Viral marketing is a marketing strategy that relies on users to generate hype and buzz for a product. The term “viral” refers to the way information spreads online, like a virus spreading through a population.
K-factor is a metric that measures the rate at which users generate new users. It’s used to track the general “virality” of your product.
Here, you’ll learn about the different ways to calculate your k-factor, as well as how to use it to improve your viral marketing efforts.
What is K-Factor?
K-factor is a metric that helps developers understand how viral their product is. The concept is borrowed from epidemiology, where the K-factor measures the transmissibility of viral infections—pretty on the nose!
In simple terms, k-factor tracks how many new users are generated by each existing user—either naturally or as a result of a campaign. You can use this metric to judge the effectiveness of:
- viral marketing campaigns
- user acquisition campaigns
- referral campaigns
K-factor can also help developers identify potential issues with their product. For example, a low k-factor could indicate that users are having a hard time understanding how to use your product, or that they’re not finding it valuable enough to recommend to others.
Here’s the basic formula for calculating K-factor:
- K-factor = i × c
- i = average number of invites or referrals per user
- c = average conversion rate for referred users (decimal form)
To illustrate, let’s say that your app has an active base of 100 paying users. You have a really generous referral bonus in place.
- This leads to paying users referring an average of 4 new users each to your free trial.
- The referred users convert to paying users at a rate of 30% (converted to 0.3).
In this case, your K-factor is 1.2 (4 × 0.3). A K-factor greater than 1 is considered viral, so your referral marketing campaign is definitely succeeding!
How to determine your average number of invites
To use the K-factor formula, you’ll need to know how many referrals are sent out by each customer. In practice, this can be tricky.
You can only get an accurate read on referrals that happen within your app’s ecosystem (e.g., referrals via an invite link). If users are sharing your app with their friends and family offline (e.g., by word of mouth), you won’t be able to track their activity.
Aside from asking users how many people they’ve referred to your app (not ideal), your best bet is to incentivize users to refer using their invite link or code. The better the incentive, the more users will be likely to use it when referring others—think discounts, premium trials, and so on.
Once you have an incentivized (and trackable) referral program in place, calculating the average number of invites per user is simple:
- i = total invites sent / total users
And how do you actually create a referral program? That’s a great question to ask a referral marketing mentor!
How to determine your average conversion rate
Your conversion rate is the typical success rate of the referrals you get. You can easily work this out with the following formula:
- c = new users from invites / total invites sent
Should you be tracking k-factor?
K-factor won’t be important for every app or product. If your app or website doesn’t lend itself to referral marketing (e.g., if it’s not the sort of thing people would share with their friends), then K-factor is most likely not worth tracking.
But if you think referral marketing could be a key growth strategy for your app or website, K-factor can be a useful metric to track.
- A high K-factor indicates that your existing users are bringing in new leads effectively. This is a good sign that your referral marketing campaign is working well, and that you have a solid foundation for growth.
- A low K-factor, on the other hand, suggests that your referral program isn’t working as well as it could be. If you’re not seeing the results you want, it might be time to rethink your strategy.
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