Viral Coefficient (or K-Factor)

The viral coefficient is one of two important metrics in Viral Marketing. Viral Marketing is a style of promotion that relies on users liking your service so much that they recommend it to others. The viral coefficient represents the number of additional customers you get for each customer. Going viral is the holy grail. Every user you acquire will then bring in at least one other customer. Virality, however, is not something that happens by accident. You always have to engineer it. There are two different types of virality. First, the well-known word-of-mouth method. Second, the built-in virality. Built-in virality describes features that act like a natural mechanism for existing users to get more users. When speaking of viral marketing, people most of the time refer to built-in features. These built-in features can lead to viral loops.

Viral loops comprise three steps.

1. A customer discovers and uses your service.
2. The customer tells his friend about the service.
3. The friend becomes a customer as well.

Viral Loops work exceptionally well for services that become more valuable the more people use them. Communication and social media platforms like Facebook, Instagram, or Skype already have built-in viral loops. Mainly because it makes little sense if you are the only one to use them. To measure the effectiveness of viral marketing, use the viral coefficient.

How to calculate the viral coefficient

This is how you calculate the viral coefficient:

Viral coefficient = Number of invites sent per customer * Conversion percentage.

For example, if your customers send out 5 invites and 3 people convert, the math is like this: Viral coefficient = 5 * (3/5) = 3

A viral coefficient above 1 signifies exponential growth. Best practices for immense growth are social media share buttons or the famous Dropbox incentive, which rewards you for every friend you invite. Keep in mind that just because these techniques have worked before, they don’t necessarily have positive effects on your service as well. Before adding generic social media share buttons, think about how people would like to share your service.

How to improve the viral coefficient

• Create a fantastic user experience
• Create a natural mechanism for existing users to get more users
• Make sharing as easy as possible
• Reward people for inviting their friends
• Reward people for accepting the invitation

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