Did this ever happen to you? You come up with a product idea. You gather your friends to discuss it and then pedal off your way to success that you imagined. Many new users even loved the product you created. Fast forward to the future. After three months, you see that you have the same users but with an exception this time. They are dropping off.
What happened?
Your product had no viral loop for it.
It could be tricky when it comes to releasing products and creating a viral loop around them. You could resort to sending out cold emails like the ways LinkedIn resorts to by suing similar automation told and cold emails.
If you want to know what a viral loop is, you have come to the right destination. Dive in detail about the viral loop and how you can have a viral loop fever for your product.
It creates a chain that wholly creates a viral loop and makes your product a sensation in the market. People might think of it as word-of-mouth marketing as well. But well, the difference between both of them is that the viral loop is about the product itself by putting up a mechanism in place to keep your users spread the word about your product and company.
This mechanism will create a loop in motion resulting in exponential loop creation and growth.
A viral loop is created in the steps as follows:
A new user uses your product, likes it, and uses it again and again.
In exchange for his referrals, you offer him an incentive.
When the user finds a profit for himself in your referral exchange, he sends invites to his acquaintances.
The acquaintances receive the invites.
Then they become new users.
The steps are followed again from square one.
People vouch for free storage space in exchange for referrals to friends and known. Dropbox is one such great and overused one that fits the criteria.
Viral loops are essentially effective for social media platforms. What do you think was the reason for Facebook to blow up in its early days? It happened because once you sign in and make your Facebook account, the first thing you do is start sending out invites and making friends. After all, a social media platform where you get to be social, one way how Facebook went from a simple startup to the social media leader platform.
Three advantages of viral loops
Still not much appreciative of the viral loops and their working? We have got you covered:
1. Leads with high- qualification
Viral loops help to bring out the highly qualified leads as much as possible.
For proof, according to a Social Media report, referrals are rated as the second most effective way to get quality leads.
The same study shows 785 B2B marketers claiming that results are from the referral system.
When you provide a chance to win incentives to the public, they are more likely to refer your products to the people who are bound to find them useful.
Example
To unlock Evernote premium features and take advantage of the referral program to earn points, who would you prefer for sending the invite. Suppose you have only one invite. Would it be your classmate who needs the same sort of software or your grandma?
2. Cost-effective
Face the true yet harsh reality. Businesses are unable to gain trust as much as in the past. You can spend more on making ads and even gain some users. But what about your monetary bottom line?
So the best way to create the marketing system cost-effective for you is, why not make a viral loop and let the existing consumers do the bidding for you.
According to Nielsen, more than any other form of advertising, the consumers trust the friends and family recommended advertising.
In other words, to get to new users and get more reach, give a reason for your existing consumers to vouch for you to reduce your customer acquisition costs.
3. Exponential growth
Relationships are carried out only with the trust of both parties and have become even more needed in businesses, where the trust factor is at an all-time low.
With viral loops, the advantage that you have is the real customers vouching for your products.
Types of Viral Loops
To create a viral loop, you should first know what right type of viral loop is best suited for your product/ company.
1. Basic viral loop
Dropbox is a classic and simplistic example of this type of loop, where you can get free storage space in return for successful referrals. According to the Basic viral loop, existing users bring new users by referral programs in exchange for some incentives and benefits. Then that new user is given the same cycle to follow and so on.
2. Value-Driven Viral Loop
This type of viral loop is a win-win situation for both the referrer and the recipient. Here some value is given to both sides.
The chances for the recipient to accept the invite increases exponentially while the referrer is encouraged to send even more invites to those who need it.
3. Savings-Driven Viral Loop
In this viral loop, customers save money through a coupon or promo code for referral programs.
4. Charity-driven viral loop
As the name itself suggests, the loop is for giving back something charitable to the benefit of the society in return for referrals. For example, the online pharmacy Pillpack by Amazon donates some amount to a charitable organization in return for each successful referral.
Finding the Right Viral Loop
Still unable to decide to choose which viral loop to choose?
Then go over the stocks of different elements and compare them to get a good idea of making a viral loop successful. Also, the right questions and get your doubts resolved is the primary step.
Try giving a unique and special referral offer to your existing users.
Make sure to offer them incentives that will be attractive to your target audience. You should follow the mindset that not all consumers are equal. If you provide a referral program that attracts everyone, your campaign will be a muddy water campaign. On the other hand, you can get highly qualified users, given that you provide referrals specified to only those who are required on your platform and will bring real value.
When it comes to how much incentive you should give out, it should be generous, no doubt but should compromise with your bottom line as well. Strike a balance between the value of your product and the incentive provided.
Creating a viral loop and creating a viral loop that will help grow your business are both different.
Here are the following steps to ensure the success of the viral loop you create.
Make sure your service is well-loved
A viral loop is not about how many users you have. Do they love your product or not?
You need to find the engagement of your users and find ways to grow that engagement. Use data analytics for this purpose. Use online or paid product intelligence tools that help to give you insights that might help you improve product experiences.
But which metrics or KPIs should I track?
For bringing in growth, focus on North Star Metrics as called by Seam Ellis.
The North Star Metric is the essential metric for determining your company’s or product’s long-term success. Also, it has a direct effect on your user retention.
Now, to determine this North Star Metric, you must define the value of your product and then identify the KPIs that help contribute to its value.
Examples
With an established North Star, you can use your KPIs as deciding factors when you make changes to enhance the product experience.
You will be able to point out what you need to focus on for a better product experience by survey development, interviews, A/B testing, and other determining factors.
Once the KPIs of your product are known, you are all set to get on the journey to creating a viral loop through referral programs.
Optimize your referral funnel
Provide your users with straight pathways towards conversion and brand advocacy.
Here’s what the referral funnel looks like:
A user has to go through specific stages in the user journey, from being a new user after being referred to the referrer themselves.
Make sure that there are no chances of any possible leaks in your referral funnel. It means making sure that your prospects don’t go through multiple stages for getting to the desired point. They need to understand the value they’d get after completing a task and getting onto the next step. For minimal drop-offs, funnel analysis and making use of user insights might help with conversions and referrals.
Viral loop effectiveness
For getting a definite answer to the confusion of whether your viral loop strategy will bring in long-term success or not, you need to calculate your Viral Coefficient, the K factor.
The Viral Coefficient is the number of users that primary users bring in their customer/client lifetime.
So suppose you have an average of three users brought in through referrals over their life cycle, then you get a viral coefficient of three.
So here is the formula for calculating your Viral Coefficient :
Viral Coefficient= Number of customers* an Average number of referrals *Average referral conversion rate in percent.
Written as Viral Coefficient= CRCR
(Here, each alphabet gives the respective place value according to the elaborated formula)
Steps:
→ The current number of users. For example:100
→ Multiply that number by average referral invites. For example 10
→ Multiply the result by CR (conversion rate of referrals). Let it be 10%
→ Multiply the above three numbers to get the new users.
It signifies that your existing user base brings you a viral coefficient of 1 which means that every user creates one secondary user through your referral program.
A Viral Coefficient of 1 is a good number. While the same being more than one indicates exponential growth. All products and companies don’t need to fail if the Viral Coefficient turns out to be less than 1.
However, if your viral coefficient is less than one, you need to make some improvements to increase your viral loop factor.
Make sure that any changes you make will bear some effect on the results.
Once all the strategies are cross-checked and improved, you will see growth in your Viral Coefficient.
Conclusion
Finally, a sustainable growth basis is the most overlooked factor- trust. Once you earn it, you need to nurture it like a loyal friend. Make your viral loops to drive sustainable growth and not just for its own sake.