When Growth Plateaus: How and When to Layer on New Acquisition Channels

This post is the third in an unintentional series on the levers founders reach for when trying to scale their company’s growth. This is beyond the day-to-day optimization a growth team might work on. This is about the next mountain that can 3x to 10x the company’s value. And a lot of times you run out of optimization opportunities along to get there. Growth starts to plateau, and no amount of optimization seems to be able to fix the problem. You need a bigger bet. Those bigger bets are usually one of:

• New products

• M&A

• New channels

• Brand marketing

You can read the links above for how to think about new product development and M&A. Today, we’ll talk about new channels, and in my fourth installment, we’ll talk about brand marketing.

Most startups find product/market fit with one acquisition loop like virality, Adwords, SEO, or sales, but they optimize that channel to asymptotic growth, and think they need to layer on new channels to grow. Let’s take a look at these channels.

Virality

Why It Scales: Users tell other users about the product

How to Sequence to It: Build sharing into the product, and figure whether the incentive that motivates users to talk about you to others is:

• Social: I look cool or smart when I talk about this e.g. Granola/Lovable

• Financial: I make money when people use this e.g. Uber/Dropbox

• Personal: I get more value from the platform when others are on it with me e.g. Whatsapp/Notion

Problems With It: Virality can die out much quicker than other channels as people by default only talk about the exceptional, and the exceptional becomes normal very quickly. When users reject the value prop, additional invitations tend to have lower conversion rates, requiring selling a new thing to get them to pay attention to a value prop they have already rejected.

Sales

Why It Scales: Use salespeople’s compensation to manage payback period of customers they bring in.

How to Sequence to It: Increase monetization to size that can support salespeople salaries and/or commission, and there is an easy way for salespeople to find leads, such as:

• Leads generated by marketing or product teams

• The ability to find leads on their own

• Channel partnerships

Problems With It: It is very hard to have very low payback periods, and only works for incredibly high lifetime value products like in B2B

Paid Acquisition

Why It Scales: Use value of purchases or lifetime value to fund more ads

How to Sequence to It: Improve lifetime value so that paid ads can drive healthy payback period

Problems With It: It tends to perform worse over time as ads always target the best possible customers first and then need to expand to customers who are less of a fit that then convert and retain worse. Network effect businesses are usually the only companies that can offset this trend, but new products can also offset this trend

Content

Why It Scales: Create a volume of content distributed that once it gets distributed can get enough eyeballs to bring in more users who also create content that can get distribution through channels like SEO, user sharing, online communities

How to Sequence to It: Amass enough content over time, typically through users creating content with the product, that can be distributed through:

• Search engines e.g. Google

• Users sharing to each other e.g. email, text

• User sharing to social or online communities e.g. X, reddit

Problems With It: Company generated content rarely scales, so product has to get users to create content, which can take a long time to become the main driver of growth as conversion rates on content are worse than invites

As one of these channels start to asymptote on the level of new growth it can create, startups look to expand into other channels on this list or new distribution forms for the current channel. You might experiment with distributing UGC through social media in addition to search like we did at Pinterest. While at Grubhub, we built SEO, Adwords, restaurant marketing, sales, TV and out of home into material channels over time. The key is over time. Certain things can happen over time that make new channels more viable. In the case of Grubhub, more supply meant better conversion and higher frequency, which started to make some more expensive channels profitable at real scale. As we drove more demand, restaurants saw more value, so they were willing to do more work to fuel more orders.

It is unlikely you just dramatically missed an important channel early on. Your first channel for growth is likely that channel for a reason: it was the most optimal one. So when you are looking for new channels, you have to ask the question: has my scale or product offering unlocked new opportunities for growth that didn’t exist when we unlocked our first channel. Perhaps you can take more risk on payback period because you’re better funded. Or you have a lot more content that you can distribute versus when you started. Or you now have a bundle of products that change your unit economics and lifetime value.

The mistake in expanding into new channels is when those things aren’t true. A lot of founders or growth people try to layer on new channels before scale effects make them more viable, and when that happens, these new channels tend to lack scale, and can at best add 5-10 points to growth, generally not what founders are looking for. A lot of the time it’s new products that unlock new markets or improve lifetime value that eventually unlock these additional channels, and they should be barking up that, admittedly, much harder tree instead.

Engagement loops are somewhat different in this regard and are generally a good idea to layer on over time, but their impact varies. At Reforge, we tend to categorize potential engagement loops into tactics that leverage:

• People: employees engage customer directly where increased engagement can produce enough of a lifetime value increase to pay for the employee’s salary

• Product: changes to the product that make it easier to use more often or features that increase utility

• Incentives: financial, utility, or social incentives that promote deeper usage like discounts, loyalty programs, and gamification (boy do I hate that word)

• Messaging: emails, texts, or notifications that bring people back more often

While activation is normally the biggest lever to improve retention, these tactics can improve the level of engagement for retained users. For a product in a low frequency category like travel, these may not move the needle that much. The higher the frequency potential for a product, the more engagement loops can double things like lifetime value, which of course then opens up new acquisition loop opportunities as well as helps the company grow revenue a lot faster and more sustainably. The key is to understand what headroom is possible from these efforts vs. considering them a panacea for growth when they will only be able to drive incremental impact.

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Growth plateaus are inevitable, but they’re not your destiny; they’re a signal something needs to change. When your core acquisition loop begins to flatten, the answer isn’t to frantically stack every new channel you can think of. Instead, zoom out and ask what has actually changed since you first cracked product‑market fit:

• Has scale improved your unit economics enough to tolerate longer payback periods?

• Has your product breadth or user‑generated content base grown to unlock new surfaces for distribution?

• Have engagement loops boosted retention or LTV to the point where fresh acquisition bets now will be worth the effort?

If the honest answer to any of those questions is “not yet,” your time is better spent deepening product value rather than sprinkling on channels that can only deliver marginal gains. But when those answers have positive responses, you’re ready to test the next loop with conviction and the patience to let it compound.

Breakout channels aren’t discovered; they’re earned through stronger economics, richer content, and tighter engagement. Nail those prerequisites and the next mountain of growth becomes climbable. In the final post of this series, we’ll tackle the fourth big lever brand marketing and how to think about that lever appropriately.

Feel free to ask Casey AI more about this topic.

Currently listening to Oneiric by Boxcutter.