The Digital Value Loop

Two key axioms

Before we start, let me establish the two axioms the loop describes:

1. Enjoyable experiences lead to future engagement (user value)
2. Future engagement sets up opportunities for transaction (business value)

Now let’s dive into the aspects of the loop.

User lifecycle

The Digital Value Loop (also called the “Engagement Loop”) describes the user lifecycle within digital spaces such as SaaS, learning platforms and social apps.

It shows how users move through onboarding, into an engagement loop, and eventually toward churning, with the potential to re-engage.

Conversion events

Forget what you know about conversion in other contexts.

Here, a conversion event is simply a specific action taken by a user that leads to more future engagement.

On the diagram, each node marks a potential conversion event. We define these only as actions that lead to further engagement, since engagement is the ultimate goal; every other kind of conversion, including transactions, is a consequence of good engagement. Each event in the onboarding phase, such as First Contact and App Install, leads on to future events.

The loop itself

The Digital Value Loop is where users engage, have enjoyable experiences, and as a result keep engaging into the future.

After successful onboarding (i.e. not abandoning), continued enjoyable experiences solidify the user’s connection with the brand, app or platform, increasing the likelihood they return.

When a user is in the engagement loop, meaningful experiences build rapport, and rapport creates opportunities for financial transactions. In other words, we monetise users by engaging them.

Abandonments

At any point in the lifecycle, a user can abandon the app entirely, never to come back.

The dashed lines in the onboarding phase show how users who fail to complete a conversion event, such as those who never install the app, abandon during onboarding.

Once a user has successfully onboarded and entered the loop, however, we have a means to contact them, which means opportunities exist for re-engagement and re-entry into the loop.

Churn and re-engagement

Users will naturally leave a platform, app or brand. That could be after a day or less, or after weeks, months or years. How you define a churned user is very business-dependent: you might say a user is churned after a month of inactivity, or three, or six, depending on what you’re trying to achieve.

A user who isn’t regularly engaging is not necessarily fully abandoned. Marketing (Google ads, influencer posts) and comms (email, push) create opportunities to bring formerly active users back into the loop.

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Want the full playbook behind each stage of the loop? The members section breaks down Onboarding, the In-App Loop, Measuring Performance, Testing and Learning and the Byproducts of engagement, with the real data behind each recommendation.