A funnel is linear: acquire → activate → retain → expand. A loop is circular: each acquired customer drives more acquisition via referrals, content, or network effects. Loops compound; funnels leak.
One user invites others who become users who invite others. Dropbox referral program was the classic.
Users create content, content attracts visitors, visitors convert to users who create more content. Pinterest, Quora, Stack Overflow.
Revenue from acquired customers funds acquisition of more customers. Only works when LTV:CAC is strong.
Sales close customers who refer more customers. B2B enterprise.
A funnel's output is a fraction of its input (decay). A loop's output grows its own input (compound).