This is a fab question… with no simple answer!
Essentially, virality is engineered by the product and development team. It’s a product phenomenon, rather than simply being word of mouth.
Marketing need to know about virality and the cycle time to know if they need to keep a low profile, or start shouting at the roof top! Why?
If your churn is high, a high viral cycle time can cripple your positioning in the market. To learn more, listen to the podcast!
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Transcript if you prefer to read
Hello 50Folders! My name is Alexander Jarvis and I’m going to be your host today. This is the first episode of the all new AskAlex podcast, in it will be taking questions from my readers across everything startup and investment related. Whether you are struggling to pitch, figuring out your monetization strategy, how to motivate your staff or even figuring out if you should invest in a startup. I have you covered at AskAlex. We’re going to try and focus in answering more complex questions those that you may not get answered elsewhere. These episodes are also going to be fairly short and to the point so maximising the value to your time. I’m going to make a landing page for you to ask a question soon but in the meantime if you want to get your questions answered at AskAlex ping me an email at [email protected]
Now let’s get kicked off, our first episode comes from Wendy Nadraska in Austria. Wendy asks “Why is viral cycle time of importance for planning viral marketing efforts?” Thanks for asking that Wendy and this is certainly a slightly more complicated topic. Let’s just quickly start out with virality so everyone’s on the same page.
You’ve heard of; Hotmail, YouTube, Facebook, and Dropbox potentially. These all products which went viral and managed to gain a mass amount of customers with relatively limited marketing, so when we think about the zombie apocalypse and someone bites another person and a person becomes a zombie who bites another person there is a relatively exponential effect which goes on whereby the whole world gets infected. True example of virality and indeed that concept was actually applied to the startup world.
So what is viral cycle time? Viral cycle time is the time it takes for referral to turn into a customer. So, let’s look at an example of this. So, you download an app from someone, you think “Hmm. This seems pretty interesting. Let’s have a play.” And pretty soon you invite your friend Richard who downloads it, installs it, has a play and thinks “This is pretty darn cool too.” That’s it. The full time it takes for someone to get it, refer that and covert that person to a customer too.
What is really happening here while there two real factors which needs to be though of. One is an Aha moment, it’s a moment of happiness when people understand your product and really see the value. Now before they share that there is next thing which is playing in mind this other behavioural factor which is fear. People don’t like looking stupid people, gone are the days of Facebook where you would throw sheep at each other and spam everyone with you know, spam with products. People don’t do that anymore and it’s relatively frowned upon. So, people getting over the fear and understanding the viral preposition thinking “Do you know what? My friends would like this too.” Is something that is really important. So that time for people to get the Aha moment and overcome that fear is obviously going to factor into the time it takes for people to make referrals.
Now, the length of the cycle time doesn’t necessarily have a huge bearing on your business. In frank, there’s going to be certain businesses which regardless are never going to go viral. If you have complicated Enterprise Business where you have systems implementations going on in the year, it doesn’t matter if your friend at Bank of America tells your friend at CreditSwiss who tells a friend at Citigroup. Your cycle time is going to be in the many, many, months just because that’s the nature of the business. And also having said that, a lot of SME businesses will never really go viral simply just because the time for people to implement is a long time. One good example you have is EchoSign which was founded by Jason Lemkin of the SaaStr fame and he said that their viral cycle time was pretty much a year which implied that their K Factor was about 0.2. So, every year they will get an additional customer, which is you know pretty nice; it’s 20% decrease in your CAC.
Generally, SaaS companies are never going to go viral. The only ones that are, are more B2C C2C type products. It’s your social products your; Facebooks, Twitters, your Snapchats which are inherently social and those products have the ability to actually go viral. But these products don’t just go viral overnight, you know you need to have the ability to share in the first place.
Do you make it easy for people to be able to share it to their friends? Do people really understand the value of your product quickly? Do they like your products? Big, big question right?
So, ultimately fixing your cycle time is not simple. Your cycle time is a function of thousands and thousands of things. All these things contributing to people loving a product and when they do decide that they want to share or not if you want to be a bit more spammy that they can.
Take a step back here, virality is different to word of mouth, word of mouth sounds like it’s very similar but one of those people having an implicitly a net promoter score of 9 of 10. You know, their chatting with the parents, their chatting with their friends on Facebook and said “You know what you should totally check out this new startup!” and they tell their friends about it. Virality in a strict sense in my opinion, is an engineered phenomenon; it’s something that your product and engineering teams developed.
So, relating to this question, its not so much something that the marketing team does, it’s more… with product. So virality is not marking strategies that can be executed on strictly by the marketing department, it needs to be built in your product. This is something that really needs to be though out and through by product developers and developed by the engineers. That’s not to say that the marketing team should stay the hell away though, you should be cross functionally integrated with marketing playing a role within that if you actually have a separate team for or if you can afford it.
So, why does cycle time matter for marketing? Well, if you have a Marketing head or department they may ultimately be responsible for growth depending on how you think about your business. Sure, virality needs to be engineered by product engineering but marketing may also take a role on that and if you have made your business plan where you assume you’re going to go viral then it’s important that your team are able to plan for this and if you don’t go viral that you have a backup plan. Because virality may not get you where you need to be and unfortunately if you’re a VC funded they don’t care they still need to have results. You need to know who’s responsible for your growth marketing needs to understand when they can spend money.
To maximise the effect of virality you still need to pump prime your engine with users from somewhere. Right? Virality always has to have at least one person to stand out with. So, marketing is responsible bring those people. If your product is going viral then naturally bringing more people into the other stage the funnel is going to accelerate the rate at which you can grow and critically marketing really needs to spend time thinking about how leaky the funnel is and as to whether or not they’re going to be spending money.
A low cycle time means that things happen really fast, now that might sound like a cool thing but it’s not necessary. So if it takes one day for cycle happen and you have an effect of viral growth factor of, say 2, then every day you’re going to double the number you have. If somehow you manage to have a 5 second cycle time that means that you’re going to double every 5 seconds and if you understand the power of compounding that means your base is going to grow like crazy and this isn’t necessarily good thing as I said. If you have high churn every 5 seconds you could end up losing say a half of all those infected customers and they may never come back to you again.
If you see lack of engagement which is time in app or these other metrics you should be tracking. You know you can see your churn or people uninstalling your app it’s best to actually kill marketing and fix your product. Why? There this is concept called jumping the shark, if churn is high then you can cycle to your user base with a high viral factor. And why is it called jumping the shark? Well, the curve looks like shark fin so if you map out on the x axis time on the y axis you have your users then this will go up very rapidly in a curve and then comes suddenly down and that back of the fin is a terrible place because it just means that the growth that you have is being totally been offset by churn and there’s no new people coming into your funnel and so you’re just churning, either getting a number of users into nowhere. Great example of that is BranchOut which totally capitalise on Facebook but was really far too spammy, cycled through Facebook and ultimately no one was willing to use it again. I remember Mike Butcher who’s editor at Techcrunch posted on his Facebook “If anyone ever sends me a BranchOut request, I’m going to unfriend you.”
Look, there’s can be positive effects too, so let’s say you see that you’ve got a high engagement and higher referrals it’s definitely time to push the product. In very rare circumstances are people going to be truly viral so where you have the right numbers and the right metrics try and push the viralities where you can. Maybe it’s time to put money into the paid marketing, to be aggressively reaching by your email databases all the marketing channels you have, going for that press, get featured in Techcrunch because that massive spike you going to get may actually convert and may even retain your users and leverage on that viral word of mouth effect.
So starting out you may actually want to think about keeping yourself in beta mode at the start if you have viral potential so that you can capitalise on opportunity and not waste it. Early variety can be a killer but virality doesn’t just happen it’s not necessarily something you can just plan for but you have to plan for it by making it happen day by day with every small incremental little product improvement that you can.
So in short the cycle time matters because it increases the velocity at which you will be growing your user base but it only matters in so far as your churn rate is low. That’s the end of the first episode of the AskAlex podcasts, I hope that was useful for you Wendy and here’s looking to the next session. Thanks guys
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