How to Boost Your Business Growth with Viral Loops?

By 2017, the word "viral", although directly related to "virus", has almost lost its negative meaning of something infectious or contagious. On the contrary, this word is now used to describe something which is extremely popular and widely circulated, often with no or little effort on the part of the creator. When we describe something as "viral", we usually mean that its popularity is increasing exponentially, mainly by word of mouth. With the almost global availability of high-speed Internet, quality content can become viral quite easily. Of course, today's business cannot afford to miss the opportunities offered by this trend. Viral marketing is now a part of marketing strategies of many brands and companies.

So, what is viral marketing and how can it be used to increase business growth? Viral marketing employs the mechanisms of the existing social networks and communication services to circulate the brand information from user to user – just like a virus infects people one by one in the process of interaction. When we hear of viral content, it usually means a video or a story which seems so fascinating to the public that it is shared and reposted with increasing frequency, thus more and more people see it and pass it on. You must have seen the epic Volvo Trucks video featuring Jean-Claude Van Damme in one of his famous splits. This is one of the examples of extremely viral content – 87 million views by now!

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[Image source: The Inspiration Room]

However, for companies, viral marketing is not only a channel of advertising content. It can also be used to boost the business growth by attracting new users. So, let's see how viral marketing campaigns are organized and how you can use these techniques to promote your startup.

Viral Loops and How to Get into Them

OK, we have figured out what "viral" means in the modern business context, but what is a viral loop? Do you need it in your business growth strategy?

Let's backtrack a bit and remember one of the main challenges a startup company usually faces – it’s getting customers. To be more exact, the challenge lies in not only getting one-time buyers but gaining an increasing number of customers, because it is customers which assure the ultimate growth of the business. And getting loyal clients is a costly process – you need to produce advertising content, tune in all sorts of advertising platforms, run marketing campaigns, engage professionals to promote your product, and so on. All these things come at a price, and at the end of the day you will calculate the expenses and compare with the number of customers you have managed to attract. Naturally, you will strive for the maximum number of customers at the minimum cost.

Viral loop marketing is a brilliant solution to the problem of getting more customers at a relatively low cost because it applies the natural algorithms of the existing social networks and platforms. With viral loops, start-up owners ensure their business growth with users bringing other users through a very carefully designed referral structure. Such approach keeps down the growth costs while getting new clients for your product or service.

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A viral loop is defined as a sequence of steps a user usually takes between the first contact with the product and recommending this product or sharing it with other users. At that moment, the circle closes, and the next user commences the same sequence. Hence, the term "loop". A well-orchestrated viral loop technique will bring new users with almost no additional investment from the company, as users will be doing all the work.

With traditional advertising, most companies target their campaigns at a great number of Internet users, while only a certain percentage of them turn into real customers. A large part of their advertising power is wasted. In a viral loop, on the contrary, you start with a real user who shares or recommends your product on the basis of own experience. Needless to say, that not all further contacts become your customers, but your total advertising investment and the cost per customer is much lower.

Startups targeted at large audiences should always consider viral marketing as a very effective method of promoting their products at the initial stage. However, there is one major catch – your product should be really outstanding for users to want to share it.

Well, let's assume that your product is great, but, like many startups, you encounter difficulties promoting it due to your tight budget. Try launching a viral loop campaign to attract users through referrals. Below we’ll look at some of the well-tried viral marketing strategies and see how they can be applied to achieve the best results.

Incentivized Referral Loop

This is the most straightforward strategy aimed at growing your customer base through referrals – users are offered various incentives for bringing more followers. The best example of incentivized viral marketing is, of course, Airbnb, an accommodation rental marketplace that helps travelers rent houses or apartments, as well as provides a convenient platform for hosts to offer their properties for rent. Airbnb has been following a simple but very smart pattern of incentives – users are encouraged to invite other users, with both of them receiving discounts on their next rental. The flavor of this offer is that the discount is actually granted on a closed transaction, thus Airbnb won’t lose if the invitation did not result in a conversion.

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[Image source: Airbnb, Inc.]

As you can see from the screenshot of Airbnb’s referral message, it immediately suggests the possible referral channels – either your contact list from an email service or your account in a social network. If you want to refer the service to multiple users, it will take just a couple of mouse clicks.

This viral marketing strategy is widely used by companies providing all sorts of services – think of Dropbox, a file hosting service which has celebrated 500 million users back in 2016. Dropbox follows the same practice – once your free space is used up, invite a friend, and both of you will receive 500 MB free of charge. Dropbox user statistics suggest that this strategy was well-planned and superbly implemented.

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[Image source: How-To Geek, LLC]

And, by the way, incentivized referral loops do not belong strictly to the world of software products – have you ever spoken to a Mary Kay beauty consultant, for example? “Refer me to a friend, and you will get a set of cosmetics for free”. Doesn’t it ring the bell?

Invitations through Social Media

Have you ever played a game on Facebook? There are hundreds of them – casual games, strategies, role-playing games, simulators, and dozens of others. No matter which game type you prefer, you are very likely to see a prompt to invite your Facebook friends at a certain stage of the game. You can either start a competition with your friends or create a team or guild – it depends on the gameplay, but boils down to the same ultimate goal – bringing more people into the game. Of course, you will get an incentive – an additional life or some game currency or a certain artifact. This is the same referral loop where you are immediately given the list of people you can invite – the list of your Facebook friends. In addition, many games suggest sharing your success through social networks, thus your friends will see references to the game on a regular basis.

The tactics of referrals via social media is not limited to games only. Many brands invite customers to share their advertising in exchange for an award. American Giant, a US clothing manufacturer, offers a $15 discount for a referral through Facebook. The algorithm is simple – you share the American Giant post, and your friends get a 15% discount on their purchase. In turn, you will get $15 off on your next purchase as well. Of course, you qualify for a discount only if your friends actually buy something. Everybody wins – you and your friends get goods for less money, and American Giant gets new customers.

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[Image source: American Giant]

Of course, with such strategy, you should be very clear on the application-specific access permissions to avoid possible controversies. Asking customers to share your brand’s post, make it clear that you request access to their friends’ list and profile, thus no claims can be brought in future.

Inherent Virality

This is something all brands envy but only some can achieve. The reason is that inherent virality stems from the nature of the product itself – it has to be something you just cannot use alone. The obvious example is instant messaging. To use it, you must have contacts, otherwise, it does not make sense.

When you install WhatsApp, an instant messaging service for smartphones, one of the first prompts you receive is the suggestion to invite friends. The application checks whether your contacts use WhatsApp or not and offers to invite those which are still outside its orbit. There are quite a number of options to invite people – via SMS messaging, email, Facebook or Twitter. Of course, in each case, WhatsApp pulls up your contact list in the selected service to send invitations to.

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[Image source: WikiHow]

Of course, this method works best with applications designed for use by multiple customers, so if your product includes any networking, such as messaging, forums, peer-to-peer operations, you should try it to bring more customers.

Viral Marketing in Figures

If you are thinking of using viral marketing for your business growth, you should understand some theory behind it. As with every marketing strategy, there are certain factors which influence its success rate.

  • One of the variables affecting the viral marketing efficiency is the viral coefficient which is the number of invitations sent by each customer multiplied by the conversion rate in percent. For example, if each customer on the average sends 10 invitations out of which 2 users become new customers (the conversion rate of 20%), the viral coefficient is 2. For a business to grow, the viral coefficient must be greater than 1, meaning that each user must bring more than one conversion.
  • The second factor which is critical for evaluating the viral marketing success is the so-called viral cycle time or the time between the user’s initial experience with your product and their decision to refer the product to somebody else. The viral cycle time largely depends on the nature of the product – if it is a piece of content, it may take a couple of seconds to share it. However, when the product requires certain actions on the part of the user, the cycle is longer – for example, you may come across a photo-sharing service, but it may take days or weeks before you post your own photos there to share. Of course, the shorter the cycle, the faster the growth.

So, we can conclude that in order to make your business grow with viral marketing, you should strive for a larger viral coefficient with a shorter viral cycle time. To put it in a nutshell, if your users send out many invitations with a high conversion rate, and the converted users do not take long to send out more invitations, this is the recipe for growth.

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Viral Marketing Do’s and Don’ts

For your viral marketing strategy to hit the bullseye, you should plan it carefully. We’ve put together several basic principles of successful viral marketing:

  • Schedule viral marketing together with initial product kickstart. Viral marketing works best when it is built into your product. Adding it later might produce a less organic result which may perform poorer than expected. So, include the viral marketing options in the product design
  • Make sharing as easy and quick as possible. Do not make users search for addresses or contacts they wish to share your application with. If they have to quit an app to look up email addresses, there is a good chance that they will never return. Use integration possibilities of social media and email services to include sharing links directly on your application page. Enable your application to retrieve users’ contact lists in various services for easy one-click sharing
  • Run A/B tests to see which options bring better results. Use several viral techniques in different versions of your product to compare the results and find the best one
  • Plan for success. This is not a mere slogan but a very practical recommendation. If you focus on getting new users, prepare to scale your application out quickly. Use cloud services providing on-demand resources to accommodate for your customer base growth

On a final note, we would like to say that viral marketing is not a “campaign” in the pure sense of the term. Viral marketing accompanies your product throughout its lifetime. Your product is great, and your users will feel the urge to share their experience, thus the only thing left now is to provide the means for them to do it.

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