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A viral coefficient above 1 in customer acquisition signifies that for every new user the company acquires, it will gain an additional user or more. This means that each new customer is bringing in more than one additional customer, leading to exponential growth.
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The branching rate is the average number of users that get invited from each new user. So each actively engaged user branches out to invite 7 of their friends, of which 50% click-through, and of which 40% become a new user. To calculate the viral coefficient, multiply all four of those numbers and you have the viral coefficient, which is the number of new customers that are generated by every new user. In this instance, for every new engaged new customer that we generate, this new person will bring in additional 1.05 people. Execs can input their own data into the formula to find the number of new customers that are generated by their own viral coefficient. Any number above 1 is good because, for every new user the company acquires, it will gain an additional user or more. (Slide 22)
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Do you spend too much time and energy to acquire new customers? Our Customer Acquisition Toolbox can help track and manage customer acquisition costs....
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