Category creation is extremely difficult and in any category creation endeavour your most fierce competition are not the other startups who are building similar capabilities, it is non-consumption that is the most worrisome failure mode. The most critical aspect of creating any new category is the ability to cross the Chasm and reach the second half of the technology adoption curve. It requires sellers and marketers to spend millions of dollars to educate and create awareness among early adopters. In fact, in most cases having competition is actually a blessing in disguise as collectively there will be enough capital available to expand and enable startups to cross the Chasm.
A product manager ideally needs to segment the roadmap into 3 buckets :
- Hygiene
- Neutralizers
- Differentiators
Why is this important?
PMs have a plethora of avenues for gathering feedback and building the product backlog/ roadmap. As the product continues to grow, a large chunk of feedback gathered is typically through customer interaction and through the Sales/ Solutions team and these tend to be in the first 2 buckets listed above as they are born out of comparisons with existing Products/ competition. The pressure to build these can be significant at times. Although it’s important for PMs to capture these inputs and add it as part of the roadmap, one should ensure that this does not form the bulk of the roadmap. Any product needs to differentiate in the long run to be successful and for that one needs to continue to invest in building differentiators.
General rule of thumb – Invest/ allocate around 25-30% of the roadmap purely for segment no. 3. i.e., to innovate and build differentiation.
We all have ideas. We all have felt the need of having something more to an existing solution or an alternate way of doing something which we often do. Startups and products are born out of this. The good part or maybe the sad part is that there are thousands of such ideas and products that spring up every day and it becomes increasingly difficult for these products to succeed in the market.
Of course having a great founding team with the right mix of technical, marketing and design skill set would go a long way in helping the product to wade through the clutter and be noticed but it still doesn’t guarantee the success of the product. It’s often easy for a founding team to lose direction early on in terms of what’s the right product that people are willing to use, or better, willing to pay for. There is an even worse scenario which I have often seen among founders when they try and convince themselves that the features and the products that they are building is the right solution based on intuition and practically zero metrics to back their claim. That’s suicidal.
It’s imperative for a startup to follow the Lean methodology’s Build-Measure-Learn loop. But before you enter the build phase, your first step should always be to do Research and understand the market you are going to target.
Research
First things first. One wouldn’t want to waste a significant amount of resource on an idea which has relatively zero market potential. So always begin by understanding the true market potential of your idea. You can start by asking yourself a set of questions initially:
- Will my idea address a genuine pain point, if yes, what is it?
- Who will be my potential customers and where can I find them?
- Who are my competitions?
- How different is my idea from what my competitions have?
- Will I pay for a product like this? Would anyone pay for the product I intend to develop?
- Are there are regulatory constraints?
- What would my rough budget be and what would be the resources required for a basic product?
I’m sure you won’t get comprehensive answers to a lot of these questions but then the point of asking yourself all these questions initially is it helps you understand the market and the opportunity you are going after and sets the context right. Googling will give you sufficient inputs which will enable you to take a call on if it’s worth pursuing further. If you want to understand things a little deeper, do a survey or shortlist a set of people who will in the future be interested in the product and try and get their opinion on if they would actually pay for such a product (To be honest, at this stage it’s difficult to really understand if the users will pay for it at this stage, but do get opinion from people nevertheless.)
In already established markets there would be a fair number of research reports which you can leverage to understand in detail the market you are going after. An easier way would be to use Google Keyword Tool or Market Samurai to understand the demand for your idea. It’s always easier for a startup to build something in a space where there is an existing demand and is not fully saturated than to carve out an entirely new market. I am not saying that’s not possible but with limited resource at your disposal in your early days, trying to create a new market might not be the best option.
Just did a search on Google KWT for the term Video Games and see the results. It has a fairly good number of searches worldwide. The KWT also gives you a set of related keywords which might help you even segment the entire market.
It’s important at this stage to try and segment the market you are going after. Having a generic solution won’t help at an early stage. Segmenting the market you are going after gives you a much better chance of validating your idea. The Idea can be expanded on to other segments as and when you grow and become mature. Also, make a shortlist of your competition and their offerings. This would give you a fair bit of understanding on the current market demand for various features and would allow you to understand how your product is different from your competition.
All of this helps you in getting a Problem/ Solution fit. It’s good to get a feel of the market even before you start prototyping and building a product. Like Eric Ries mentions in his Lean Startup methodology, it might be a good idea to just create a landing page and put up a “Register to get an Invite Option” and check how many click through to register and actually register. This is a trend followed by a lot of online startups and especially Apps. One of the most important tactics for an app’s pre-launch marketing strategy is to build up a landing page with an option for the users to subscribe to be notified when the app goes live. This would also enable you to get a feel of the solution you are suggesting for a problem. Again, the problem here is that often people without proper segmentation and without trying to get their target users to come on to the page would conclude that the idea has no demand in the market. This is why it’s important to segment your market and know your core group of audience. Hunt for them on forums, groups or anywhere they are available if you want to make people discover your webpage for free or else use Google Ad words or any of the Ad solutions to target your core group of audience. Understand if there is a demand for your solution.
The next stage in the product lifecycle is to develop an MVP (Minimum Viable Product) that would actually enable you to reach out to customers, engage with them and understand better the demand for the product.
Minimum Viable Product
The concept of a Minimum Viable Product was introduced by Eric Ries, the man behind the Lean Startup movement. In his own words :
“The idea of minimum viable product is useful because you can basically say: our vision is to build a product that solves this core problem for customers and we think that for the people who are early adopters for this kind of solution, they will be the most forgiving. And they will fill in their minds the features that aren’t quite there if we give them the core, tent-pole features that point the direction of where we’re trying to go.
So, the minimum viable product is that product which has just those features (and no more) that allows you to ship a product that resonates with early adopters; some of whom will pay you money or give you feedback.”
According to me, it’s always a difficult task clearly understanding what exactly is “minimum viable” as far as your product/ idea is concerned. It would be different for each idea and category. Understand that if the product is as is any other competitor and there is no differentiation then the product you are shipping is in no way a “minimum viable” product. Focus on your core value proposition and how your product is different from the rest. If your differentiation is purely the experience that you give your users then ensure that when you ship out your MVP, you enable your customers to have that experience. Minimum Viable Product does not mean that you roll out a crappy product. In fact that would be suicidal as with Social Media these days it does not take a lot of time to completely kill your product or brand with a negative word of mouth. Of course the MVP can have bugs and there would be hundreds of features that could be added later. The early adopters that you manage to get are always going to give you a leeway and that’s because they genuinely need and value the core experience or the core feature your product provides. So ensure that the core proposition is in its entirety is reflected in the MVP.
Steve Blank in his book outlines the four stages to the Customer Development process with the following success end goals:
- Customer Discovery – Achieve Problem/Solution Fit
- Customer Validation – Achieve Product/Market Fit
- Customer Creation – Drive Demand
- Company Building – Scale the Company
This is a great framework for someone operating with the Lean Startup methodology. The initial research phase and the development of the MVP falls under the first bucket where in one achieves the Problem/ Solution fit. This does involve effort however you do significantly cut down on the unnecessary resource you would have spent otherwise on trying to create something which has no demand in the market only to realize that after you have pumped in all of your money and effort.
The Second phase of Customer Validation is where one achieves Product Market fit. This is the stage where in you actually try and sell your MVP and or make your customers to use it to tweak and bridge the gap between the Product and the Market.
Achieving Product/ Market Fit:
How exactly does one determine whether you have achieved product/ market fit? Different people will give you different definitions for Product/ market fit
“Product/market fit means being in a good market with a product that can satisfy that market,” according to Marc Andreessen
Andrew Chen
Sean Ellis has created another metric for determining Product/ Market fit. He suggests asking existing users of a product how they would feel if they could no longer use the product. According to him, achieving product/market fit requires at least 40% of users saying they would be “very disappointed” without your product.
For me the whole idea of getting a Product Market fit is nothing but getting to a point with your product when a particular segment of the market which you have identified as your initial target segment embraces your product so that you can grow your company/ product scalably. Achieving Product/ Market fit as early as possible is crucial for any product as it allows you to then focus on company growth and not on iterating and pivoting the product. Spending significant money and effort on growth and marketing at this stage before product/ market fit is not an advisable strategy.
It’s important for startups to constantly measure during this stage and understand the behavior of their users. One needs to craft and test several value propositions, user flows, conversions, user interactions to effectively achieve a product/ market fit.
The priority here is to focus on the macro metrics, the right ones. Understand that optimization of micro-metrics comes at a later stage once we achieve product/ market fit. There are various macro metrics that matter; you may refer to Dave McClure’s AARRR model.
- Acquisition – How many people landed on your website coming from a marketing campaign or through viral channels that you are tracking and then you acquire the user.
- Activation – The user uses your product and completes a core action on the platform.
- Retention – What is your churn? How many of the users you have in your user base are active? How many stopped being active and why?
- Referral -How many of the users that are using your product are willing to refer to others?
- Revenue -How many users are willing to pay you of the ones that are using the service?
During this stage out of the 5 macro metrics Dave suggests, there are only two that needs to be tracked comprehensively. They are: Activation and Retention. Of course Acquisition is important as well because for measuring and optimizing activation and retention there needs to be sufficient users. But then the idea here is to not spend and focus on acquisition but to focus on Activation and retention in a core segment by minimizing your acquisition cost and optimizing it. Try and figure out the best and most effective channels to let your target audience discover your product and allocate a budget accordingly. Social Media these days provide a great channel for enabling your target users to discover your product, so utilize it to the maximum effect possible.
Try and map out the important actions on the platform that corresponds to the macro metrics : Activation and Retention.
Activation:
Activation rate, in a nutshell, is the percentage of users who stick with your app long enough to experience the value it offers.
For a project management application, the point of first value might be when an account achieves these things:
- Account created
- Invited 2+ team members
- Created project
- Uploaded 2+ files
- Created 3+ calendar events
- Created 1+ tasks
- Completed 1+ tasks
And these actions can be taken in any order – a non-linear experience – so measuring them as a funnel is a mistake.
In this case, you should be measuring Activation as a percentage – not a linear funnel. You need to measure, how many of these steps have been completed (regardless of the order). If a new user or account needs to complete 5 steps to become fully activated and has only completed 2 of those steps – they are 20% Activated. If it completes 4 of 5 steps – they are 80% Activated.
This view of number of criteria for activation fulfilled by the end user gives a clear picture of how well New accounts are able to complete the list of activities you have defined as activation criteria.
Retention:
Retention is nothing but getting the users back on the site regardless of the engagement they have on the site. You can define retention as mentioned or tie it to certain key actions on the platform. In general for a consumer product which is both creation and consumption based, it might be good to just consider the activity of the user coming back to the site as retention. For eg: Facebook or twitter might consider retention as the case of users just logging back in to the site. Engagement, however, is a different concept where a platform like Facebook or twitter would want the user to perform any major/ core user action on the platform like sharing content, liking or updating status or tweeting etc.
A good retention rate would be different for different consumer products/ apps depending on the nature. It would also depend on the customer usage cycle which tends to be shorter for a social gaming app while it tends to be a little longer for a platform like Snap, TikTok etc. So based on your product’s customer usage cycle and general trend in your niche/category decide on your target retention number/ time frame ( 1 Day, 7 days or 28 days) to achieve.
Measure and iterate on both these macro-metric to get to Product/ Market fit. Use Funnel and Cohort analyses to better understand the user flows and the churn at each stage so that you can identify and improve/ rectify the non-required or wrongly crafted features and flows. Breakdown each user flow to understand in depth any issue there is. The idea here is not optimization for efficiency but the idea here is to validate your MVP. People often relate A/B testing with changing colors of the Sign Up button, yes, that might be a good way to improve on the conversions in some cases, but getting to product Market fit is all about validating your MVP, to get people to buy into the features or the experience it provides and then make them repeatedly come back to the platform. There would various broad scenarios:
Have high arrivals but low Conversions: Tweak your messaging and positioning to check if that helps in conversion. Also, ensure that the incoming traffic is composed of people you assume to be your target audience.
Have low arrivals but high conversions: Work on the channels to bring in more targeted traffic. Groups, Forums, Meetups etc of target community would be a great start. Try and improve on the keywords you chose for your PPC campaigns.
Have high conversions but low activation: Ensure people understand the interactions on the platform. Is it too difficult to understand or complete the core action on the platform? Would an interactive guide in the beginning help the user understand user actions on the platform?
Have low conversions but high activation: Are you bringing in the right traffic on the platform? Is the messaging right on the front page? Is the signup process easy enough or have you made it too difficult? Is there a clear call to action on your landing page?
Have low activation but high retention: A good sign to have a high retention number. However lower activation would mean either people are not interested in the core activity you have considered or people are not given an easy enough option to complete the core activity on the platform.
Have high activation but low retention: Low retention could be due to lack of interest in the product and it’s core feature. A product which genuinely solves a problem for a sect of people would have high retention numbers. Products which are not a must but is a luxury like Quora would need to constantly remind people and get through the clutter to improve on their retention numbers. Work on either.
The whole cycle would look something like the figure below. Keep measuring all the important metrics, learn and iterate on important features/ flows till you get to product/ Market fit. The earlier, the better.
Post achieving Product/ Market fit, the company can focus on user growth and leverage their marketing spend to speed up the entire process. Utilize the best and the most effective channels to scale further. You can now utilize Funnel analytics and Cohort analysis to measure each of the important macro-metric defined in the framework above.
SaaS as a business model has existed long enough and there are compelling value propositions for Organizations to adopt this model as can be seen with the large increase in SaaS products over the last few years. This theme is not specific to any vertical but is something that can be seen across the IT landscape, although the speed of adoption across different industries have been different. No wonder, there is more and more money being pumped into these SaaS companies. Coupa, a SaaS company that I track on a daily basis for eg is trading at an all-time high valuation of $5.5 Billion and a Fwd P/E of 446. That’s incredible.
The SaaS business looks attractive but if you were to build one, what are the key components of an effective and valuable SaaS business?
- Product should be fundamental to how the business runs: A great SaaS product is something that is fundamental to how the organization functions and is relied on a daily basis. Eg: Coupa for procurement, Concur for expense management or Freshdesk for customer support. There are incremental/ value add systems that you can build, but they are always going to be a hard sell if it’s not business critical. Net result, these incremental products would never turn into a multi-billion dollar businesses.
- Easy to understand/ visible value proposition: Cost reduction, increased efficiency, productivity, sales or whatever is the core value proposition of your product is something that is easy to understand and is experienced instantly. Intangible benefits are often a hard-sell.
- Moat: How easy or difficult is it for the client to replicate the value proposition you are delivering? If it’s cheaper for them to build it at their end, then you probably don’t have a market. Or if your technology is easy to replicate, then soon enough you are going to have a very commoditized market that in turn drastically reduces your profitability.
- Shorter time to Market: You probably start with the SMB segment where the compliance, security and the complex integration requirements are much lesser and with more customers, you end up getting more feedbacks during the initial days. This is critical as early feedback helps you course-correct with minimal investments.
- Revenue model: I had previously written about how startups by tweaking their subscription revenue model can have significant cash flows, interest free cash that can drive product development and growth during the early stages. Upfront revenue collection and if it’s done annually is a great way for SaaS companies to work with negative working capital.
- Customer Breakeven Period: Can you have a customer breakeven period of less than a year. This includes all cost associated with customer acquisition and management. If you are able to charge the customer upfront annually then, you are nullifying any loss you can have with customer churn before breakeven. The longer you are able to retain your customer, the better the ROI.
- Market Share: What’s the relative market share you have in whatever market you have defined for yourself and how big is that market? The lower you are in the list, the higher your CAC gets. Momentum, customer references and WOM helps you drive down CAC as well as increase your top and bottom lines.
If you are planning to build a SaaS product or already have one, ensure you tick most of these criteria listed above. If you aren’t ticking a good number of these criteria, maybe it’s time to rethink your SaaS strategy.
One of the major challenges for a marketer or an entrepreneur is to get users and grow for an eternity. Paul Graham would tell you that you ain’t doing it right if you are not growing by a minimum of 5-7% Week-on-Week. And there are plenty of channels one could use to grow, be it the Press, Text Ads or Visual Ads, Partnerships. All of these techniques require money to be spent proportionally to the amount of visits/ click throughs or conversions you are going to get. Wouldn’t it be so much better if we could get hundreds of users for an eternity for virtually no marketing spend. This is where the inherent Virality of products help.
What is Viral growth? Viral growth is nothing but an existing user bringing you new users either through a generic invite sent on any of the platforms the potential user is on or by directly using the product ( sharing a file link on dropbox) or by any means possible. Google with gmail was phenomenally successful in creating a viral growth. Google initially started with a base of 1000 people who were given a limited number of invitations to share with friends/ family. Gmail finally went public in the year 2007 but by April, 2006 Gmail had through viral referrals grown phenomenally to a base of 7.1 million users. Quite incredible. Products like Instagram, Dropbox, Youtube etc grew rapidly to a million users through virality.
As with any product the key to being successful in growing virally is to have a world-class product, a product people would love to use and would love to share with their friends. Word of Mouth is a great, free channel for products to grow. But that’s not the only way to build virality in to your products. Look at products that grew phenomenally and you would understand that they built in and utilized at least one or two incredibly viral features in their products. Let’s examine the various viral features a product could have:
1) Inherent Virality : It’s incredibly difficult to achieve this type of virality in all products. There are certain products and niches where the products are inherently viral like gmail or Whatsapp or facebook. These products thrive on users inviting others users because the user gets no value out of them without his families or friends or someone else. But do understand that the easier you make it for a user to invite his friends or family, the more invitations they send out whereby increasing your virality.
2) Signature Virality : Remember the messages “sent from my Blackberry” or “Sent from my ipad”? This type of virality encourages people to include the messages as signature because they think it makes them cool. Again, you would need a world class product that people would aspire to use to truly achieve this. Could you imagine someone using the signature “sent from my Nokia?” Kidding. But yeah, the point is to spread the message like Hotmail did with a simple “ Get your free email at Hotmail” signature and grew rapidly from a nominal base to 1 million in 6 months and in the next 5 weeks to 2 million. Remember this was a time when there were only 70 million Internet users and in 18 months they had about 12 million users.
Paypal with their autolinks on ebay is another great example. It automatically inserted Paypal logo to the bottom of each of the listings of the sellers who used Paypal. This was incredibly successful in making Paypal grow virally.
3) Incentivized Virality: Companies like Fab.com or Dropbox are great examples of this. They incentivized their users to send invitations to their network for either monetary benefits or extra storage space in the case of Dropbox. It worked and people brought in an incredible number of referral traffic. Think of Affiliates as well. They thrive on this. The company grows and sells products by incentivizing the affiliate marketer to sell more or bring him more buyers. Amazon has achieved an incredible amount of success through their affiliate networks.
My facebook feed is filled with shares from this new to be launched service :Trevolta
Of course one is going to share this with their friends, there is no better thing in this world than travelling around the world on someone else’s money! 🙂
4) Embeddable Virality: The biggest example of this is Youtube. Youtube was not the only video sharing website available during its initial stages but what made Youtube a leader was when they made the videos embeddable. People started embedding Youtube videos on their website and with it Youtube amassed massive views and made itself visible to an incredible number of people. This shifted the balance in youtube’s favor and there was no looking back.
5) Social Virality: In this case, Products depend on Social Network like facebook, twitter, pinterest etc to rapidly spread their base. There is a psychology behind Social virality. The key here is always to give people a set of tools to create something awesome which they would want to flaunt with their social graph. Instagram exploded because they could make photos beautiful and people loved flaunting their good looking self to the world. Services like twitter or Scoop.it grew virally because they allowed people to project a certain persona. Even the content shares that are done on any of these networks is in effect a way for a user to project a certain type of persona. If one could get this aspect right, then the product is a sure shot bet to grow virally. What I like about Twitter or Tumblr is the re-tweet or re-blog option which enables a user to create content effortlessly while actually he or she is curating content. It increases engagement on the platform and also gives a sense of satisfaction to the user that he or she is actually creating content.
I guess it’s easy to understand virality but its difficult building virality in to a product and even more difficult trying to measure it accurately.
For measuring Virality, one needs to understand two components:
- Viral Coefficient
- Viral Loop time
Let’s assume the scenario where:
This implies that each user brings you an additional user within a time frame of 10 days ( the Viral Loop time), which is absolutely incredible if you are able to achieve it! J As we had discussed earlier there are different types of virality and in this case we are assuming a simple scenario where each user is sending out invitations to get their friends in (it could be incentivized or simply because your user loves your product)
Now if we were to look at the growth the product would have by the 20th day:
Understanding Viral Loop time is important because Virality is inversely related to it. The shorter the Viral loop time, the better virality one would be able to achieve. Imagine if the Viral loop time in the earlier case was 1 day, ie, each user invites a set of users and the new user signs up all in a day’s time. That would make the user acquisition 5 times faster than the earlier scenario and your table would look like this:
Let us plot a graph to understand our growth curve in the first scenario:
Assuming a product has a viral coefficient that is equal to or greater than 1, it results in a steep upward growth curve. In reality a product having 1 or a number greater than 1 as its viral coefficient throughout its lifetime is impossible although there might be intervals during which the product shows such a viral coefficient. In reality a viral coefficient of 0.4-0.6 for a product is extremely good. Now let us consider such a scenario where the Viral coefficient is 0.5 assuming the rest of the numbers remain the same from our earlier example.
And if we were to plot this on a graph, the growth curve would look something like this:
The growth curve flattens out after a particular interval. It’s important for growth hackers and marketers to understand that in reality for most of the viral product this is how the graph would look like if they only depend on user acquisition through virality. So it’s important to plan out the metrics in such a manner that you constantly boost up user acquisition from other channels as well to have a steep growth curve which a product requires to be successful. Remember Paul Graham and his number for the ideal growth rate for a startup? Utilize not just the virality of the product but also other channels like Press, Market Places , Creation of Viral Content, Paid Advertising or anything that boosts traffic and discoverability of your product/ service which drives conversions in order to maintain an upward trending growth curve.
Now if I were to simply consider the scenario earlier described with users sending ‘n’ invites and x% converts from them giving us a Viral Coefficient of K=n*x%, then the User Base at any particular point of time would be (considering only viral growth):
User Base (t) = User Base(0) * (K ^ (t/vlt +1) – 1) / (K-1)
(where vlt is the Viral loop time)
[Reference: David Skok’s article]
The above is not a comprehensive model as there are various things we have left out which includes:
- The sending invitations process is always staggered. We have just assumed it to happen in one go. If I were to give an example – Imagine dropbox, you will always end up inviting people in a staggered way as you interact with them and share docs with them. It does not happen in one go. And If I were a user of dropbox and If I were to stop using it all together one fine day, then dropbox loses out on any referral signups from me.
- The churn your product will have as it affects the above mentioned parameter.
- We have not considered virality across the many channels and the different forms of virality.
- We have also not included the saturation of a particular channel. If I were using a platform which has a total base of 10Million as the target base for sending out invitations, once I cover the entire user base I can’t rely on the formula.
The Viral Loop
The viral loop highlighted in the diagram is what can be called as the single viral loop. It’s important where it’s possible to have a double viral loop to fasten your user acquisition. This is possible especially in case of Social networks. Like we discussed earlier, retention is a key component that defines the Viral Coefficient. An increased retention will result in increased Viral Coefficient and hence a faster user growth. There are simple techniques one could do to improve retention and engagement on the platform. This forms part of the double viral loop. Re-connection always increases engagement and retention and hence it’s important to re-connect people by prompting them as well as by making it easy for them.
For ex on LinkedIn, after we sign up, it prompts us to export contacts from our address books and re-connects us. This removes the friction normally people will have in searching for people and then connecting with them. Also, it helps in retaining dormant users. This is a technique employed by many of the Social networks to bring back dormant users on to the platform. Notifications on follow improves your chances of brining back dormant users.
This simple step resulted in an increase of 16% in the number of invitations sent. Check the stats below:
Source: http://www.slideshare.net/joshelman/josh-elman-threegrowthhacksgrowconf81413
Or in case of twitter they take you step by step through the various things one can do on twitter and by it helps you in getting content on your feed and making you follow a few popular people on login itself. It alleviates any friction the user will have initially to engage on the platform and also interacting with the popular users sets the context for them to get active. In doing so Twitter achieves more invitations and requests sent to users and prospective users and also re-connections and engagement between existing users. That’s a double viral loop.
Similarly, it’s important for any marketer to understand the viral loop of their product, one would have to iterate and measure to understand in detail the parameters and the best possible viral loops.
At Zoomdeck, we are creating a platform for making photos interactive. A User can spot anything interesting inside photos to ask a question or add notes or add spots to highlight an interesting story or experience about an element inside photos, then make it much more engaging by linking the spots to audio, video, products, people, places or any link relevant. Users would be able to discover and share the stories and elements in photos using interactive spots and have contextual conversations around each spot. We have a web version, an iOS app and an embedding option which along with viral content shared across various Social Media sites would be a key driver of traffic and user acquisition for us. When I look at the various channels of virality for Zoomdeck, I have:
- Embedding: Bloggers and Publishers embedding Interactive Photos on their website. Similar to how Youtube utilized embedding as an important element of their Viral growth.
- User joins Zoomdeck, takes photos and makes them interactive by adding spots. Shares it with their friends and family (Invite). ( This will have a longer Viral Loop time) Similar to how Instagram or Pinterest built their viral loop.
- Directly recommends the product to their contacts through the invite option in the app or in person.
- Sharing of Interactive Photos they find interesting on Zoomdeck( Content) on Social platforms ( Facebook, twitter or Pinterest). Their network discovers, finds it interesting and shares with their friends. ( This will have a much shorter Viral Loop time) The advantage of having content that is viral in nature is the Viral Loop time significantly reduces as you are providing ready made things for people to share and not asking them to create which is always time consuming and requires an effort and hence would always have friction. A Youtube or Twitter is a great example of this.
The four basic viral loops in the case of Zoomdeck as mentioned above would each have different conversion ratios. While the first option and the fourth option would enable Zoomdeck to reach a much larger base of audience and that too multiple number of times, the conversion percentage is going to be a lot lesser than the second and third option where in our chances of conversions are much higher. Similarly, the Viral loop time for the first and fourth option would be much lesser than the VLT number for the other two. So measure the various parameters continuously and optimize for the ones that give best results.
Importance of Seeding :
Imagine for calculation purpose the current user base of a product as 5000 and consider only the 2nd and the 3rd channels of virality listed above as the growth channels for easiness in quantifying. (Assume a Viral Coefficient of 0.6 and a Vlt of 10 days) We would have a table that looks like this
And our user graph would look like this:
Now, assume acquisition of a constant number of users from other channels, we have (all values are hypothetical):
Seeding initially is critical as that’s what enables the viral growth to kick in. In the first example we flatten out our user base after 2 months. This is why seeding should always be an ongoing process to leverage maximum value from virality or else we should have a viral coefficient greater than 1 to have an eternal upward curve for our user graph which is very difficult to achieve throughout the lifetime of the product. There would be short bursts when the viral coefficient is greater than 1 and would result in phenomenal growth especially if you are on a larger base as well but not through the lifetime of a product.
Key-points:
- Virality is something that should be inherent in the product. It’s important to design and incorporate virality during product conceptualization itself.
- Always measure and track various metrics to understand what works best and dig deep into those channels.
- Iterate as fast as possible to understand the best viral channels. The longer the iteration cycle, the longer it will take for you to spot your best viral loop.
- Reduce the number of steps required to do any action that results in virality. Make it as easy as possible for the users to send invitations. Understand that the easier you make, the better your metrics would look.
- Two factors that influence Virality are: Viral Coefficient (K) and Viral Loop time (Vlt). Increase ‘K’ and decrease ‘Vlt’ for rapid growth.
- Retention and re-connection are important factors that help in Viral growth.
- Important to seed users initially.
- Exponential growth from Virality kicks in after a threshold limit. Make use of various channels for seeding the initial audience.
- It’s very difficult to achieve sustaining growth through virality where you require a viral coefficient greater than 1. Hence, compensate for this and balance it out by seeding users through other channels as well – if required paid channels also to maintain momentum.
References:
http://www.forentrepreneurs.com/lessons-learnt-viral-marketing/
http://andrewchen.co/2007/07/11/whats-your-viral-loop-understanding-the-engine-of-adoption/