→ Your growth practice

Leverage the virality of your platform and get your users to acquire more users for your product.

→ Quick explanation

Viral Rate, Viral Coefficient, or K Factor is responsible for the growth of multiple SaaS companies.

The generally accepted definition says that viral rate is when individual users refer your software to other people, teams, and companies. Some may ignore the referral, while others may give your software a try.

That’s the viral rate or coefficient formula:

Here’s an example:

• Let’s say you currently have 150 users.
• Let’s imagine that each user makes 10 referrals.
• From 10 referrals, on average, 2 people start using the platform, which means you gain 2 new users from an existing user. In other words, the conversion rate of those referrals is 20%.
• You have to multiply all these numbers and divide them by the current number of users.
  

Here’s what we have:

The viral rate or coefficient is 1.3

The benchmark says that everything above 1 is a good viral rate. This number means that you’ll gain an additional one user from each existing user.

However, there’s an accuracy problem with this formula. We like to have control over the numbers. However, product virality doesn’t work this way.

Let’s take a virtual event platform as an example. Imagine there’s a virtual event gathering over 1,000 professionals. The attendees knew about the hosting platform before the event. But thanks to their great event experience, some will check the platform and maybe try it when organizing their own events.

How do you evaluate the Viral Rate in this case?

You see, Viral Rate is not about referrals only. Your users may not purposefully refer your software to anyone. But they may share your platform link or dashboard with others to get a job done. Subsequently, these connections may like your software and give it a try.

If you aren’t asking your new users how they discovered your platform, you’ll never know whether they were acquired through your existing users or not.

The Viral Rate highlights the power existing users have to share your software with other people and get them interested in your product.

→ Definitions

📓 Viral Rate: This term refers to the number of users your existing users acquired (purposefully or not).

📓 Network Effect: Some professionals interchangeably use Viral Rate and Network Effect terms. They’re different, though. According to Andrew Chen, a general partner at venture capital firm Andreessen Horowitz:

• The “Network” is defined by people who use the product to interact with each other.
• The “Effect” describes how the value increases as more people use the product.
  

The Network Effect happens when the number of users on the platform is crucial to its value. In the case of a virtual events platform, the value of the software doesn’t increase proportionally with the number of attendees. It stays the same whether it hosts 10 or 1,000 attendees. However, the platform will get exposure, and maybe some of the attendees will want to use it for their events.

→ Types of stakeholders your users may acquire

Your Viral Rate depends significantly on how much your existing users expose your software to external stakeholders who are out of your reach. These people can be your users’:

• Clients
• Attendees
• Guests
• Business partners
• Investors
• Students
• Users
• And more
  

→ Types of user acquisition

• Purposefully: Your existing users are incentive-driven as they’ll get a referral bonus from driving new customers to your business.
• Unintentionally: Your existing customers share your platform with their contacts to get a job done.
  

→ Types of virality

• Word of mouth or users may want to share with their friends, colleagues, or contacts a good product they’ve discovered.
• Collaboration-based or some users may share the link to a platform dashboard or project to co-create and engage with others. In this case, your users are nudging others to use the platform.
• Job to be done, or users who share your product with other contacts to get a job done. For example, they may share their calendar link and unintentionally expose a meeting scheduling platform. Or, they may invite their leads to a webinar platform, unintentionally showcasing it. In this case, your users create an environment for other people to experience the platform.
• Referrals or users share a platform to drive users/customers to a business and get a referral bonus.
  

→ Your growth opportunities

By leveraging the virality of your product, you’ll be able to:

• Get your existing users excited about sharing your product with others. This can happen thanks to your referral program, a job to be done, collaborative work, or the simple desire people may have to help others with a good software recommendation.
• Increase brand awareness and get your product in front of other people.
• Acquire more users without any effort.
• Reduce the user acquisition cost significantly.
• Grow your revenue.
  

→ Case examples

>> Loom, async video messaging for work

Loom users may share video messages exposing the platform to their:

• Clients
• Industry colleagues
• Prospects
• Investors
• And more
  

As a result, some of these contacts may get curious about Loom and try the platform.

>> Cal, open scheduling infrastructure

(Personal story) I’m using Cal as my meeting scheduling tool. I once sent my calendar link to someone. After a while, this person told me he didn’t know about Cal, but it seemed a nice alternative to Calendly, and he’ll give it a try.

>> Miro, a visual collaboration platform

Miro collaborates with different types of consultants. The company has a special Consultant Plan dedicated to people who use online whiteboards for their consultancy sessions. The Plan includes unlimited guests, which means that consultants can collaborate on the online whiteboard with an unlimited number of clients. As a result, Miro gets exposed to the consultants’ clients, who can be:

• Entrepreneurs
• Executives
• Professionals (different areas)
• And more
  

Subsequently, these people may decide to give Miro a try and become users/customers.

I first heard the Viral Rate term when listening to an interview with Johnny Boufarhat, founder and CEO at Hopin, the fastest-growing startup. As Boufarhat said, Hopin grew thanks to its virality, and its viral rate played an essential role in attracting investors. Countless companies and brands run events on Hopin. As a result, they’re exposing the platform to a large number of attendees.  

>> Notion, project management and note-taking platform

Companies may invite freelancers to collaborate on a project on Notion. Professionals may share a Notion product with industry colleagues, unintentionally showcasing the platform. Maybe even you discovered Notion only because someone shared a project with you. And that’s virality at its best.

>> Riverside, an online recording studio

Riverside allows you to record podcasts inside a virtual studio. As a result, some of your podcast guests may become interested in Riverside and try it.

Under the Case Examples category, we may include any other product that is:

• Collaboration-based, allowing people to co-create inside the platform (brainstorming or mapping software).
• Interaction-based, allowing people to interact with each other (podcast software) or enjoy an experience you’ve built for them with the platform’s help (webinar software).
  

→ What to consider?

Questions:

• Can my users share my software dashboard/project easily with others?
• How will I incentivize my users to share my product with others?
• How will I evaluate my product’s virality?
  

Requirements:

• Virality works best for product-led companies. Users may refer or mention sales-led products to their contacts. And their contacts may check and even purchase these products. However, this is much less likely to happen, considering the friction people encounter in accessing and trying the sales-led product. It’s more natural to see a product and explore its free trial/plan than wait for a demo call.
• Collaboration and interaction-based platforms have a greater exposure rate. Just think about it: if your users can’t invite other people to join them inside your platform, your product will have less visibility.
  

→ Your action framework

📒 Create a product people will use as an interface to interact with others. It can be anything, from scheduling tools and in-app chatbots to learning management systems and product release software.

📒 Enable collaboration via your platform. It can be anything, from commenting to editing.

📒 Make it easy for your users to share your product dashboard or interface with others. For example, it can be an easily-generated shareable link.

📒 Your platform or dashboard should communicate your brand (logo, font, colors, design).

📒 Make it easy for your users’ connections to create their accounts from the shareable link they’ve received.

📒 Start a referral program from day one. Incentivize your users to promote your software.

► Quick note: Don’t rely on referral programs to grow, though. As Yaagneshwaran Ganesh, award-winning marketer and Head of Content Marketing at Avoma, highlights, “A referral is going to be a slow growth lever for most companies in B2B. Also, a referral to become a paying customer can take anywhere from 1-5 months on average. So you cannot rely on it to reach $1m ARR and the growth beyond that.”

📒 Track KPIs focused on identifying the impact of your product’s virality. If you don’t have a referral program, ask your new users how they’ve discovered your platform.  

📚 Other resources:

• Your guide to product virality by Kyle Poyar, Pricing, Product Led Growth & Market Strategy at OpenView