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9-Step Viral Growth Recipe for Startups

9-Step Viral Growth Recipe for Startups

Every startup dreams of viral growth and hopes that its will become the next big hit that people can’t seem to live without. However, similarly to any other dream, this one too requires hard work, research, and good planning.

Virality is a lucrative business model that enables companies to develop rapidly with a minimal customer acquisition cost, high ROI, and incremental customer growth. Once a viral loop is in motion, it is theoretically possible to maintain it perpetually until you reach full market saturation. If a product is a success, companies may consider adapting it to enter a new market, and repeating the steps once again.

The process sounds simple and organic – you create an awesome product, people love it, they share it with their friends; their friends love it and share it with more friends, and so forth.

However, there is a catch – organic virality is impossible if it’s not built-in to the product from the start. And even when it is, there are additional factors essential for success.

In this article, we offer a 9-step viral growth recipe for startups and practical tips on how to minimize the risk of failure. Read on to find out more!

1. Understanding Virality

The key to understanding virality is to read into the etymology of the term.
Originally, the word viral refers to the way viruses spread – one person infects another, and this continues until groups of people are infecting other groups of people, thus creating incremental growth.

Understanding Virality

The term was introduced into business and marketing in the ‘90 when the internet began to gain popularity and made digital marketing virality possible. The pioneer of viral growth is believed to be Hotmail, which added a note in the email signature inviting the user who received the message to create their own account.

That’s how, without investing in expensive customer acquisition strategies, the company managed to reach a 31M users milestone in less than three years, and grow at a pace of 1 million new accounts per week (150,000 per day).

And thus the product spread from one user to their friends making the whole world hot for Hotmail.

Of course, this was in the golden days of the digital world when everything was new and exciting and people were not oversaturated with content.

However, although it’s more difficult to achieve viral growth now, it is still possible, it just takes more effort and preliminary work. It all depends on how well you design your product and how fast you want it to catch on.

2. Doing the Math

We have to admit, the math behind viral growth is enough to make a grown man cry. However, it’s necessary in order to build an efficient model and estimate your chances of success. Tracking the numbers also enables you to identify what factors need to be adjusted in order to achieve the desired results.

We recommend David Skok, Andrew Chen, and Alexander Jarvis who have all provided detailed equations and downloadable viral growth model spreadsheets as well as some additional math insights.

3. Studying the Market

Viral growth strongly depends on people’s needs and emotions. To share a product with a friend, a customer has to be excited, inspired, impressed, or otherwise emotionally engaged.

The customer’s feelings are what makes virality feel less like spam, and more like value. If people love what they see, they are prone to send out more invitations, and if the receivers feel the same way, your product is more likely to spread.

Therefore, before you make any major business decisions and start designing your products, you should define a target market and study it to better understand the customer.

  • Needs. Find out which of your target audience’s needs match the solutions your products offer.
  • Capacity. Market saturation is viral growth’s final limit. To understand your business’s potential, you should calculate the market’s capacity and identify at what point you may saturate it. Also, consider what other markets you can approach (if any) when you exhaust this one.
  • Streamlining. Identify what communication channels your target audience uses and integrate your product with them. Sharing should be quick and effortless.

4. Designing a Product with Built-In Virality

People often talk about marketing as the driving force of viral growth. However, the key to virality is a product that self-markets, so the company doesn’t need to invest resources to inflate its growth.

Once the process is in motion, you can, of course, give it a boost with a great campaign. However, as mentioned, first, your product has to be eligible to go viral.

So how to design your startup for viral growth?

  • Make a Product That the Customer Will Fall in Love With. People are likely to share products that make their lives easier, and provide unique value. If your solution fits the description, you are on the right path.
  • Fill in a Marketplace Vacuum. Research what needs your customers are eager to satisfy and design your product to deliver. Products that are already in demand, but there’s insufficient supply, tend to spread like wildfire.
  • Use APIs to Facilitate Sharing. APIs that allow your solution to integrate with the customer’s favorite apps and communication channels, will make it easier for them to invite friends.
  • Consider the Different Types of Virality. There is more than one way to go viral and you should consider which ones are the best for your product and how to combine them.
  1. Necessary virality is when people have to invite more people so that the product delivers more value. This applies to communication products, networking solutions, etc.
  2. Inheritance virality happens when customers expose their friends to the product by using it. Content sharing platforms can benefit the most from this type of approach.
  3. Word-of-mouth virality relies on the user’s desire to tell their friends about the exciting new product they found and share their experiences.

5. Creating a Viral Loop

Creating a Viral Loop

The viral loop consists of three stages: activation – exposure – conversion. Once you set it in motion, if all the variables are calculated properly, it can continue to unfold until you fully saturate the market.

To initiate the loop, you need a customer 0 group. Choosing the first users that will start the virality process is a widely underestimated success factor. Many startups rely on their friends to help them out, and that’s great.

However, make sure to choose people that the product is actually relevant to. This increases the chances that they will find real value in it and will try to convince their friends to try it.

What’s more, product advocates that have prominent prospects in their network, are more likely to successfully convert the people that they invite.

For example, if you are building an app for medical professionals, but your customer 0 group has mostly engineers and writers in it, they are unlikely to be able to convert many new users. Even if they send out invitations, their connections may just not be interested.

6. Boosting the Viral Coefficient – The K-Factor

How successful the viral loop becomes is measured via the so-called viral coefficient, also known as the K-Factor. It estimates how many new users a person can successfully convert over a set period of time (cycle).

How to Calculate the K-Factor

The formula to calculate the K-factor is:

K = I * conv%

How to calculate K Factor

In the equation, “I” stands for the number of invitations, and “conv%” is the percentage of people who successfully convert to users.

To achieve virality, your K-factor should be above 1.

For example, if you start out with 10 people in your customer 0 group, they each send out 10 invitations, and each convert 2 people, your K-factor will be 2.0. At the end of the cycle, you will have a total of 30 people – the initial 10 and the newly converted 20.

The next cycle will start out with 30 people. Assuming that the customer 0 group will not send out invitations again, you will have 20 people, each of whom converts 2 new users. This means that at the end of the second cycle you will have a total of 70 users – the initial 10, the 20 from the first cycle, and 40 new recruits.

At the end of the third cycle you will have 150, at the end of the fourth – 310, and so on.

However, if your conversions are not that great and your K-factor falls under 1, you will not be able to grow incrementally.

How to Improve the K-Factor

As mentioned, it’s impossible to maintain viral growth forever. Aside from reaching the limit of market saturation, there are other potential setbacks.

For example, you can’t guarantee that each person will send invitations to an equal number of friends, or that an equal number will accept and convert. In addition, not every product is as shareable as the other. That’s why, in reality, viral growth is not the same as it is in a model.

In a natural environment, virality usually happens in a series of growth spurts that occur organically, and can also be stimulated by outside factors.

  • More Invitation Opportunities. As mentioned, users usually send out invitations to friends when using the product for the first time, and are unlikely to do it again unless given a reason to. Creating opportunities to send out new rounds of invitations will remind customers to recheck their friend list for other viable candidates. Depending on the product, this can be done via setting up usage milestones, building a loyalty program, etc.
  • Incentives, Bonuses, and Awards. Consider incentivising users to invite more people. However, make sure the offer is lucrative for both the user and the recipient. This way the customer will feel that they are providing value, rather than spam, and their friends will have more reasons to sign up. This tactic also enables you to make invitation numbers more predictable. For example, you can request that people invite and/or convert 5 friends in order to obtain a bonus.
  • Make Sharing Easy. The less friction people experience when sending out invitations, the more likely they are to do it. Integrating your product with Facebook, Linkedin, Gmail, YouTube, Slack, or whatever platforms your target audience loves, will make it easier for them to spread the word about your product.
  • Launch New Features. Regularly improving your product and launching new features, especially customer-requested ones, may create a buzz around the product and initiate a new growth spurt
  • A/B test CTAs. As mentioned, emotional engagement plays a vital role in virality. To find out what messages your target audience responds to best, and what CTAs trigger the most conversions, you should A/B test them. In addition, segmenting your audience may help you automate the process more efficiently and show the right message based on the recipient’s profile. This may facilitate more clicks and more conversions.

7. Decreasing Viral Cycle Time

As important as a great viral coefficient is, it doesn’t guarantee you quick virality, because it depends on another vital factor – time.

As you can tell from the K-factor equation, virality happens cycle over cycle – the more cycles pass the more users you have.

However, what the formula doesn’t take into account is how long the conversion cycle is. In our example, if it takes your viral loop a month to close, at the end of the year, you will have 81.910 customers. However, if the viral cycle time is a week, in a year you will have millions of new customers!

In a nutshell, the quicker people convert, the faster your audience will grow.

There are, generally two ways to decrease viral cycle time:

  • Design It Into Your Product. Products that are designed for people to use often are more likely to have shorter cycles. For example, when you see an interesting YouTube video, you instantly share it with a bunch of friends, and they may spread it further right away. However, when Revolut, a finance management app, suggests you invite 5 contacts to receive a $15 bonus, you have to consider who may be interested, if they are already using the app, etc. In addition, they may ask you questions and do their own research, before deciding.
  • Create Urgency. The other way to speed up the conversion process is to create urgency. We all know that impulse buying and the fear of missing out are amongst the top marketing strategies and may be responsible for a significant percentage of the decisions we make as customers. Urging people to act on the invitation now and offering irresistible incentive, can cut the viral cycle time short.

8. Battling Churn

For viral growth to be efficient, you not only have to bring in new customers, but have to manage to prevent them from leaving.

Customer attrition, also known as churn, is a major issue that may compromise your growth efforts. If you are unable to win the client’s loyalty, all your efforts may be in vain. The viral loop will continue to deliver an incremental number of new recruits, but your company will not be able to grow, because you are losing existing accounts.

There are two types of attrition that you should look out for: first-month churn, i.e. the clients who leave shortly after trying out the product; and ongoing churn – customers who abandon the product after using it for a while. To fix both, first, you have to identify the reasons why people leave, and address them.

Some steps to consider include, but are not limited to:

  • Onboarding Customers
  • Working on Retention
  • Improving Your Product
  • Keeping the Customer Engaged
  • Encouraging Feedback

9. Bootstrapping Your Success With Marketing

Although the idea of viral growth is that it’s self-propelling, supporting it with a marketing and PR campaign can only help. By creating the feeling that your product is all that people talk about, you may encourage even those who are reluctant, to give your brand a try and see what all the fuss is all about.

Amongst the marketing strategies to consider are:

Bottom Line

Nowadays, viral growth is not as easy as it was at the dawn of the internet when users were still excited by new products and eager to share them with friends. However, back then virality was more of an organic phenomenon, rather than a scientific approach.

Leveraging all the information businesses have at their disposal, startups today can successfully implement a viral growth model. To make it work, they have to take the time to do the math, put in the work to understand their market, and design their products properly.

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