October 31, 2022
Is it possible to link the words "viral" and "2020" when we are talking about something positive, and not about a pandemic? Yes, it is if we think back to the success of the Zoom video calling platform that year. The company's product has gained incredible popularity worldwide among absolutely different people, from famous politicians to schoolchildren. Users forwarded video meeting links to their friends and colleagues, spreading the word about Zoom like a virus.
Of course, the scaling of the company's prominence was due to the demand for the product, but it was not unique in the market. Zoom made its service truly user-friendly, and it encouraged users to engage other people in communication through the platform. Audience growth continued in 2021, while the number of active participants in meetings increased by 2,900% in two years. Most newcomers joined Zoom not because of ad campaigns but because of recommendations and invitations from existing users.
If you wish your customers to attract new customers, you definitely need to learn more about viral loops. This guide will tell you what they are, what types of viral loops exist, and how to encourage your audience to recommend your business. And at the end of the article, you'll find bright examples of viral loops for inspiration. Let’s go!
A viral loop is a marketing mechanism when attracting new customers through the recommendations of existing ones.
Is this a fancy name for word of mouth? These concepts are similar, but they are not the same thing. Word-of-mouth marketing is based on satisfied customers telling their acquaintances about a positive experience with a brand. Some of those people may try the company's product, but the chain of recommendations can end there.
Meanwhile, a viral loop is designed to induce exponential customer growth. Its goal is that those who have joined the brand through a recommendation will also bring new clients. In this way, a loop works like a closed cycle, constantly increasing your audience.
Moreover, the viral loop involves a sharing tool built into the product, significantly shortening the newcomer's conversion path. For example, your friend will sign up faster for a certain app if you don't just talk about the product, but also send a link to download it.
You might also come across the concept of "viral marketing," which, like the viral loop, is built on sharing information between people in your target audience. However, this method focuses more on brand awareness than on attracting new clients. For this purpose, companies create content that users will surely want to share on social media or private messages.
At the same time, these approaches can be closely intertwined and complement each other.
There are several reasons why viral cycles can be more effective than traditional promo campaigns in attracting customers.
The average person is surrounded daily by dozens of advertising offers in the offline and online world. So it can be a challenge to fight for a customer's attention. Part of the target audience will find your competitor's offer more attractive, while another may abstract away from any promotional campaigns and make a choice on their own. It's also worth bearing in mind that sometimes your messages reach not potential customers but completely uninterested people.
The good news is that your existing customers may be more effective lead generators than the best advertisers' ideas. New potential clients get information about your brand from someone they trust, so they are much more likely to use the product. As a result, your cost of attracting these customers is significantly lower compared to other methods.
If you provide a high-quality product or service, you have a good chance of retaining newcomers. When becoming loyal customers, they can recommend your company to their acquaintances. In turn, some invitees are also likely to bring new contacts. Mathematically speaking, your audience grows exponentially, or simply put, it grows like a rolling snowball.
This is the key difference between a viral loop and a funnel, such as the AARRR model. When working with a funnel, marketers focus on increasing the entry flow of potential customers. Next, the company optimizes the journey of customers in such a way that as many of them as possible arrive at the endpoint. This often requires more effort and does not give as high a result as a viral loop.
A well-designed viral loop scheme encourages customers to invite not random contacts but those who might be interested in your product. Therefore, your customer base grows both quantitatively and qualitatively.
For example, a customer gets bonuses for referral purchases. In that case, they send a link to someone interested in products from the store. Similarly, if a customer wants to compete in a quiz with a friend, they invite the person who is most likely to play it.
Viral cycles have one operation principle, but there are several implementation techniques. This makes viral loops applicable to different businesses so that you can develop your own working version. Depending on the product, it is not always necessary to plan a budget for the functioning of the loop. You can motivate your customers to promote you not only through discounts but also through other incentives.
Broadly, all viral loops can be divided into two categories, depending on the nature of the customer's interaction with the product.
This type of viral marketing can also be called organic. Customers attract others to get a reward, not because of certain pushes from you for these actions. Information spreads naturally, according to the user’s intentions and intrinsic motivation.
Intended-action loops are suitable for companies that sell off-the-shelf products and services as well as those that allow users to create their own content using the offered products/services. In both cases, brands should provide an easy way to spread the word about themselves.
The desire to click the "Share" button is often due to psychological and social factors. Here are a few reasons why people engage their friends in the product they use:
At the core of incentive-based viral cycles is a reward for the user who brings a new customer to the company. This approach is used in most referral programs. The incentive usually encourages the consumer to continue using the product. In this way, companies fill two needs with one deed: growing their audience and increasing the lifetime of existing customers.
Depending on your business niche, you can use one of the following types of incentives:
As we can see, there are genuinely many types of motivations that can form the basis of your viral loop. A noteworthy thing is that many brands manage to combine different methods. For example, the app Quiz Planet uses 3 approaches at once.
1. In-game currency: each new player receives rockets to his account, for which they can start a new game.
2. Vanity: when a player correctly answers a question while others incorrectly, the app offers to send a challenge link to their friends.
3. Social interaction: periodically, the question pops up between the levels of games: "Is your whole family already playing?" And, of course, the interface offers easy ways to share the link on the App Store or Google Play.
Loyal customers bring new customers who also become loyal and bring new customers... The viral loop looks like a magic wand that allows you to reach more people and get more money with minimal effort. But in reality, for getting a working loop, you have to put enough effort at the start of its development.
Here are 4 steps on the way to an effective viral loop.
This is essential for choosing the incentive that will motivate users to share information about you. If your product is based on content or social interaction, people may do this altruistically, just by following their desire. In that case, you need to provide a perfect user experience and keep your audience engaged.
If the organic viral cycle is not relevant for your company, you have to design a referral program. As a rule, the most effective ones are double-sided, with benefits for both the new user and the one who invited them.
You should also think about the following conditions for attracting referrals:
The answers to these questions will help make the referral program both attractive to customers and profitable for you at the same time.
Add a user-friendly button that nicely fits in with the overall interface to make it easy for users to send others links to content and individual products. If you know your audience well, suggest in the sharing menu the channels that are most relevant to your customers.
Keep in mind that the loop may break down after a user shares content from your product. If the customer's audience is not motivated, they may not join your product. You can give them a little push by adding a call to action or the like. As an example, when someone shares a track from Spotify in their Instagram story, you might see a clickable button to play the song in the app.
For referral programs, you can develop a separate section of your site or application. Make this feature easily detectable and the terms and conditions transparent. You can also use creativity to introduce your program to customers. For example, the mobile banking app visualizes the amount of money a customer can receive by inviting a certain number of friends. And to make the invitation more fun, the user can record a video, replacing the face of a well-known actor with their own.
Make sure that after receiving the invitation, it will be easy for referrals to join and use their bonuses.
Acquisition without retention is ineffective for business. That’s why you must optimize your funnel so that the new user doesn't fall off after the first touch with the brand. Proper onboarding, personalization of the customer experience, and smart direct marketing based on customer data can help you do this.
After all, your ultimate goal is to make the newcomer a brand ambassador so that the viral loop works.
It's a pleasure to contemplate the flow of customers. However, to be able to improve your viral cycle, you need to add some math and analyze the effectiveness of the loop. So, calculate the virality coefficient (also called the K factor) using the following equation:
VC – virality coefficient (the number of customers that primary customers bring during their lifecycle)
С – number of customers
R – the average number of referrals per customer
CR – a conversion rate of invitees to paying/active customers
Let's look at an example.
Now let's substitute the values in the formula:
VC > 1 means that your customer base is growing exponentially. All brands using viral cycles strive for this value, but it is often difficult to achieve.
If your VC < 1, analyze which of the variables in the formula is not big enough and how you can influence it. Are customers reluctant to invite other people? Pay attention to an incentive that would give them strong motivation. Are referrals unwilling to accept the invitation? Consider what might encourage them to join. Maybe you should simplify the registration process or provide some bonus.
Developing a viral loop, you shouldn’t rush to conclusions. If your K factor is less than 1, don't consider your program unsuccessful. After all, it's good for business if 100 customers bring at least 50 new customers at a low cost (or even free). It is important to focus not only on one indicator to evaluate the results, but also to conduct an in-depth analysis of the impact of the viral cycle on your final result.
Dropbox, Uber, and Airbnb are among the most frequently mentioned companies in viral cycle guides. Their referral programs have similar mechanics: they are based on a double-sided model with rewards for two participants. Let's look at examples of viral loops from other famous companies, which prove that this marketing tool is more multifaceted than it may seem at first glance.
The popular service for learning foreign languages offers its users to invite their friends through one of the following options:
For each registered friend, the user gets access to the premium version for one week. However, this financial incentive is not the only motivation for the audience to engage their contacts. Duolingo adds value to the invitation by providing an opportunity to interact with a friend, for example, to compare progress, congratulate him on achievements, or take part in joint learning quests. In its motivational email, the company notes that such collaborative learning increases the likelihood of completing the course by 5.6 times.
The app interface also allows users to share content and their own achievements in popular messengers and social networks.
The effectiveness of the Duolingo viral loop is achieved not only through recommendations from active users. The company's marketing strategy also includes two crucial approaches:
In this way, the company manages to retain a significant portion of new users who came through invitations. Gradually, newcomers become loyal and willing to involve their friends in learning, making the viral loop work steadily.
The email referral program has become one of the main factors in the growth of this media publication. In 4 months since its launch, the project has reached 70,000 subscribers. Today, its audience is 2 million readers and keeps growing.
The Hustle uses a multi-level referral program. The essence is that the more new subscribers you bring, the more valuable bonus you get. The first letter a subscriber receives is from the company's founder. He addresses the reader with a proposal to build a society of thinkers and dreamers. Real prizes for invitees reinforce the motivation to achieve lofty goals.
From time to time, the company changes the list of gifts. The current list is:
Readers can receive their gift after the invitee has confirmed their subscription to the newsletter.
Maybe, you have a question about the quality of the contacts invited. What if new subscribers confirm their email addresses and then don't read the newsletter? The answer lies in the product. Hustle's content is humorous, kind of cheeky, and friendly in tone at the same time. Once you let these guys into your inbox, you'll probably continue reading their emails.
Still, if you want to adopt such an ambassador program in your business, you'll need to check the validity of the invitees' email addresses and keep an eye on the open and unsubscribe rates.
The worldwide coffeehouse chain is a prime example of a company that has made its product truly viral. The siren logo flashes now and then in movies, in photos of celebrities, and your friends on social media. The reward system has been a key to success that has allowed the business to become one of the top franchises.
Every Starbucks customer can join the loyalty program and receive virtual stars for purchases. Bonuses can be used to get free drinks, food, and other company products. From time to time, Starbucks holds a Refer a Friend promotion, which is part of the loyalty program. A customer shares a link, which the invitee must use to sign up. After that, the referrer receives stars on the bonus account, and the newcomer can get a free drink.
A feature of Starbucks’ viral loop is that each customer can choose where they can spend the earned bonus. In this way, the company encourages its audience to make repeat purchases. In turn, newcomers also become participants in the reward program and can save on their next purchases.
It is worth noting that Starbucks holds promotions to attract friends not only among customers but also among its staff. The company pays monetary remuneration to those employees whose recommendations lead to the hiring of a new candidate in the coffee shop. Thus, viral cycles are involved at different levels of brand life.
The history of the music streaming industry leader shows that viral cycles must be constantly reviewed to achieve maximum effect.
Spotify launched with an invitation-only system: new users are able to join only through a referral link. The new format of listening to music and limited access gave exclusivity to the service and helped increase demand from the audience. Seeing the constant interest of new users, the company made registration available to everyone.
After the mobile app release, Spotify brought back the invitation system. They decided to curb the influx of new users in this way to provide a high-quality service. The referral program provided a monthly premium subscription for someone who brought a friend. A newcomer only needed to register and use the free version of the application.
Over time, the company noticed that although the number of users was growing, the number of premium subscribers remained low. To change the situation, it was necessary to give more understanding of the benefits of paid subscription. For this reason, the referral program became double-sided: a referrer gets one month of premium, and their friend receives 2 months.
Spotify's audience appreciated this reward system, so the app's user base quickly grew to 5 million users. At the same time, such a motivation model did not contribute to the app monetization but caused a loss of profit. Users could go a long period without paying for the subscription just by inviting new friends. That's why the company limited the number of invitations to 5 and again removed bonuses for newcomers.
Today the Spotify referral program is no longer available. The company has reached the desired popularity, so it doesn’t need anymore to attract new users with additional benefits. Nevertheless, the brand continues to use viral loops, only now of a different nature. Just look at this list of Spotify's features:
All of these options naturally encourage users to involve their friends in the app. It allows creators to get new people and retain existing ones.
The viral loop can be an effective tool for your promotion because this type of marketing is based on recommendations from friends and acquaintances. At the same time, you need to earn the trust of your customers so that they are willing to tell others about your business. To ensure not only rapid but also steady growth of your audience, you will need an effective retention strategy.
With Reteno’s features, you can automate personalized communication for both your loyal customers and newcomers. So, now you know how to free yourself from two important marketing tasks, but still get good results:
- let your customers become your advertisers;
- let our platform relieve you of routine tasks and ensure constant audience retention.
Feel free to contact us, and we'll tell you where to start!
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