https://segment.com/academy/grow-using-data/identify-your-companys-growth-model/

All large successful companies have "growth models"--that is to say, key feedback loops that drive sustained customers, acquisition, and business growth.

The concept of a growth model, or growth loop as it's often called, is relatively new, and has been popularized by leaders in the growth community, like Andrew Chen, and programs like Reforge. At its core, the idea is very simple. What are the ways that your business acquires customers? They're called loops because they should be circular and compounding. Some common examples of growth models include paid acquisition, viral invite, two-sided marketplaces, and user-generated SEO content (see image below).

Defining your company's growth using a model helps identify high leverage "inputs" (areas of your business that you have control over) that can amplify compounding growth over time. Additionally, these high impact growth models help you choose which metrics to measure—and set goals against—to get a clear understanding of your growth progress.

We'll dive into four common models and show how to derive a set of high-signal metrics for each one:

• User-generated content (e.g., Yelp, Stack Overflow, Genius)
• Viral invite loop (e.g., Venmo, Snapchat, Zynga)
• Paid acquisition (e.g., Handy, New Relic's campaigns)
• Two-sided marketplaces (e.g., Uber, Lyft, Airbnb, Segment)

What is a growth model?

A growth model is a visual representation of the acquisition model a business uses to grow and sustain its customer base. A business’s growth model will depict the inflow of new customers, the methods used to create this inflow, and the expected growth generated with these methods.

Building a growth model

Before looking at the four growth models, let's quickly walk through the steps to determine the key metrics:

• Identify your growth model
• Create a mathematical model in a spreadsheet with assumptions
• Deduce key metrics by conducting sensitivity analysis on your spreadsheet

Identifying your growth model requires thinking holistically about each cohort of your users and how they can acquire the next cohort of users. This means looking step-by-step at your user journey and mapping them to discrete actions. The final cohort then "becomes" the next base cohort from which the actions in the loop start again.

After identifying the feedback loop, then it's time to mathematically define each step. Note that the final total number of users in the first time period will become the starting number of users in the next time period. We start by keeping things as simple as possible and using percentages in the spreadsheets below.