6 mins read
Creating an engagement loop
Disclaimer : This article is based entirely on my personal opinions and observations and is crafted for constructive analysis only. It should not be interpreted as direct criticism or a reflection of the actual business practices of the companies mentioned. I hold no affiliation with, nor proprietary insight into, the internal operations or non-public data of any featured product. All product names and trademarks belong to their respective owners.
10 years back when I was in college, a new waffle shop opened in the city at that time. I was curious and wanted to explore how waffles taste, since I never tried one. So, I went to the shop and bought one. But they did not just hand me the waffle alone. Added to that they handed me a card which looked something like this :

Please do not go with the visual details. The visuals may have been different but the concept was same.
With every waffle purchase they were marking the card with a stamp. There was nothing extraordinary about the waffle. But I got intrigued by this card. I wanted to know what was behind that 3rd purchase? What surprise will I get?
So, I purchased 2 more waffles from the same shop in the following weeks. And finally I reached the 3rd waffle purchase.

And I unlocked 2 rewards :
A 15% off on the 3rd waffle I purchased.
A coin card consisting of 30 coins.


A 15% off was a delight factor for me since I was a student and did not have money, a discount was a discount for me. Discount = money saved.
With the 30 coins I could do 2 things :
I could accumulate more coins and then trade those coins to get discount on other waffles once I had enough coins.
I could purchase an upgraded progress card with 20 coins and save the rest.
I was curious about the upgraded progress card, what rewards was it holding? So, I traded the 30 coins card for a 10 coins card and an upgraded progress card as below.

+

Since, I received something new, I did not want to get it wasted. So, I had to make use of the upgraded progress card. Now I was getting certain rewards with every purchase I made :
The 4th waffle purchase gave me 20 more coins.
5th purchase gave me 20 more coins as well as a 15% discount.
So, I kept purchasing waffles with the upgraded card till I reached the 6th.

And I unlocked 3 rewards on the 6th purchase :
40 coins. Now I had total of 90 coins with me.
An absolutely free waffle of my choice along with the 6th waffle I purchased - bought 1 and got 1 for free. I was delighted with this because my friend could have an entire waffle for herself, no sharing this time.
One time offer to get the final progress card for 60 coins, which usually costs 120 coins - I was getting it at half the cost.
There was no downside, so, I traded the final progress card for 60 coins and had 30 coins left with me.

The final card unlocked a perk for me - every purchase I make, I get 40 coins. I could exchange the accumulated coins, once I had enough, for a discount on a purchase.
And naturally again, I proceeded till the 8th purchase. And then something really interesting happened.
Normal menu

Newly unlocked special menu

I unlocked a special menu for lifetime, which had items which were not available for everyone, only for people who reached till the 8th. No way I would leave and never come back to try the newly unlocked waffles.
The new items were priced quite higher than the average price of the normal items. I saved up money to get back and have one of the newly unlocked waffles.
The point - Did you notice the loop set up by the waffle shop that I got stuck to?

This entire loop made me buy so many waffles, when as a matter of fact the waffles did not taste extraordinary. If this loop was not present I would have bought only 2 waffles, best case scenario, and would have never bought waffles again from anywhere. In other words I would have churned.
On average the waffles costed me 250 in round off. If the loop was not present they would have made 500 in revenue from me as LTV.
But before I churned, this loop made me purchase 9 waffles instead of 2. The newly unlocked menu had higher priced waffles, almost 2x price of average. So, in total it costed me 2424 with all the discounts.
That is 384.8% increase in LTV. Just because of the loop. No ad. No extra customer acquisition cost.
It just costed them 1 free waffle extra for the end reward of the second progress card, costs of the progress cards, stamps and the coin cards (apart from the discounts which is already included in the calculation above).
These kind of loops can be / are translated into digital products like apps, web apps, websites or software as well. As a result it reduces churn and increases the recurring revenue from their existing customers without making expenses for acquiring new ones (which is usually higher than retaining existing customers).
Note : I modified the loop of the waffle shop’s system here for the sake of simplicity and also to improve it to attract a larger customer base. But I tried keeping it more or less similar because the original loop made me stick with them and buy repeatedly.
Loop of posting and commenting on Reddit
Certain Sub-Reddits do not allow you to post your content unless you reach a certain level of Karma points. The loop looks like this :

Once we get enough reputation accumulated in the platform it becomes a weak argument for us to leave the platform. It takes a lot of time, strategy, efforts and energy to build reputation in platforms like Reddit. People who have done it know, it is actually a kind of achievement in itself. Humans have a cognitive bias called sunk cost fallacy. It helped us survive for a long time, especially our ancestors. As per the fallacy, once we invest enough of time, money, energy, creativity, etc. into ‘something’, our mind configures itself to consider that ‘something’ of high value subconsciously. In reality it may or may not be of real value.
Sometimes it is even luck as well to get reputation quick enough, but even luck is unlikely to happen all the times. So, it is better to not leave behind whatever we accumulated through rare chance of luck.
This drives the users to stick with the platform longer and not churn. And longer they stick, more revenue is generated from each user through ads display. Increased LTV as a result. Everything achieved not only ethically but through passion as well (because users of the platform and the platform itself are quite passionate about safeguarding it).
The Forest app
The Forest app is a wonderful app, no doubt it was extremely successful. The loop it uses :

Once users accumulate enough number of coins, they can spend it in the app and the company plants a real tree in the world through another partner non profit organization. It makes a real world impact in exchange for users’ focus on their activities - the core utility of the app.
Once users unlock a new species of virtual tree through premium subscription, they do not want to let it just sit in their inventory. Instead they want to make use of it (plant it in their virtual plot of land). Hence, they commit to their activities and plant those trees in their plots - the app keeps the users engaged by using behavioral psychology.
When users plant one tree during their onboarding phase, to learn how the app works, something interesting happens. The virtual plot of land has multiple square divisions where the trees can be planted, and one of those squares get occupied by the planted tree. This drives the users to make every square division occupy a tree. This is again behavioral psychology at play. We tend to complete what we have started - Zeigarnik effect. When users look at only one square occupied, they tend to complete filling up all the squares. That is not only delightful but also it enables the product achieve its main utility - to help users keep focusing on their activities repeatedly, forming a habit of it for them.
Forest app provides real value to the users, encouraging them to take the premium membership because of reciprocity - humans tend to feel obligated to return favors, gifts, values, etc.
How can we help you?
Product builders can get creative with the engagement loops, but success hinges on multiple constraints :
Psychological alignment : The loops must be created by understanding the user desires, needs, cultural context, context in which the product will be used, beliefs and other factors. In the Forest app, unlocking a new virtual tree prompts users to utilize it rather than let it go to waste, driving them to re-focus on their activities and form a habit. If replaced with something users don't care about, the loop fails. Behavioral Science helps deduce whether a user prefers planting virtual trees or sending virtual flowers to their friends. Or rewarding a Redditor for making a post with a 30 coins card to buy video games at discount wouldn't resonate with the broader user base. Hence, they wouldn’t have been motivated to post from next time, possibly increasing churn as a result.
Business metrics alignment : User actions must directly affect business metrics. A waffle shop offering apparel discounts from partner stores might excite college students, but it diverts spending away from buying waffles, failing to generate actual shop revenue.
Investment : While going through the loop users must be prompted to invest something of value into the product, else they might switch to competitors’ products whenever they can. User’s personal time investment into gaining status within the Reddit community makes them value it more. Also their investment is super meaningful for them as per their psychology - they invested time in promoting authentic, important, helpful and better contents throughout the platform.
Balancing the economy : This is a complicated topic to be discussed and out of scope. But one of the major reasons a loop can fail even if it makes sense on the surface is that the economy of the product is unbalanced. Economy needs to be crafted strategically just like any other economy.
Our expertise : We use Behavioral Science to craft features, mechanics, loops, balance the economy, etc. which drive meaningful and proactive engagement from the users - increasing DAU / MAU, retention and reducing churn.
Conclusion
These are some parts of our service. But extremely valuable parts. Many other complex loops can be crafted thoughtfully, depending on the context, the product, the business and the users. But just creating a loop is not enough. There are various things that need to be kept in mind as mentioned above. Also the user need to have reasons to engage with the loop repeatedly and take the actions within the product in the first place, else they will churn. In the other article, I mention how users decide whether to stick with a product and keep taking actions.
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Disclaimers : The results, claims, advice, and articles shared on this website are for illustrative purposes only and do not guarantee identical outcomes for every client. Individual results may vary depending on execution, product quality, market conditions, industry and audience behavior.
All product names, logos, brands, and trademarks displayed in our articles belong to their respective owners. Their use does not imply any affiliation with, endorsement by, or sponsorship from the trademark holders.
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