Grow a Viral Loop and Reduce Churn

Nov 8

Grow a Viral Loop and Reduce Churn

Growth hacking and customer acquisition are among the most difficult challenges faced by any new company, especially one where maximizing downloads after launch of an app is involved. The role of “Growth Marketer” is a relatively new one and where you increasingly see companies willing to invest money in hiring an experienced and successful professional to lead the charge. Experience launching new apps and acquiring proven strategies through trial and error is no doubt useful, but any growth marketer will also be fighting an uphill battle dealing with all the “noise” out there from the competition. Even getting new users to enable push notifications can be a hard sell as most smartphone owners have an average of 26 apps installed on their phones (see Nielsen report, July 2015), and nobody wants to be bothered by push notifications every 30 seconds. Stats show that only about 52% of app owners enable push messaging on their mobile devices, and the reason is obvious – it’s can be intrusive, distracting and annoying if implemented carelessly.

So what’s the workaround for this? How do we provide value to app users without overselling to them and creating marketing fatigue? And what about using push notifications to lure back users who have downloaded an app but then never used it? Or worse, once were active users and have since deleted the app from their phones?

Creating highly-targeted and personalized content to people who have downloaded and not come back is a good strategy for putting them on the path to re-engagement. We’ll be presenting the latest tips on the most effective ways you can grow a viral loop and reduce churn for your app. Using viral marketing techniques alters the perception that the message is coming from the app creator, and puts forward the feeling that it’s coming from their friends, who also use and like the app.

What is a viral loop?

A viral loop is a self-fuelling cycle of users generating more users – it looks like this:

When referring to a marketing campaign, a viral loop is used to promote a company or product by getting one person to engage with it and then recommend it to their friends. This costs a company nothing and is one of the most results-driven ways to organically spread growth – in fact, a viral loop is designed to go from zero to thousands or even millions of users in a very short time.

Viral loops offer a cheap and easy method for establishing a name and user base as customers end up doing most of the actual marketing FOR you.

So how does an app insert itself into this loop before a user churns off? Here are five key strategies for starting a viral loop:

  1. The more you give, the more you get

This concept ties back into the idea of rewarding loyalty through gamification that we discussed in our last blog post. It refers to providing each consumer who recommends the app to a friend with a reward, usually some type of benefit or upgrade to their service.

Dropbox has a successful model for this: new users receive a very limited amount of storage space when they sign up for the free model. One way to increase their storage without paying is to invite a friend. After the friend’s successful sign-up, the inviter gets to increase both their own storage space by 500 mb as well as that of their friend. It’s a WIN-WIN-WIN where the company, user, and invitee are all equally rewarded.

This model also works because the user has to do very little work to get the reward, and there are very few steps the user has to take to complete the steps needed to get what they want.

    2.  Tap into the love of connection

People use apps and social networks often because the opportunity to stay in touch with friends, or get access to something that improves their lives (and that of their friends) is a very attractive one. So, having built-in social rewards tied to using your app means that a large and active community will be your desired and easily-achievable result.

Social games do this effortlessly, when they provide the “ask a friend for more lives” option to help players advance past increasingly difficult levels. Sending other players a help request through the in-game messaging tool or by pushing out to connected social networks is usually the method for doing this. This provides the additional benefit of reminding users being pinged for help to login and continue their own gameplay.

Make sure your app has a built-in system for encouraging and rewarding users based on how active they are or how often they help their friends. After all, using an app or playing a game is way more fun when your friends are doing it too.

    3.  Pay to play

Bribery is a dirty word everywhere but in marketing. It’s nothing more than providing an incentive (often monetary) in order to get people to perform certain actions or behaviors, that they also benefit from. Some companies turn to the affiliate marketing model to offer their users something enticing for free or at a huge discount which they can do by recruiting new users.

Social games often use the “freemium” model where it’s free for anyone to download and start playing the game, but players then have the option of paying through micro-transactions (usually starting at 99 cents) for things to help them advance: additional lives, new levels, gameplay upgrades. Both Angry Birds and Candy Crush use the freemium model, and both are highly successful, profitable and addictive games.

Offering this option to your customers can be done as simply as including a share button or link to recruit new users via their own social networks. People who do this can be rewarded monetarily, so that they are effectively buying into the company’s growth, or through other benefits or upgrades.

   4.  Give back through social consciousness

Starting a viral loop of giving back is never a bad thing, and is a great way to encourage others to do the same while also getting your name out there. You can involve your users in this process by asking them to suggest/nominate charities for you to give a portion of your proceeds to, or offer to match your users’ donations.

This can be a new program launched by your company’s HR department, or you can simply join in with popular annual fundraising campaigns such as Movember, Toys for Tots, or holiday food bank drives and invite your users to participate also. The on-demand alcohol delivery service Drizly, for example, regularly gives people who order from them the option to donate non-perishable food items to their delivery driver to be passed onto food banks.

  5.   Measure your success

Determining the efficacy of all of these (and other) growth hacking strategies you choose to employ is important for making sure you’re on the track to continued growth. Luckily, there’s an easy formula that’s commonly used to measure this:

VC = N x P1 x P2

VC = viral coefficient – this just refers to the result of the equation and will tell you how your loop will grow

N = the average number of customers who are invited by each active user who invites people.

P1 = the proportion of invited users who tend to actually sign up and become active customers.

P2 = the proportion of active users who tend to invite other people.

Reading the results of applying this equation is simple: If VC is greater than 1, you can expect to see the growth of your viral marketing campaign increase exponentially into every area possible. If VC is less than 1, you’ll need to constantly monitor and re-market your content to keep it going. If VC is 0, you will see no growth whatsoever.

Apply the strategies above, then use this equation to understand what your viral content needs to do to survive, and you’re on the path to increased growth and revenue. As with any experimental marketing tactic or campaign, testing and analyzing your growth hacking efforts will require a lot of monitoring and tweaking. But for many of us, this is the fun part!

In the next posts, we’ll talk about other factors that influence viral loop spread, including engagement and share rates, the k-factor formula, and double viral loops.

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