PivotBuddy

Unlock This Playbook

Create a free account to access execution playbooks

9 Comprehensive Playbooks
Access to Free-Tier AI Tools
Save Progress & Bookmarks
Create Free Account
Chapter 6 of 15

Chapter 6: Designing the Growth Engine

Viral loops, content loops, paid loops, and K-factor mechanics.

Playbook Chapters
What You'll Learn By the end of this chapter, you'll stop relying on "hacks" and start building systems. You'll master the three engines of growth: Sticky, Viral, and Paid, and understand K-factor mechanics.

The Three Engines of Growth

Eric Ries (The Lean Startup) defines three distinct engines of growth. Successful startups usually focus on just one at a time.

1. Sticky Engine

Focus: High Retention

Growth comes from keeping customers longer than you lose them. Key Metric: Churn Rate, NRR (Net Revenue Retention).

2. Viral Engine

Focus: Referral

Growth comes from users inviting other users. Key Metric: K-Factor (Invitations sent × Conversion rate).

3. Paid Engine

Focus: Arbitrage

Growth comes from spending money to acquire customers. Key Metric: LTV > CAC + Margin.

The Science of Virality (K-Factor)

Virality isn't magic; it's math. The viral coefficient (K) tells you how many new users each existing user brings in.

The Formula

K = i × c
i = number of invites sent per user
c = conversion rate of those invites

What K Means

  • K = 1.0: Steady state linear growth. (One user brings one user).
  • K > 1.0: Exponential growth. (Unstoppable, though rare).
  • K < 1.0: Decay. You need other channels (Paid/Sticky) to grow.

Example: Dropbox gave extra storage for referrals. PayPal gave $10 cash. Hotmail added "Sent from my Hotmail" to every email.

Content Loops (The SEO Engine)

For B2B, Content Loops are often more sustainable than Viral Loops.

  1. User creates content (e.g., TripAdvisor review, Pinterest board)
  2. Google indexes content (SEO)
  3. New user finds content via search
  4. New user creates more content (Loop closes)

Paid Loops and the Payback Period

If you have LTV > CAC, you can scale. But Payback Period determines how fast.

The Cash Flow Trap

If you spend $100 to get a customer who pays you $10/month, your payback period is 10 months. If you scale too fast, you will run out of cash before you reap the rewards. Aim for a payback period of < 12 months (or < 6 months for bootstrapped startups).

Model Your Growth

Simulate different growth engines and see how changes in LTV, CAC, and K-Factor affect your trajectory.

Viral Growth Engine CAC/LTV Calculator

Turn Theory Into Action

Build your GTM strategy, test pricing, and validate PMF with the LeanPivot AI tool suite.

Start Free Today
Works Cited & Recommended Reading
GTM Strategy & Frameworks
  • 1. Complete Go-To-Market (GTM) Strategy Framework with Examples. Slideworks
  • 2. The Lean GTM Framework: A Founder's Guide. Seed Through Series
  • 3. 6 Steps to Creating a Go-to-Market Plan. YouTube
  • 4. How to Build a GTM Strategy Without Guesswork in 2026. Via Marketing
  • 5. GTM Strategy for SaaS: Step-by-Step Process & Examples. Default
Growth Loops & Viral Mechanics
  • 6. Growth Loops: Transcending AARRR Frameworks. Reforge
  • 7. Brian Balfour on Flywheels, Funnels, and the Future. Proof Blog
  • 8. The 4 Growth Frameworks You Need to Build a $100M Product. Reforge
  • 9. Four Fits For $100M+ Growth. Brian Balfour
  • 10. Product Channel Fit Will Make or Break Your Growth Strategy. Brian Balfour
  • 11. What is K-Factor? Complete Viral Growth Guide. Arfadia
  • 12. Viral growth explained with a formula for the viral factor. Hacker News
  • 13. Why more retention drives more viral growth. Andrew Chen
  • 14. Discover content growth loops. Reforge
  • 15. Discover paid growth loops. Reforge
Bullseye Framework & Channel Selection
  • 16. Strategize, Test, Measure: The Bullseye Framework. Brian Balfour
  • 17. Bullseye Framework: The Definitive Guide To Traction Channels. DesignWithValue
  • 18. The 19 Traction Channels for Extraordinary Growth. GrowthRocks
  • 19. How does the Bullseye method compare with other frameworks? Medium
  • 20. 24 Budget-Friendly Marketing Ideas for Startups Under $500. KeyGroup
  • 21. 24 Marketing Ideas for Startups Under $500. M1-Project
Pricing Strategy & Van Westendorp
  • 22. Pricing Products the Silicon Valley Way - Van Westendorp Model. First Principles
  • 23. How To Price Your Product: Van Westendorp Pricing Model. Forbes
  • 24. Conducting a pricing survey with Van Westendorp. Startup Recipes
  • 25. Van Westendorp Price Sensitivity Survey Template. Contentsquare
  • 26. A complete guide to Van Westendorp + How to graph it in Excel. The Maykin
  • 27. Van Westendorp Price Optimization Using LimeSurvey. LimeSurvey
Value-Based Pricing & Economics
  • 28. EVC, a value-based pricing technique based on Competitive Analysis. Gocious
  • 29. PRICING ECONOMIC VALUE TO THE CUSTOMER. MIT OpenCourseWare
  • 30. Value-Based Pricing: Pricing on Customer Outcomes - 2026 Guide. Rework
  • 31. SaaS Unit Economics: Pricing for Growth. Lucid.Now
  • 32. Mastering Value-Based Pricing Calculation. Togai
  • 33. Value-based pricing example: Pricing SaaS products by value. Orb Billing
Unit Economics & SaaS Metrics
  • 34. LTV/CAC Ratio: Guide for Startup Founders. Lucid.Now
  • 35. LTV:CAC Ratio: What It Is & How To Calculate It. Klipfolio
  • 36. CAC Trends for Growth-Stage Companies 2025. Phoenix Strategy Group
  • 37. 2025 SaaS Benchmarks: CAC Payback. ScaleXP
  • 38. CAC in SaaS: How to calculate, benchmark, and improve. Stripe
  • 39. Go-To-Market Fit: SaaS KPIs & Metrics. Oxx VC
  • 40. 2025 B2B SaaS Benchmarks: CAC, NRR & Growth Rate Metrics. Pavilion
  • 41. 2025 Private B2B SaaS Company Growth Rate Benchmarks. SaaS Capital
Product-Market Fit & Sean Ellis Test
  • 42. How to Measure Product Market Fit: Tips & Metrics to Master. First Round Review
  • 43. How the 40% Rule Can Help You Find Product-Market Fit. Usetiful
  • 44. Measure and improve product/market fit with the 40% test. Reforge
  • 45. SaaS churn and user retention rates: 2025 global benchmarks. Pendo
  • 46. SaaS NPS Benchmarks 2025: Software Company Scores. NPSpack
  • 47. 38 SaaS NPS Benchmarks & Top SaaS eNPS scores. Customer Gauge
Activation, PLG & Experimentation
  • 48. What is Activation Rate? Full Guide With Examples. Eppo
  • 49. 20 Product-led Growth Examples to Inspire Your Own Strategy. Userpilot
  • 50. 8 Inspiring Product Led Growth Examples to Emulate in 2025. Development Corporate
  • 51. Growth Experiments Templates. Todoist
  • 52. Experiment Canvas Template. Soren Kaplan
Channel Saturation & Risk
  • 53. Diminishing Returns: Accounting for Channel Saturation. Recast MMM
  • 54. MMM: Saturation Curves. Indaru
  • 55. Advertising response curves: What are they and why do you need them? Sellforte
  • 56. Essential Steps for Risk Managers in Product Launches. LaunchPad Agency
  • 57. Top 10 Product Risk Assessment Templates. SlideTeam

This playbook synthesizes research from traction methodologies, growth engineering, and value-based pricing frameworks. Some book links may be affiliate links.