The power of viral expansion loops when building robust social networks
When we build social networks, we are gathering groups of like-minded people together for a reason. That reason may be that we want to monetise that social network by advertising to them, or to sell them services, apps or products on line. Another reason that we build social networks is to manage relationships with people around a common interest, this may be brand building for a motor vehicle brand, or employee relationship management for a large bank. Whatever the purpose, a social network will be most successful when we have the highest penetration of suitable members possible, active within the social network.
Network Effect
The concept of the “network effect” relates to the fact that the more members there are in a network, the more value that network has for the individual member. The quintessential example is the phone. If only two people have a phone, the phone has less value to you than if thousands of people have phones, because you can contact so many more people.
Online social networks are subject to the network effect, if there are too few people in the network it will not have any value to the individual member and they will abandon the network pretty quickly. Therefore, when we build social networks, we want to populate them as rapidly as possible, so that people can derive value by networking, sharing, communicating, collaborating or conducting business.
Viral Expansion Loops
Viral expansion is when the members of a community actively recruit new members and is an extremely effective and cost-efficient way to build powerful social networks.
A “viral expansion loop” occurs when virality is incorporated into the function of the product, in other words a company grows because each user begets new users, just by using a product they spread it. This concept is explored in detail in a fantastic book by Adam Penenberg (2009), called “Viral Loop The power of pass it on”. In the book Penenberg says “What’s the sense of being on Social Media if nobody uses it?”. The value of the community is inherently incorporated in its size.
Tupperware was one of the first viral businesses. When one housewife hosted a Tupperware party for six of her friends, they were each given the opportunity to host a Tupperware party for another six friends and so on. This viral distribution network proved more effective and created more sales for Tupperware than any organised retail chain.
Viral Coefficients
One of the ways to build robust social networks is to focus on the “viral coefficient”. The viral coefficient is the ratio with which community members attract new community members. In other words, on average, how many additional members does each network member recruit?
If the social network’s viral coefficient is less than one, it will be self-contained and very soon will stop growing. For example, if the viral coefficient is 0.5 and there are 20 people in the network, then they will invite an additional 10 people who themselves will invite another 5 people who themselves will invite 2 people who invite 1 person. We can see with a vital coefficient of less than one that the network plateaus very rapidly at 38 people.
If the viral coefficient equals one the, 20 people invite 20 people who invite 20 people and we see a linear growth pattern from 20 to 40 to 60 to 80 in total in round four.
The real secret to growing social networks is to cultivate a viral coefficient of greater than one. Let’s assume that the viral coefficient is two then 20 people invite 40 people who themselves invite 80 people who invite 160 and so forth. By the fourth round, we have 300 people on board.
We see exponential growth in viral networks with viral coefficients higher than one, and the higher the coefficient the exponentially higher the growth. Just by doubling the viral coefficient from 2 to 4 we see that the social network grows by 80 to 320 to 1280 and in the fourth iteration we have 1700 members. In other words, having a viral coefficient is the equivalent of compound interest in the world of social networking.
Measuring Viral Coefficients
So how do we increase our viral coefficient? Well there are basically three ways;
- Make is useful for members to spread the message;
- Make it easy for them to spread the message; and
- Make them look good for spreading the message.
Offline examples of this include multi-level marketing with products where members actively encourage their friends to come on board in order for them to sell more. An example could be a charity whose members actively recruit more people to donate money to a good cause, or a political party raising funding for a campaign.
Another example is the “Wishlist” on Amazon Books. Making it easy for members to bring more members on board. There are a number of ways to do this, clearly an “invite friends” button which automatically eMails friends the link to the social network is easier than expecting the person to type in the URL.
At Digital Bridges we have a saying “The more virtual you are, the more real you need to be”. The same holds true for social networking. People still network socially in the real world, you could use a real-world networking tool, such as a business card, to bring people into digital communities.
Special interest networks
This should be the easiest part if you have bespoke special interest social networks. You need to create content and encourage your users to create content which appeals to like-minded people within the network and let them share it with their friends, peers and colleagues.
So, for a scientist social network you might post some provocative comments about the ISS which they can respond to and share with their friends. On a joke website they could forward the latest joke to potential members.
A word of caution
It is important to remember that particularly in South Africa, we don’t have sufficiently large, digitally literate communities to become self-sustaining and that although we need to focus on maximising the digital coefficient in order to approximate saturation, we also need to have dedicated resources managing these social media networks to reduce churn at the same time as raising the viral coefficient.
