One
What's up everybody.
Welcome to the last video and for this one I wanted to do something a little different.
We're going to be talking about the viral coefficients So what is it and why is it important.
Why do we care about it.
The viral coefficient is basically a way to quantify via reality or the potential of reality.
And this is used to calculate certain share in campaigns or to try to find factors you can use to increase
your conversion rates so that more people share it gets in the hands of more users and your products
will become successful.
So as we go through this example think about apps that you are building or have built and see if you
can put these numbers into practice.
There's a couple of variables that we will be working with.
I'll start with this one so it's the the average number of friends or users that one user will share
your app to.
All right so let's just say for example that we're talking about some sort of social app.
Right so what this number basically means is for every one user that you have they're going to tell
five people right the next one is the conversion percentage so out of those five people on average how
many people or what percentage of those people are going to actually download your app or get involved
in your app in one way shape or form.
And then the Vargo coefficient is basically a quantitative number.
And it is denoted as k in the equation and every equation that you'd find that has the viral coefficient
will be denoted as such.
So let's just say we just finished making our awesome app and we have a group of 100 people that we're
going to send this off to right that already committed to using our app and being our users and and
all all that good stuff.
So you go ahead ignore all of these numbers for now let's just start with the 100 users and if each
of those users shares it to five of their friends you're reach in this first in this first segment is
going to be 500.
Right.
And then what we're doing here on these is converted is saying 35 percent of those 500 people are going
to Adeler app or user app you're going to convert that many people and then from there we're going to
add that to our user count right down here.
All right.
And we're going to repeat repeat this equation all the way down.
One thing to note however when you're doing this is not to add the So.
So once we jumped to the second line right we're going to take the obviously the average amount of people
that are sharing per user.
We're actually going to take it off this 175 number instead of this 275 because we can't assume that
these 100 people are going to be constantly sharing it at the same rate as new users right.
And it also depends on what kind of campaign you're running.
So for this example we're using some sort of social word of mouth viral component or coefficient but
some have use this and it's frequently used in email campaigns promotional campaigns.
You know I share this with five friends or two friends and get your third purchase or your you know
your next pursers half off something to that nature.
So there's many many different ways you can use this equation and I've seen it been actually plugged
in into some other hybrid equations but just for this example what we're going to do is take the users
convert a number and plug it into this average of the friend shared so.
So here we go.
We're going to go down.
And as you can see if on average every user tells five friends the reach increases and the users convert
converted increases which is great.
And then thus our user account increases drastically from a hundred to a million 17.
I guess cycle's you can you can call it.
All right.
So I'm going to manipulate these numbers and I want you to watch what happens right.
So we're going to jump down a 4.
You're doing good.
We're still growing.
Right.
It's jumped down to 3 you are getting drastically worse.
And I'm going to come down to two.
All right so if on average
for every user that you have it's being shared by two of their friends and of course we have a below
below average conversion rate or just not below average just really bad given it's only two friends.
Our viral coefficient decreases 2.7 and our user count slowly comes to a screeching halt.
Friends share two decreases drastically and uses converted eventually gets to zero or on the 16th or
17th cycle.
All right so let's mess around with the second variable here which is our conversion rate.
I'm going to say point for now as we're getting better things are still diminishing.
So we're kind of setting ourselves up for failure here.
And I'm going to jump to maybe like a point seven five right on average points a 75 percent conversion
rate.
So as you can see these numbers have jumped up and now we are growing again which is awesome.
So these two variables are the foundation of what you want to be able to manipulate right and you can
do this a couple of ways you can increase the amount of reach or friends share too.
So you can maybe think of a campaign to say like share this with 10 of your friends and you will get
50 percent off.
Right.
That's awesome because now you have incentive to share it.
You give the reward and your friends share to reach increases which would be awesome.
So that's one example of how you can increase this variable.
And the second one is what if you said share to 10 friends you get the 50 percent off.
So we're also using this.
But if your friend signs up they will also get 50 percent off.
Right so now you're manipulating your conversion percentage to your friends that get it from you are
most likely going to want to sign up because they're going to get 50 percent off as well.
Right.
So there are two baseline variables that you can work with.
I've seen some hybrid formulas but these are the two that you're going to want to be looking at.
Are these for this example so I'm going to jump this number back down to 50 percent.
I want you to watch what happened so as you can see the user's friends share everything remains the
same.
Converted remains the same throughout all the cycles and we are slowly but steadily increasing in user
base.
It's not great but it's not too bad.
And what happens if we go maybe 49 percent.
Right.
All of a sudden these numbers start to decrease.
Friends share two very very slowly.
You just converted in decreases very very slowly.
So it's safe to assume then that our Vajra coefficient in this formula is to be at least 1 in order
for our product to grow in order for our user base to grow.
So whatever you do to manipulate these two numbers you want to make sure that in your campaigns in your
marketing and whatever you're doing this viral coefficient needs to be at least one in order for your
product to have a shot given this formula.
Right.
So I want to put this back up to 60 percent conversion and let's go ahead and make this sorry.
Those motorcycles driven by.
So this is an outstanding Varco viral coefficient.
Right.
And largely this is largely why Facebook decided they had an insane Varco officiated a lot of products
that go viral obviously have a great Wajir coefficient.
And then this is also a lot of the reason why if you've created an awesome app and you share it with
your friends and family on Facebook you get everybody you know to download it and you work your tail
off to have an awesome launch party in the first month.
You get all your friends downloaded the whole nine yards.
That often leads to a great first start at the the French share.
And in the current version is pretty decent but then all of a sudden things start to decline.
But then what starts to happen is those 100 users that you got at the beginning of launch they're not
sharing it to friends and then that's where the decline starts.
You know your outreach goes down your users convert it goes down and then depending on the conversion
which is generally pretty difficult especially with starting products that will basically create this
downward spiral and your Vajra coefficient will come to a screeching halt around one of these cycles
so.
So that's why while sometimes you might see your user base increase.
Your your Viral coefficient is actually causing your growth to slowly come to a stop but you don't see
it because all you see is hey look we jumped.
You know in user account.
So it's definitely something to think about.
You have these two to manipulate.
How are you going to get your friends to show their friends and how are you going to increase the conversion
rate when they show them.
That's definitely something that will drive your product to success.
All right guys I hope you guys really enjoyed this course.
I had a lot of fun putting it together.
Find me on LinkedIn.
Discord slash everything I love to keep in touch with all of you guys and see where your products go.
When.