Viral Loop: Let Your Customer Advertise for You [Part 1]

Viral Loop: Let Your Customer Advertise for You [Part 1]

You might have seen content featuring Grumpy Cat. The owners of the unique-looking kitten posted her photo on Reddit and jostled the internet. It’s still one of the most recognizable feline faces on the web and the face of many memes.

Is the snowball effect of such popularity a pure coincidence or good timing? What if your product or service could also get shared by many, become viral, and bring you huge sales?

Well, the way users share, repurpose, and distribute a piece of content to other channels, making it viral, helps us understand that there are certain patterns you can replicate in your business to set up a viral moment for your creation.

Far better, you can create a sharing mechanism — a viral loop — with a tangible benefit that will encourage your clients to spread the word about your product, connect new users to the cycle, and keep the interest growing.

So, let’s touch on the business science of viral loops in more detail.

What Is a Viral Loop?

Keeping in mind that viral piece of content from the intro that people (users) like, share with friends, and repost to many social media platforms, imagine you can control it. That is, decide what content or information about your company will be distributed and to which platforms or on your channel. And users, on your behalf, perform the preferred action because you motivated them with a reward or incentive.

This process can be closed off into a viral loop, converting customers into a marketing asset that helps spread the word about your product or service to a broad audience.

Traditional Funnel vs Viral Loop

When a viral loop is crafted appropriately, it enables maximum efficiency with the best capabilities that impact retention, acquisition, and monetization layers. This is because a loop encompasses your product, acquisition channels, and model, making it more defensible against competitors.

Unlike traditional funnels, you share the channels and customers with other businesses, so it’s easier to lose the competition.

But How Does Something Become Viral?

One word — dopamine.

The rational part of the human brain needs time to process and interpret information. The emotional part can cope with information much quicker.

The content itself can bring up positive (curiosity, delight, joy) and negative (anger, fear, sadness) emotions. If people feel it, they are likely to share the content with friends, family, and other connections on the internet because they will get a response from their audience as a reward.

This brings us back to dopamine — a pleasure hormone that gives people a sense of satisfaction triggered by a positive experience. People like to feel entertained, empathized with, and understood. A like, comment, or share of the content they reposted is a +1 coin into the piggy bank of their personal reward system that encourages them to find more relatable content to share.

And since emotions are contagious, word-of-mouth advertising works. Existing users can introduce new users to a business via referrals, link sharing, or any other method. The circle continues indefinitely as receipt users become members of the network and spread the word.

Viral Coefficient

The viral loop is calculated using a viral coefficient that shows the exponential referral cycle accelerating business growth. It estimates the number of new users generated by an average client. The formula is as follows:

Viral Coefficient Formula

Viral Time

The viral cycle time is the time it takes for a user to invite another user — that is, to complete a loop. The shorter this period is, the quicker you get a new client. But it’s more important for users to keep completing the cycle, so your audience grows.

General Steps of the Viral Loop

Given that we now understand what a viral loop is, let us review the broad stages it entails using the example of one of the most popular services — Dropbox — where users can invite friends to earn money and get more free storage space.

  1. New user: The foremost step is ‘installing’ or ‘purchasing’ the product or service, whether it is Dropbox or another app or product. This means it enables new users to try out the platform.
  2. Invite/action: After creating an account, users invite their friends to install Dropbox to get more storage space. Hence, advertising the referral program and sharing the product for free. As a result, the product gets free advertising with no additional effort and cost, saving both time and money.
  3. Branch: When users share the Dropbox link with their friends, they expose the platform to new people. Thus, branch refers to invites per invite and how many people were exposed to the new application.
  4. Channel: Users can share the Dropbox link through various social media or traditional channels. Some use messaging applications to invite their friends to Dropbox, while some use WhatsApp or Facebook Messenger to share the link. This is referred to as a channel.
  5. Response rate: How many of your friends responded and downloaded the app after you sent the referral links? Response rate, also known as conversion rate, is the number of people exposed to the platform after downloading through the link.

With this example in mind, let’s examine the types of loops and where they fit.

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Types of Viral Loops

All viral loops are identical in structure and function. However, you must choose which form of viral loop is most appropriate for your product or service. As such, develop the one you believe is the best match for your target demographic and encourage people to share it with their friends and family.

Organic Loop

To illustrate, consider BuzzFeed or LOL games, both of which produce user-generated content such as quizzes, custom avatars, achievements, or badges. Audiences share these on various social media platforms, including Facebook, Twitter, and WhatsApp.

By publishing on social networking accounts, users share a URL with their friends, encouraging others to look at and utilize the program. This spreads the word about your program and allows potential users to understand its worth instantly.

Value-Based Loop

This form of viral loop occurs when individuals directly invite their friends. Both parties get a discount or other benefits, such as unlocking features. That’s also where the Dropbox example fits.

As for other examples, Airbnb and Uber achieved phenomenal growth via viral loops. They concentrated on personal referral codes and reciprocal reward functions that increase user engagement and promote new client acquisition. In Airbnb’s case, it was a $25 travel credit for each new friend they referred and $75 if that friend lists their property on the website. The platform grew from 21,000 guest arrivals in 2008 to 80 million in 2015.

Invite-Only Loop

Scarcity can make a product more desirable. A current bright example is Clubhouse, which allows users to create accounts only after receiving an invitation from an existing member. This increases the application's engagement and draws a large number of users in a short period.

Additionally, since the program is unique compared to other similar apps, many of its users share images of their audio chat rooms on their Facebook pages. This aided in attracting a large audience throughout the globe. As a result, there is a solid incentive to install or acquire the product.

Types of Viral Loops

Benefits of Using a Viral Loop

When correctly built and used, a viral loop establishes a long-lasting chain that results in the company's exponential development. Here’s what creating such a successful viral loop can provide you with:

High-Quality Leads

Imagine someone recommends an app to you or shares anything about it on the social media you follow. If you trust that person and this app is something you need in your life, you might try it and keep using it. This makes you a high-quality lead — someone who is more likely to sign up for an app than another person who’s just seen a random ad.

Cost-Effective Advertising

While public relations and marketing are both effective, word of mouth may also work wonders if the product has a favorable influence on the minds of current users. It can be compared to free advertising if done correctly since it does not need a considerable investment to reach a larger audience. Existing customers will act as advertising for your goods, which will benefit your business.

Exponential Growth

The combination of client confidence in the product and a robust reference system ensures that the viral loop operates consistently. Generally, consumers trust word of mouth and recommendations from their friends more than the product speaking directly with them. In fact, 92% of consumers trust their friends more than traditional media. Consequently, your audience base is more likely to grow if you encourage a group of users to spread the word rather than advertise traditionally.

All of this sounds nice. But if product virality isn’t based on luck or coincidence, how do you create a viral loop?

Crafting a Successful Viral Loop

Now that you have a basic understanding of what a viral loop is and the type of loops, one question still stands. How do you implement this process into your business successfully?

There are a few steps that a successful viral loop requires:

1. Understand what is valuable for your users

Why should a user share anything about your product? They are probably quite happy just using it.

Of course, if your product is social or content-based, the motivation behind sharing may be purely altruistic — “I just find it fun.” — or inclusive — “I want to show you that I’m a part of a group, and I can invite you, too.”

But in other cases, people want a reward in turn for advertising your product. Since you’re not paying them wages (unlike your marketing staff), think of something that will be useful to your users, such as a bonus feature, credit, or additional months to their subscription.

2. Create a trigger for sharing information about your product

You need a CTA that will encourage users to spread the word. This CTA might also cause a need for updating your funnel or even your product. Here’s why:

If you want users to share a piece of content, you need a share button. If you offer referral bonuses, your product should recognize a new user as a referral.

3. Track how users interact with your content

Another factor in success is understanding how well your viral loop works — the overall success rate and the conversion rate at each step of your loop.

This allows improving the steps that show a drop in conversion rate and optimizing the loop to grow your audience more efficiently.

4. Strengthen your real estate to drive shares and content creation

If the growth loop is well-executed, it helps drive exponential growth. However, you might need to optimize your other assets to facilitate the viral loop, such as:

  • CRM: When matched with the product, a CRM system can support your audience growth.
  • Email marketing: You can use this channel to escalate the excitement of new features or promote your referral program.
  • Push messages: Can help you leverage rewards and inclusion (e.g., congratulate users on getting a new referral).
  • In-app messaging: A great channel for redirecting users to sharing your content or rewards and completing a loop.

Aside from these steps, there are also some common mistakes to consider when devising a viral campaign.

Common Mistakes to Avoid While Building a Viral Loop

Creating a successful viral loop might bring some trial and error, but there are a few things you should definitely avoid:

  • Thinking you know your audience well enough: You won’t know what will work exactly. Still, you have more chances to create a successful viral loop if you have data about the type of content or reward that will trigger an emotional response in your audience. Find out what moves your audience and create a viral campaign based on that information.
  • Stopping after a failed campaign: Achieving success will take some trial and error, so don’t be afraid to try again. Instead of worrying, take that time to analyze what went wrong and improve on the next try. A failure is just experience.
  • Making the viral loop too complicated: If it takes too many steps to, say, get your credit for sending a referral code, people won’t bother sharing it. You can avoid overcomplicating the process by optimizing the steps a user needs to take to get a sense of satisfaction from sharing any kind of content about your product.
  • Creating viral content instead of a viral loop: It’s one thing to make content that people connect to emotionally and share, but that doesn't mean users will do anything beyond sharing. You need to think about the campaign mechanics to make sure new users convert after seeing the shared content.

There may be more, but the key to a successful viral loop is to forget about luck and approach it as any other business matter.

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Emotions are contagious. And if you can tap into those emotions and offer a reward, you can create a viral loop that will grow your audience and convert it into customers.

How can you do this?

  • Understand what moves your audience; what kind of content, value, or conditions would incentivize them to act and complete a loop.
  • Create a trigger that will motivate them to become your marketing asset; that is, create a simple mechanism for achieving an emotional or physical reward by completing your loop.
  • Track all your actions and results; this bit is especially crucial since you might want to improve your result in consequent campaigns.

And what do you get out of this? Cost-effective advertising and an exponentially growing number of high-quality leads. So, find what your audience considers a reward, create a few simple steps to achieving it, and you might see good results right from the start.