1 00:00:04,800 --> 00:00:05,870 One 2 00:00:08,470 --> 00:00:09,940 What's up everybody. 3 00:00:09,940 --> 00:00:16,050 Welcome to the last video and for this one I wanted to do something a little different. 4 00:00:16,060 --> 00:00:21,430 We're going to be talking about the viral coefficients So what is it and why is it important. 5 00:00:21,430 --> 00:00:23,260 Why do we care about it. 6 00:00:23,290 --> 00:00:30,980 The viral coefficient is basically a way to quantify via reality or the potential of reality. 7 00:00:31,180 --> 00:00:40,960 And this is used to calculate certain share in campaigns or to try to find factors you can use to increase 8 00:00:41,110 --> 00:00:47,380 your conversion rates so that more people share it gets in the hands of more users and your products 9 00:00:47,380 --> 00:00:48,430 will become successful. 10 00:00:48,430 --> 00:00:55,150 So as we go through this example think about apps that you are building or have built and see if you 11 00:00:55,150 --> 00:00:58,030 can put these numbers into practice. 12 00:00:58,030 --> 00:01:02,480 There's a couple of variables that we will be working with. 13 00:01:02,560 --> 00:01:12,100 I'll start with this one so it's the the average number of friends or users that one user will share 14 00:01:12,220 --> 00:01:13,190 your app to. 15 00:01:13,390 --> 00:01:18,440 All right so let's just say for example that we're talking about some sort of social app. 16 00:01:18,690 --> 00:01:25,410 Right so what this number basically means is for every one user that you have they're going to tell 17 00:01:25,650 --> 00:01:34,890 five people right the next one is the conversion percentage so out of those five people on average how 18 00:01:34,890 --> 00:01:41,880 many people or what percentage of those people are going to actually download your app or get involved 19 00:01:41,880 --> 00:01:45,740 in your app in one way shape or form. 20 00:01:46,470 --> 00:01:51,520 And then the Vargo coefficient is basically a quantitative number. 21 00:01:51,810 --> 00:01:59,580 And it is denoted as k in the equation and every equation that you'd find that has the viral coefficient 22 00:01:59,610 --> 00:02:02,100 will be denoted as such. 23 00:02:02,850 --> 00:02:11,250 So let's just say we just finished making our awesome app and we have a group of 100 people that we're 24 00:02:11,250 --> 00:02:17,340 going to send this off to right that already committed to using our app and being our users and and 25 00:02:17,340 --> 00:02:18,830 all all that good stuff. 26 00:02:18,840 --> 00:02:27,330 So you go ahead ignore all of these numbers for now let's just start with the 100 users and if each 27 00:02:27,330 --> 00:02:36,270 of those users shares it to five of their friends you're reach in this first in this first segment is 28 00:02:36,270 --> 00:02:38,490 going to be 500. 29 00:02:38,850 --> 00:02:39,190 Right. 30 00:02:39,210 --> 00:02:46,970 And then what we're doing here on these is converted is saying 35 percent of those 500 people are going 31 00:02:46,970 --> 00:02:55,070 to Adeler app or user app you're going to convert that many people and then from there we're going to 32 00:02:55,070 --> 00:02:58,850 add that to our user count right down here. 33 00:02:58,860 --> 00:02:59,180 All right. 34 00:02:59,190 --> 00:03:03,660 And we're going to repeat repeat this equation all the way down. 35 00:03:04,130 --> 00:03:12,380 One thing to note however when you're doing this is not to add the So. 36 00:03:12,410 --> 00:03:20,780 So once we jumped to the second line right we're going to take the obviously the average amount of people 37 00:03:20,780 --> 00:03:22,950 that are sharing per user. 38 00:03:23,120 --> 00:03:30,740 We're actually going to take it off this 175 number instead of this 275 because we can't assume that 39 00:03:30,740 --> 00:03:37,170 these 100 people are going to be constantly sharing it at the same rate as new users right. 40 00:03:37,220 --> 00:03:40,970 And it also depends on what kind of campaign you're running. 41 00:03:40,970 --> 00:03:49,100 So for this example we're using some sort of social word of mouth viral component or coefficient but 42 00:03:49,370 --> 00:03:54,480 some have use this and it's frequently used in email campaigns promotional campaigns. 43 00:03:54,740 --> 00:04:01,160 You know I share this with five friends or two friends and get your third purchase or your you know 44 00:04:01,160 --> 00:04:05,120 your next pursers half off something to that nature. 45 00:04:05,120 --> 00:04:12,200 So there's many many different ways you can use this equation and I've seen it been actually plugged 46 00:04:12,200 --> 00:04:20,180 in into some other hybrid equations but just for this example what we're going to do is take the users 47 00:04:20,180 --> 00:04:26,320 convert a number and plug it into this average of the friend shared so. 48 00:04:26,920 --> 00:04:27,710 So here we go. 49 00:04:27,740 --> 00:04:28,710 We're going to go down. 50 00:04:28,820 --> 00:04:39,260 And as you can see if on average every user tells five friends the reach increases and the users convert 51 00:04:39,270 --> 00:04:40,810 converted increases which is great. 52 00:04:40,820 --> 00:04:50,210 And then thus our user account increases drastically from a hundred to a million 17. 53 00:04:50,570 --> 00:04:53,590 I guess cycle's you can you can call it. 54 00:04:53,660 --> 00:04:53,930 All right. 55 00:04:53,930 --> 00:04:59,450 So I'm going to manipulate these numbers and I want you to watch what happens right. 56 00:04:59,450 --> 00:05:01,530 So we're going to jump down a 4. 57 00:05:02,180 --> 00:05:02,910 You're doing good. 58 00:05:02,930 --> 00:05:03,900 We're still growing. 59 00:05:04,840 --> 00:05:05,730 Right. 60 00:05:05,830 --> 00:05:14,080 It's jumped down to 3 you are getting drastically worse. 61 00:05:14,680 --> 00:05:18,520 And I'm going to come down to two. 62 00:05:18,520 --> 00:05:20,950 All right so if on average 63 00:05:23,920 --> 00:05:31,570 for every user that you have it's being shared by two of their friends and of course we have a below 64 00:05:32,860 --> 00:05:39,450 below average conversion rate or just not below average just really bad given it's only two friends. 65 00:05:39,490 --> 00:05:50,520 Our viral coefficient decreases 2.7 and our user count slowly comes to a screeching halt. 66 00:05:50,530 --> 00:05:56,110 Friends share two decreases drastically and uses converted eventually gets to zero or on the 16th or 67 00:05:56,110 --> 00:05:58,970 17th cycle. 68 00:05:58,980 --> 00:06:04,190 All right so let's mess around with the second variable here which is our conversion rate. 69 00:06:04,330 --> 00:06:12,320 I'm going to say point for now as we're getting better things are still diminishing. 70 00:06:12,410 --> 00:06:15,730 So we're kind of setting ourselves up for failure here. 71 00:06:15,920 --> 00:06:21,800 And I'm going to jump to maybe like a point seven five right on average points a 75 percent conversion 72 00:06:21,800 --> 00:06:22,880 rate. 73 00:06:22,880 --> 00:06:29,740 So as you can see these numbers have jumped up and now we are growing again which is awesome. 74 00:06:29,990 --> 00:06:37,500 So these two variables are the foundation of what you want to be able to manipulate right and you can 75 00:06:37,500 --> 00:06:46,010 do this a couple of ways you can increase the amount of reach or friends share too. 76 00:06:46,100 --> 00:06:55,790 So you can maybe think of a campaign to say like share this with 10 of your friends and you will get 77 00:06:55,790 --> 00:06:57,260 50 percent off. 78 00:06:57,260 --> 00:06:58,030 Right. 79 00:06:58,040 --> 00:07:00,530 That's awesome because now you have incentive to share it. 80 00:07:00,530 --> 00:07:08,670 You give the reward and your friends share to reach increases which would be awesome. 81 00:07:09,080 --> 00:07:14,260 So that's one example of how you can increase this variable. 82 00:07:14,310 --> 00:07:21,100 And the second one is what if you said share to 10 friends you get the 50 percent off. 83 00:07:21,270 --> 00:07:23,410 So we're also using this. 84 00:07:23,970 --> 00:07:29,820 But if your friend signs up they will also get 50 percent off. 85 00:07:29,820 --> 00:07:36,450 Right so now you're manipulating your conversion percentage to your friends that get it from you are 86 00:07:36,600 --> 00:07:41,890 most likely going to want to sign up because they're going to get 50 percent off as well. 87 00:07:41,940 --> 00:07:42,190 Right. 88 00:07:42,180 --> 00:07:47,240 So there are two baseline variables that you can work with. 89 00:07:47,280 --> 00:07:52,240 I've seen some hybrid formulas but these are the two that you're going to want to be looking at. 90 00:07:52,260 --> 00:07:58,830 Are these for this example so I'm going to jump this number back down to 50 percent. 91 00:07:58,830 --> 00:08:08,010 I want you to watch what happened so as you can see the user's friends share everything remains the 92 00:08:08,010 --> 00:08:08,690 same. 93 00:08:09,860 --> 00:08:19,280 Converted remains the same throughout all the cycles and we are slowly but steadily increasing in user 94 00:08:19,280 --> 00:08:19,970 base. 95 00:08:20,150 --> 00:08:23,210 It's not great but it's not too bad. 96 00:08:23,810 --> 00:08:27,740 And what happens if we go maybe 49 percent. 97 00:08:27,740 --> 00:08:29,740 Right. 98 00:08:29,900 --> 00:08:34,220 All of a sudden these numbers start to decrease. 99 00:08:34,250 --> 00:08:36,610 Friends share two very very slowly. 100 00:08:36,740 --> 00:08:40,350 You just converted in decreases very very slowly. 101 00:08:40,880 --> 00:08:49,700 So it's safe to assume then that our Vajra coefficient in this formula is to be at least 1 in order 102 00:08:49,700 --> 00:08:53,270 for our product to grow in order for our user base to grow. 103 00:08:53,270 --> 00:09:00,740 So whatever you do to manipulate these two numbers you want to make sure that in your campaigns in your 104 00:09:00,740 --> 00:09:05,840 marketing and whatever you're doing this viral coefficient needs to be at least one in order for your 105 00:09:05,840 --> 00:09:08,880 product to have a shot given this formula. 106 00:09:09,150 --> 00:09:09,440 Right. 107 00:09:09,440 --> 00:09:18,870 So I want to put this back up to 60 percent conversion and let's go ahead and make this sorry. 108 00:09:18,880 --> 00:09:21,130 Those motorcycles driven by. 109 00:09:21,830 --> 00:09:25,830 So this is an outstanding Varco viral coefficient. 110 00:09:26,360 --> 00:09:26,820 Right. 111 00:09:26,930 --> 00:09:35,180 And largely this is largely why Facebook decided they had an insane Varco officiated a lot of products 112 00:09:35,180 --> 00:09:40,040 that go viral obviously have a great Wajir coefficient. 113 00:09:40,130 --> 00:09:48,470 And then this is also a lot of the reason why if you've created an awesome app and you share it with 114 00:09:48,620 --> 00:09:56,240 your friends and family on Facebook you get everybody you know to download it and you work your tail 115 00:09:56,240 --> 00:10:00,020 off to have an awesome launch party in the first month. 116 00:10:00,020 --> 00:10:03,480 You get all your friends downloaded the whole nine yards. 117 00:10:03,680 --> 00:10:12,560 That often leads to a great first start at the the French share. 118 00:10:13,310 --> 00:10:19,770 And in the current version is pretty decent but then all of a sudden things start to decline. 119 00:10:20,000 --> 00:10:28,040 But then what starts to happen is those 100 users that you got at the beginning of launch they're not 120 00:10:28,040 --> 00:10:30,910 sharing it to friends and then that's where the decline starts. 121 00:10:30,910 --> 00:10:37,490 You know your outreach goes down your users convert it goes down and then depending on the conversion 122 00:10:37,490 --> 00:10:46,190 which is generally pretty difficult especially with starting products that will basically create this 123 00:10:46,190 --> 00:10:52,910 downward spiral and your Vajra coefficient will come to a screeching halt around one of these cycles 124 00:10:52,910 --> 00:10:53,540 so. 125 00:10:53,720 --> 00:10:58,950 So that's why while sometimes you might see your user base increase. 126 00:10:59,020 --> 00:11:08,690 Your your Viral coefficient is actually causing your growth to slowly come to a stop but you don't see 127 00:11:08,690 --> 00:11:11,060 it because all you see is hey look we jumped. 128 00:11:11,430 --> 00:11:12,970 You know in user account. 129 00:11:13,010 --> 00:11:15,620 So it's definitely something to think about. 130 00:11:15,620 --> 00:11:17,930 You have these two to manipulate. 131 00:11:17,930 --> 00:11:23,930 How are you going to get your friends to show their friends and how are you going to increase the conversion 132 00:11:23,930 --> 00:11:26,070 rate when they show them. 133 00:11:26,080 --> 00:11:30,560 That's definitely something that will drive your product to success. 134 00:11:30,560 --> 00:11:33,430 All right guys I hope you guys really enjoyed this course. 135 00:11:33,440 --> 00:11:35,560 I had a lot of fun putting it together. 136 00:11:35,870 --> 00:11:37,310 Find me on LinkedIn. 137 00:11:37,310 --> 00:11:44,390 Discord slash everything I love to keep in touch with all of you guys and see where your products go. 138 00:11:48,610 --> 00:11:49,270 When.