The term viral loop refers to the steps a new user goes through between signing up for a product and inviting their friends. Viral loops make exponential growth possible, and they are the secret behind break-away companies such as Airbnb, DropBox, and Zoom.
In this post, we are going to explore a few examples of viral loops and discuss how to engineer a viral loop in your product.
Phases of a Viral Loop
A viral loop includes 4 key phases:
- Sign-Up: What are the steps to sign-up? What are the barriers lowering the sign-up rate?
- Desire to share: How to motivate users to share? What are the incentives?
- Share: What are the steps to share? Which channels? Do you broadcast it to a group or invite individually?
- See Invite: How is the invitation presented? What’s the offering/incentives?
Successful Viral Loop Case Studies
1. Paid Referrals
Airbnb: Invite your friends to join Airbnb. Both parties receive free Airbnb credit.
Uber: Invite your friends to join Uber. Both parties receive free Uber ride.
Motivation to share:
- Recommending a valuable/helpful service.
- Gifting free service credit to others.
- Receiving free service credit for successful referrals.
Incentives to accept:
- Finding the value proposition useful.
- Receiving free service credit.
- Gifting free service credit to referrer.
Why is it effective?
- The service has social proof when it’s a friend referral.
- Consumers irrationally perceive free products with higher benefits.
2. Product Benefits
Dropbox: Share Dropbox with friends. Both parties receive free 500mb cloud storage.
Motivation to share:
- Recommending a valuable product.
- Gifting free product benefits to others.
- Receiving free product benefits for successful referrals.
Incentives to accept:
- Finding the product useful.
- Receiving free product benefits.
- Gifting free product benefits to referrer.
Why is it effective?
- The service has social proof when it’s a friend referral.
- Consumers irrationally perceive free products with higher benefits
3. Product Driven
Slack: Invite your team members to join Slack for a better collaboration and communication experience.
Zoom: Invite your meeting attendees to join Zoom for a better video conferencing experience.
Motivation to share:
- There is a business need.
- Recommending a valuable product.
- The product is only useful when others involve.
Incentives to accept:
- There is a business need.
- The choice of collaboration tool by the invitee.
Why is it effective?
- The invitation is for the group benefits rather than for self-interest.
- Users must invite others to join to take advantage of the product.
4. Exclusivity
Gmail: It was launched with exclusivity. Each Gmail user had limited invites to offer to others.
Motivation to share:
- Offering exclusive product access to friends and family.
- Recommending a valuable product.
Incentives to accept:
- Joining the exclusive club of Gmail users.
- Obtaining access to invite others.
- Receiving a free email account
Why is it effective?
- The exclusivity makes users feel important.
- The power to offer others exclusive access serves as a status symbol.
- Consumers irrationally perceive free products with higher benefits.
5. Appeal to Emotions
Candy Crush: Invite Facebook friends to join and receive special game items in return.
Motivation to share:
- Recommending a fun game.
- Addictive desire to complete game levels.
Incentives to accept:
- The novelty in trying a new game
- A small gesture to assist the invitee.
Why is it effective?
- The game has social proof when it’s a friend referral.
- It appeals to our altruistic nature to help when asked.
Why does Viral Loop Fail?
1. Low User Retention
If your product has a low retention rate, you should focus on increasing user retention and finding product-market fit first. It’s detrimental and a waste of time to achieve viral growth when the same users churn after sign-up. Once the users leave, they may never come back. A desirable product where the users join and stay is the foundation of a successful viral growth campaign.
2. Overused Tactics
Marketing tactics often work initially and then stop working. Marketers always jump on to copy effective tactics. Marketing response rate drops when consumers become numb to those overused tactics. To be successful, you need to have insights on what motivates your users to share and prospects to accept. Offer your users tailored incentives to trigger their sharing.
3. High Friction
Viral loop fails when the process is too confusing or complicated. Strive for clarity and simplicity. A tweet can go viral because retweet is easy and immediate. Create an experiment framework on testing and improving the viral loop. Strive for the following:
- Least steps to sign-up.
- Show product value ASAP.
- Request sharing the moment users realize your product value.
- Make sharing visible and easy.
- Choose the channel where your targeted customers live.
Wrap Up
The success of a viral loop comes down to 1) simplifying the process and 2) maximizing the motivation to share and incentives to join. Leverage technology to detect users who are more receptive to viral loop triggers. Personalize messages and offering to create more effective viral loops inside your products.
