Viral coefficient
The Viral Coefficient reflects the number of fresh customers that a single existing customer can bring to an eCommerce business in a given cycle.
The Viral Coefficient is a critical metric that is useful in measuring the virality of a product or a service during a specific time frame. In an eCommerce context, it signifies the ability of existing customers to generate new ones via referrals, social media shares, reviews, and various other viral marketing strategies. It quantifies the degree to which a product, campaign, or service is 'viral' and is inherent to measuring the efficiency of viral growth campaigns.
Formula
Viral Coefficient = Number of Invitations Sent per User * Conversion Rate of Invitations
Example
Consider that an eCommerce business has 100 customers and each customer invites three friends to shop from the site. If one friend from each group of invitees becomes an active customer, then the Viral Coefficient becomes 1 (3*33.33%), signifying that each established customer is obtaining exactly one fresh customer.
Why is Viral coefficient important?
An understanding of the Viral Coefficient offers numerous insights for your eCommerce business. It helps indicate the overall efficiency of the customer acquisition process. It aids in predicting future growth and can serve as a critical determinant of sustainability for startup ventures. A Viral Coefficient higher than 1 indicates exponential growth, which is an excellent sign for any eCommerce business.
Which factors impact Viral coefficient?
Many factors can impact the Viral Coefficient. These include the quality of the product or service, the user interface/experience, the effectiveness of the incentives offered for sharing, the reach of the sharing mechanism used, and the overall market saturation.
How can Viral coefficient be improved?
Improving the Viral Coefficient typically involves boosting the number of invitations sent out by active customers and/or improving the conversion rate. This can happen by offering incentives for sharing, making it easy for customers to share your product, creating compelling content or products that people naturally want to share, and continually refining your user experience to maximize conversions.
What is Viral coefficient's relationship with other metrics?
The Viral Coefficient closely correlates with other eCommerce metrics. An increased Viral Coefficient can lead to a higher customer lifetime value (CLTV) as it can bring in customers at a lower cost. Furthermore, it impacts the customer acquisition cost (CAC), as a high Viral Coefficient reduces the CAC. It shares an indirect relation with the churn rate; if customers are pleased enough with the product or service to refer others, they’re more likely to remain with the business for a longer duration.
Explore more Glossary terms
Visits Conversion Rate
Visits Conversion Rate (Visits CR) is the ratio of visits that result in completed transactions to total site visits.
Visits per user
Visits per user is an ecommerce metric that calculates the average number of visits that each unique user makes to a web...
View-through rate
View-through rate (VTR) is the percentage of users who view an ad and perform a desired action afterwards.
Viral Reach
Viral reach is a metric of social media performance used to gauge how many times your content has been seen due to someo...
Visits per Visitor
Analyze user engagement with Visits per Visitor. Measure average website accesses per user, indicating customer loyalty ...
View Through Attribution
View Through Attribution measures the impact of ad impressions that did not result in immediate clicks but later led to ...