How do some companies seem to grow exponentially? They use Viral Strategies. In this article, we'll explain 1) what viral strategies are, 2) how to incorporate them into your business, 3) the top viral tools you can use, and if you watch to the end, we'll explain how Tiktok became the fastest growing app of all time.
So how does a product become viral? Companies like Uber or Tinder that successfully created great viral products started with a niche demographic and expand with viral growth features. Uber targeted early adopters in the tech industry, so it hosted tech events and offered free rides to first-time users. It then built viral features into the app like promo and referral codes to accelerate word-of-mouth lead gen. Tinder copied Facebook's strategy and targeted colleges, specifically by sponsoring parties where you had to download the app to get in. Because you hoped your "crush" was on the app, you'd promote it to your friends as well. The more people who used it, the bigger the dating pool, and the more likely you'll find a date.
To supercharge your own growth, we've created a customizable template that incorporates the top viral strategy tools available today. It includes slides on viral lead generation, viral growth loops, viral growth cycle time, return on ad spend, and conversion tracking, plus many more. Here's a breakdown of how to apply these tools to supercharge your own growth efforts.
Viral lead generation
What Uber and Tinder did to grow was called "viral lead generation." This slide visualizes how viral lead gen works. To acquire a user, assume the base cost is five dollars. On Day 1, you've already built your app with certain features to incentivize the new user to share it. The branching rate is how many new people the first user shares the app with after Day 1. By Day 5, this number of shares plateaus at four new people. Thanks to the additional features you designed, your conversion rate of these additional shares to users is 50%. This means two of those four become users by Day 12. Thanks to your viral lead generation engine, since every new user brings in an additional three users, the true customer acquisition cost has dropped from five dollars to one dollar and sixty-seven cents.
The benefit of viral growth is to continuously lower customer acquisition costs as the quantity of users increases. Without more active viral growth strategies, your cost of acquisition remains fixed and doesn't decline over time, which makes growth hard. Plus, since even the companies that use viral growth strategies inevitably see their growth plateau, companies of all sizes and stages should use this slide as a reminder to proactively develop new features to jumpstart viral lead generation. (Slide 3)
Viral lead gen timetimeline
If you want to tabularize the information, a line graph timeline slide tracks the user growth recorded across set periods of time with a line graph to visualize growth. across time.
The cheat sheet breaks out the variables you'll track: initial customers on day zero; the branching… and conversion rates; the cycle time, aka the number of days it takes to complete a full viral cycle; and the viral coefficient, which is the number of invites divided by their conversion rate, and indicates how successful your strategies are. We'll explain both of these below. (Slide 4)
Viral growth loop
So how do you calculate the viral coefficient? In an ideal scenario, you want a viral growth loop to be a positive feedback loop that feeds into and amplifies itself. This slide defines the viral growth loop. It begins with one new user. In this example, seventy-five percent of these users become brand advocates and share the product with seven others. Of those branching referrals, only fifty percent clicked through to the invitation. And of those, only forty percent converted to become a new user. So in this scenario, the viral coefficient is "1.05." This rate means that for every one hundred users you bring in, you'll get an additional hundred and five. Any number over one indicates you've got a viral growth loop on your hands. To learn about Tiktok's original viral growth loop, watch the end of the article. And if you wanna see me dance on TikTok, too bad cause that's never gonna happen. (Slide 5)
Viral growth cycle
So what about "cycle time"? Cycle time makes a huge difference, as the lower the cycle time, the faster your customer base will grow. This slide breaks out cycles into cohorts, where one cycle's starting point is the end point of another. In cycle one, we started with ten users and ended with thirty. Cycle two begins with thirty users and grows to seventy, and so on. This tool is useful for organizations that want to utilize time stamps to track how changes in new marketing initiatives or acquisition strategies could impact upticks or declines in growth. (Slide 8)
How cycle time impacts growth
This slide visualizes how cycle time influences the overall growth trajectory. Each line is a separate scenario where the only difference is cycle time. As you can see, the royal blue line of five days yielded the highest result as it compounds on itself. Imagine how much of a difference it makes if these growth rates continue over a span of five years. Features can and should be designed to drive this cycle time down. Like referral systems that utilize time limits for promo codes to create a sense of urgency for their users to spread the word. You know, like those annoying pop-up notifications and marketing emails to remind you to subscribe? (Slide 10)
Return on ad spend
If you want to grow your user base, you'll likely need to spend money on ads, which is where the return on ad spend, or ROAS comes in. A decent goal for every team to strive for is a ROAS of one to break even. Anything above that is gravy; anything below, and you're advertising at a loss. In this slide, the dividing line is the break-even point. The ROAS is tracked across three separate ad platforms, and the graph delineates at what point each ad source breaks even. This tool is useful for tracking and goal-setting. For example, if your current viral coefficient from Instagram is 1.7, you can visualize how reaching 2 would lower the days required to reach a ROAS of one below forty days. Some companies have longer ROAS timelines depending on their business model. Because freemium models allow users to enjoy certain features for free, they may delay paying. So if you're watching this because of an ad, please subscribe! Do it today - it'll raise our ROAS!* By the way, for more tools to calculate your customer acquisition costs, you can download our Customer Acquisition presentation template.
This slide breaks out the different global and regional conversion rates of your overall viral strategy. Let's say you want to increase your conversion rate in a specific region. You can compare the effect of a new feature on a conversion rate to the baseline rate with this slide. If the new feature drives the new rate lower than the baseline, it will do more harm than good. This slide can also be used to AB test two different features and determine which brings in higher conversion. In that scenario, add a line for an A and B line. Test both features in two test groups, then use the feature with the higher rate for a wider rollout. (Slide 17)
Tiktok business case
So how did Tiktok owner ByteDance create viral growth for its app that made it the fourth biggest social media company in only four years? Besides spending a billion dollars on PR and paid ads in 2018, Tiktok designed some specific viral features into its app to help it grow organically. It prioritized out-of-app shares in a world where social platforms wanted to create closed ecosystems to keep users engaged. TikTok knew it needed to leverage social sharing on other platforms to spread virally. That's why it's so easy to send a friend a TikTok, and why you always see videos reposted from TikTok on Instagram.
As TikTok videos get posted on another platform, they are shared with all that users' followers. The Growth data scientist Justin Hilliard estimated that Tiktok acquired 6.4 additional users for every user that it acquired with that one billion ad spend. Hilliard found that this viral growth loop returned $0.20 of additional ad dollars TikTok didn't have to pay for a new customer with every dollar spent on ads. That is true viral lead gen.
If you want to incorporate these viral growth strategies into your marketing initiatives, you need this presentation. Download the Viral Strategies Presentation template for more slides on Branching rate, Viral coefficient by segment, New referral tracking, Switching cost vs. defendability, and Critical mass to save time and hours of work.