Viral Coefficient
Date created: Oct 12, 2022 • Last updated: Mar 25, 2024
What is Viral Coefficient?
Viral coefficient is the number of new users or customers the average customer generates. This can be through a formal business referrals program or simply through sharing and inviting others customers to use your product - but the key is that these users also convert to paying customers or users.
Viral Coefficient Formula
How to calculate Viral Coefficient
Assume your company runs a formal business referrals program. Out of your entire customer base, 5,000 customers offer an average of 2 referrals to other users, for which the conversion rate is 2%. Using the formula, your Viral Coefficient would be (5,000 * 2 * .02) / 100 = 2. This means that for every new customer there will be an addition of 2 new customers.
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What is a good Viral Coefficient benchmark?
A Viral Coefficient higher than 1 indicates exponential growth. Here are some virality rates (also known as K-Factor) of well known businesses:
Viral Coefficient benchmarks
How to visualize Viral Coefficient?
When tracking your Viral Coefficient metric, make sure you compare the current value to the past, to see how your virality has changed! A significant increase in the Viral Coefficient indicates your viral marketing strategy is succeeding.
Viral Coefficient visualization example
Summary Chart
Viral Coefficient
Chart
Measuring Viral CoefficientMore about Viral Coefficient
Viral Coefficient is a ‘leading indicator’ measure that helps you to predict the future velocity of your growth, as well as predict your costs of acquiring a new customer. It’s also a good indicator of how fast a company can compound its growth.
The Viral Coefficient is another way to measure how much your customers are willing to stake their personal reputation on recommending your product and is closely related to Net Promoter Score, although just because your customers recommend you - doesn’t mean the recipient of that recommendation will become a customer.
While the Viral Coefficient can be a good indication of quality of a product or service - if a company is growing extremely fast through viral recommendations, it needs to be able to back up this growth with scalable on-boarding and support of the new customers.
It also doesn’t tell you how long it will take for the growth to happen or what your churn rate will be. It could even be misleading if the Viral Coefficient is driven through an excellent referral incentive rather than a love of the product.
Finally, it can also be very hard to maintain stable levels of viral growth. That being said - if you can achieve a level of virality where you can maintain service and product quality - nothing can be more powerful for scaling your business efficiently.
Viral Coefficient Frequently Asked Questions
What does a Viral Coefficient of 1 or above mean?
A Viral Coefficient of 1 or above means that you are gaining 1 or more additional users through each initial customer you gained - simply because they are referring customers to you who then convert.
How can I increase my Viral Coefficient or make my product go viral?
Here are the top 3 tips to make your product go viral:
- Build your product to be exceptional: good design, good user experience and support, and short time to value.
- Add touches that distinguish your product from the sea of options available to your customers.
- Consider giving your customers incentives to refer your product or review your product. A discount can go a long way and still be cheaper than acquiring customers who have never heard about you.
Metric Toolkit
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