I attended a shareholders meeting last night for a small start-up.
The marketing manager mentioned their “viral coefficient”.
I had to raise my hand and ask what a viral coefficient actually is. The embarrassment was only slightly lessened when the majority of other people in the room confessed they’d never heard of it either.
Embarrassment quickly turned to shame once it was explained to me. It’s such a simple concept and one I really should have known.
I’m operating on the assumption that some readers of this blog may not be familiar with the concept either. So to save you embarrassment , here it is:
A viral co-efficient of 1 means each of your customers in turn brings you one more customer. It’s as simple as that. So a coefficient of 0.5 means every other customer brings you a new one. 0.1 would mean one in ten customers bring you a new customer.
So the goal is to achieve as high a number as possible. I’m told Facebook has a viral coefficient of 12. So each user brings in 12 others. A nice position to be in as once you pass 1, your users/customers grow exponentially.
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Tags: coefficient, facebook, Marketing, viral
This entry was posted on Wednesday, February 24th, 2010 at 2:02 pm and is filed under Marketing, Ramblings, Small Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
In which case, ours is not terribly high! We’ve always had an eye on this, though I’ve never known it as “viral co-efficient” – more as “referral rate” or similar.
One of our targets for this year is to try and increase referrals via some sort of “reward” scheme for clients who successfully refer friends/associates/etc to us.
Mind you, I doubt we’ll ever beat Facebook – after all their product is free (in cash terms, at least)!
Nice summary of the viral coefficient. Although it’s useful to know when viral marketing is working, if you want to achieve a viral coefficient of more than 1, the coefficient itself does little to help you figure out how to do so. I was recently debunking the viral coefficient to show some of the variables that are not factored into the viral coefficient, but that help a lot when you’re trying to get the coefficient to that magic value greater than 1. Maybe it would be helpful for you and your readers.