receivers: Who's Benefiting from Your Awesomeness?

The first step is to map out who is receiving the Primary Value Proposition (PVP) of your product or service. This might seem obvious, but it's crucial to be specific!

On some business models, there may be different segments of the value receivers within the ecosystem:

• Hubspot: For a SaaS product like HubSpot, we might have SMBs (small and medium-sized businesses) and enterprise companies. Different needs, different value propositions.

• Slack: In the case of Slack, we have individual users who love the platform for its communication features, and admins who manage accounts and make purchasing decisions.

Where in others, there are completely different value receivers that has different loops, products, and goals:

• Instagram Example: On Instagram, users get value from connecting with friends and seeing their content, while advertisers receive value through brand awareness and potential customers via targeted ads.

• Amazon: For a marketplace like MercadoLibre or Amazon, we have buyers and sellers. Both are receiving value but in very different ways.

Understanding who your Value Receivers are and what motivates them is crucial. With this clarity, we can now identify who is generating this value.

Value Generators: Who's Making the Magic Happen?

Next, we need to identify the Value Generators—the ones who make that Primary Value Proposition a reality.

It's tempting to think that the company is always the Value Generator, but that's not always the case!

• Instagram Example: In a social network like Instagram, users generate the content—photos, videos, stories—that make the platform engaging. Brands also generate value by sharing content about their products and services.

• Rocket.la Example: At one of Mexico's largest credit card affiliates, the banks were the Value Generators. They provided the credit cards and financial services we promoted.

By identifying the Value Generators, we understand who creates the value that our Value Receivers seek. Now, let's explore how this value reaches our audience.

Value Distributors: Spreading the Love (and Your Value Proposition!)

Finally, we need to map out the Value Distributors—the ones who spread the word about your product or service and bring in new users. They're like your marketing megaphones! 📣

Just like with Value Generators, you can have multiple distributors, leading to different growth strategies:

• Company Distribution: If you're running ads or doing SEO, you're distributing the value.

• Partner Distribution: Leveraging affiliate marketing or working with influencers means your partners are the distributors.

• User Distribution: A strong referral program or social sharing turns your users into distributors.

By mapping out the Value Receivers, Generators, and Distributors you create a comprehensive picture of your ecosystem. This understanding lays the groundwork for defining effective Growth Loops.

2) Map Out Growth Loops

Now that you've got a clear understanding of how value flows through your ecosystem, it's time to identify the potential Growth Loops that will drive your strategy.

It's very important to connect this with the first block of the Growth Strategy, the Growth Principles.

Why? Let's say your Growth Strategy leans more towards Sales-Led Growth than Product-Led Growth. In that case, you may prioritize creating a Paid Sales Loop instead of a Viral Social Loop.

Another important point is to have a clear sense of your company's financials—the third step of your Growth Principles block. If you plan an Ad Paid Loop as your main growth machine, you should keep in mind financial resources, CAC:LTV ratio, payback period, etc.

Conversely, if your main acquisition source will be a Company-Generated Content Loop, consider that the time to make it work will be longer than a paid loop.

Here are the main categories of Growth Loops you can play with:

• Paid Loops: Fueled by capital (think ads, influencers, sponsorships).

• Content Loops: Fueled by valuable content (blog posts, videos, social media updates).

• Viral Loops: Fueled by people power (referrals, word-of-mouth marketing, social sharing).

Think about your different Value Receivers and the stages of your customer journey:

• Acquisition

• Activation

• Retention

• Monetization

• Post-Purchase Experience

Mapping out this journey helps you identify key touchpoints where you can implement Growth Loops to enhance the user experience and encourage progression to the next stage.

For example:

• Awareness Stage: Implement a Content Loop by creating valuable content that attracts potential customers through SEO and social media.

• Consideration Stage: Use a Viral Loop by encouraging current users to refer friends with incentives.

• Purchase Stage: Offer limited-time promotions through a Paid Loop to nudge hesitant customers toward purchase.

Each stage and each Value Receiver might require a different type of Growth Loop! It's like choosing the right tool for the job—you wouldn't use a hammer to screw in a lightbulb, right?

Below you can check an example for Reddit, how they should have some loops under the user and advertiser side:

3) Mapping Your Loops: A Visual Guide

Now that you've identified which Growth Loops apply to your Growth Model, it's time to map out their individual steps. Think of this as creating a visual blueprint for your growth!

Breaking down each loop into visual steps will help you:

• Understand the key growth moments in your product.

• Identify potential bottlenecks where your loop might get stuck.

• Convert your qualitative model into a quantitative model (more on those juicy numbers in our next post!).

Below you can check an example for Reddit:

Here's how to approach it:

1. Map out your core loop’s steps: Ask yourself, "What is the essential loop at the heart of my product?" This is often the loop that drives your primary value proposition.

2. Layer on the steps for your other loops: You'll likely have other acquisition loops, retention-specific loops, loops for other Value Receivers, and monetization-related loops.

By visually mapping your Growth Loops, you gain a clear picture of how users move through your product and where you can optimize for growth.

I'm excited to see how your Growth Strategy unfolds! We've covered a lot of ground in this post—from understanding your Qualitative Properties to mapping your Growth Loops and defining your Consumer Decision Journey. In our next post, we'll dive into the exciting world of Quantitative Properties and Product Optimization!

Now it's your turn! Start mapping out your own Growth Base Model:

• Identify your Value Receivers, Generators, and Distributors.

• Analyze their Who, What, and Why.

• Map out your Consumer Decision Journey.

• Think about which Growth Loops could propel your product forward.

Here are some articles that can help you with the lessons of this post:

• Learn about the different types of Growth Loops and their quantitatives and qualitatives properties

• Unlocking the "Why" Code: How to Crack the Qualitative Properties of Growth Loops

• Paid Growth Loops: Exponentially Increase your Revenue with Paid Marketing

• Viral Growth Loops: How to Turn Your Customers into a Referral Army

• Content Loops: Unlock the Secrets to Unlimited Growth

Other newsletters that I am reading

• Growth Archive: Get real-world marketing examples every week from successful B2B projects that you can replicate for your own business

• Better Letter: The behind-the-scenes playbook for how to launch, operate and grow a profitable newsletter with paid ads 📈

• Scalable: 🚀 Practical know-how for founders to build winning startups

That is all for today friends.

Keep measuring, keep optimizing, and keep growing!

Jojo