Virality and Network Effects
What does it mean to “go viral?” It’s not just when your cat video appears on the front page of YouTube or Reddit. What it really means is that you have optimized the time it takes for a customer to refer or invite new people to check out your product. This, in the biz, is known as a viral loop.
These viral loops happen like this:
- A customer organically discovers your product or service and likes it
- This customer then shares your product or service with other people who haven’t heard of your product or service
- This new customer likes your product or service and tells another new person, who, in turn, buys your product or service
The more people who share your product, or who become customers, the better the viral loop will be. To measure the success of your viral loop, you can use something called a viral coefficient.
Viral loops are pretty common in online places like LinkedIn and Facebook, but you have to make sure that there is an increase in value for each new customer that uses your product or service. These network effects are very important, though they are not the same as virality.
There are many things that can have a viral effect without having a network effect. For example, Buzzfeed and Upworthy could certainly be categorized as companies that focus on virality, but they do not actually have a lot of network effects.
On the flip side, products that have network effects often don’t have viral effects. Keep in mind that any marketing channel that we have discussed here can bring people into a network effect. For instance, a college student ready to graduate might use Facebook to get a job, or a B2B marketplace might use content marketing to attract a new audience.
Now, I also want to tell you that creating these loops and effects is difficult. You can’t even really create a viral loop or force something to go viral. What you CAN do, however, is to create products that are:
- Social in nature
- Target extroverts
- Have a high retention rate with daily use
- Invite visiting a new channel with a good pitch
- Apply to many different people in an organization, so that anyone can use it
Network effect products should also have certain features that are built into the product in order to create this effect. Remember this: a network is not valuable to you if no one is using it. Consider this. Was the first ever fax machine useful to the first person who bought one? What about those who bought the first 100 fax machines? Unless they are faxing each other, there is no value there.
Viral loops and network effects are, of course, valuable. In fact, it is said that up to 70 percent of the value in tech comes from network effects. Both of these methods can bring in new customers, but the challenge is attracting them to your product.
Here are some strategies that you can use to apply both virality and network effects on your marketing channel plan:
- Use a tool that works without a network effect to attract customers, and then keep these customers engaged within the network
- To improve your referral campaigns, offer a reward to anyone who participates. They don’t have to be huge rewards, either.
The Different Types of Marketing Channels
Now that you have information about the above marketing channels that can help to bring in 1,000 or more customers, let’s go a bit deeper.
There are two different types of marketing channels:
First, we have those marketing channels that are scalable in nature. When these are used correctly, you will experience growth without putting in a lot of work.
There are four different marketing channels that are very scalable out of those I have presented above. They are:
- Business Development and Partnerships
- Search Engine Optimization (SEO)
- Virality and Network Effects
- Paid Advertisements
There are also marketing channels that are not scalable by themselves. It is possible to make them scalable, however, but for all intents and purposes, they are not for this article.
To scale a non-scalable marketing channel, you either have to use them along with a scalable marketing channel, or outsource, automate, or hire people to make them scalable.
The non-scalable marketing channels that we have discussed here are:
- Social Media
- Community Marketing
- Email Marketing
- Content Marketing
Now, you might be wondering why you should choose a marketing channel that is not scalable. This is a great question!
First, there is the fact that most scalable channels will require a non-scalable channel for it to work. For instance, if you want to improve your SEO, you can use content marketing to help.
Second, those scalable channels are more difficult for most people to master.
Anyone can write an article and publish it online, for instance, but actually getting people to read it and for it to rank in Google is another story altogether.
Third, these non-scalable channels make it easier to bring in new customers. Once you get the basics in place, it can be much easier to get more customers in less time with non-scalable channels instead of scalable ones.
Finding the Best Marketing Channel Strategy to Bring in Customers
I’ll be honest. Your opportunities for growth are amazing.
However, it is not easy to know which marketing channels are going to bring in more customers. Your team’s skills, your budget, and even the market conditions can change or influence which marketing channel is best. Also, remember…what might work well today might not work well next month or next year.
You also don’t want to jump into all of these at one time.
So, how do you know which ones to try first?
You can start by using something called the ICE Framework.
What is this?
Everything that you go for comes with a cost. At some point, when you go for one marketing channel, it will prevent you from going for another. So, which one should you go for first?
I recommend using this ICE Framework. ICE stands for:
- Impact to your revenue if it is successful
- Confidence that your actions will be a success
- Ease of setting up the marketing campaign
First, you should create a team who want to share their marketing ideas. You shouldn’t limit this to people who have a background in marketing…anyone can have great ideas.
Second, have this team brainstorm and make a list of any marketing ideas you can think of. Don’t worry if some of these sound pretty outrageous…add them anyway.
Third, you should give these ideas a score from 1 to 5 based on the Impact, Confidence, and Ease.
Finally, take the average score for each idea, and then organize them by the highest ICE score. Those at the top are the ones that you want to focus on.
In order to really improve your marketing strategy, you can think of any and all marketing campaigns as being like a science experiment. Even if your campaign fails, you can certainly get some good information out of it. Then, you can use it to show you what to do…or not to do…next time.
It doesn’t matter what your goals are. You can apply this to anything. Remember, you won’t know what works and what doesn’t without trying it and learning lessons from your failures.
All of the lessons that you learn here will only set you up for the future, and that’s when you can really create a marketing machine.
So, go out, start marketing, and bring in those first 1,000 customers.