VOCINOLABS

Customer Acquisition& Viral Marketing

Viral marketing is not a marketing strategy.

‣ Develop your product

‣ Plan how to make people use it

‣ Declare viral marketing is one of n approaches(along with SEO, SEM, PR, etc)

Forget about adding "viral" to your marketing to-do list after your product is already on the market.

You need to bake it into your business model from the very beginning.

CPA + COSmust be lower than

Lifetime Value

Sustained Viral Growth

‣ Have an awesome product(ideally in communication or social content)

‣ Convert user growth ideas into Excel-based hypotheses and clear user funnels

‣ Build and track each step of your funnels

‣ Get initial stream of traffic(Adwords is a great start)

‣ Optimize until every user is bringing in at least one new user

‣ No single feature determines the viral factor of the product.

‣ Instead, it’s part of a viral loop that connects a set of functions into a cohesive motivation for the user to tell their friends/network.

‣ If the fundamental product doesn’t drive a viral motivation from its users, then it’s very difficult to force it.

We have Product X, how do we virally spread it like freaking crazy!?@#$

We have Viral Loop X, what’s the right product to fit into it?

‣ Not really something in the domain of PR, advertising and marketing people.

‣ Nor in the world of hardcore technical peeps that can architect systems but not consumer interactions.

‣ Understanding the motivations behind user behaviors

‣ Understanding and exploiting the technical loopholes to create viral loops

You’re not simply depending on making something really cool so

people spread the word.

You’re making something automatic.

‣ Sources of traffic

‣ Landing page views

‣ % of users that register

‣ % of users that send out invites

‣ # of invites sent out, per user on average

‣ % of invites delivered successfully

‣ % of invites read by users

‣ # of virally added users, per user on average

Viral Loops

‣ What things do people share and what tools do they use for communication?

‣ Files, wikis, contacts, links, information, show-offs

‣ These are your viral channels(vs. news feeds, Facebook notifications, etc.)

‣ If your value proposition can align with a channel, then you might make it viral

‣ Case study:

‣ First encounter is embedded on some other page

‣ If you like it, embed it yourself.

‣ Otherwise, more relevant videos available.

‣ E-mail, Facebook newsfeed, blogs, etc.

‣ How difficult is it to integrate into their surface and what’s the response rate?

‣ If response rates are low, that means huge difference in outcome.

What’s your viral media?

‣ As short and accessible as possible.

‣ Each page is a barrier to leap.

‣ Assume a percentage of attrition for registration complexity.

‣ 2-3 Pages at the most.

What’s your funnel design?

Register Use Evaluate Share

Register Share Use Evaluate

‣ Bad product will adversely affect viral experience

‣ Deep personal expression works best (music, avatar, slideshow, etc)

‣ Communication mechanism (voice, text, etc)

What’s the viral hook in your product?

‣ Your site

‣ User profile

‣ User dashboard

‣ Between two other steps

‣ Before evaluation, if possible

What are the onramps?

Value Propositions for Viral Loops

Best value proposition is like

‣ Great for both parties(incentive and value for inviter and invitee)

Worst value proposition is like

‣ Little to no value for either party(lots of chum, feels very spammy)

Apps

Viral Loopsfor You & Your Clients

‣ Social Proof: Quizzes, Badges, Founding

‣ Reciprocity: Top friends, eCards

‣ Scarcity: 8 invites left!

Paid User Acquisition

‣ Start with your laundry list of acquisition ideas

‣ Search, “tell a friend”, Twitter, Facebook, etc.

‣ Convert into 2 or 3 testable hypotheses

Buy users at $1

Monetize at $5

20% of registered users will import address books

Less than 5 of their friends will register

‣ CPM = Cost per Thousand

‣ CPC = Cost per Click

‣ CPA = Cost per Acquisition

‣ COS = Cost of Service

‣ LTV = Lifetime Value

Everything rolls back to how much it costs you to have a

registered user.

CPA + COSmust be lower than

Lifetime Value

‣ Cost per Acquisition

‣ Efficiency of media (traffic sources, CTR, Impressions)

‣ Signup funnel conversion %

‣ Average viral invites sent out

‣ Cost of Service

‣ Infrastructure (servers, bandwidth, storage)

‣ Employees?

‣ Support?

‣ Lifetime Value

‣ Retention metrics

‣ Revenue mix

‣ Viral factor

Source Ads CTR Clicks Signup % Action % Users Cost CPA

G 1M 0.5% 5k 20% 50% 500 $5k $10

Ad 20M 0.10% 20k 10% 50% 1k $20k $20

G = Google AdwordsAd = Advertising.com

Type Options Importance

Source of Traffic Ad networks, publishers ++

Cost model CPM, CPC, CPA +

User requirements Install, plug-in, flash +++++

Audience and theme Horizontal vs. vertical ++

Funnel design Landing pages, length, fields +++

Viral marketing Facebook, OpenSocial, email +++++

A/B testing process None, homegrown, Google +++++

‣ How are you paying for traffic? (CPM/CPA/CPC)

‣ What do the intermediate metrics look like? (Impressions/CTR/etc)

‣ How does your signup funnel perform?

‣ How much are you spending for the users you end up registering?

Optimize Funnels by Brainstorming Levers

‣ Newly registered users come in (both paid and viral)

‣ Some % of these users convert into paying users

‣ Some % of these users send off viral invites

‣ Revenue is generated by building up a base of paying users

‣ Cost is generated by building up a base of active users (paying or not)

‣ The placement of the button?

‣ The color of the button?

‣ The fact that’s it’s a button and not a form?

‣ The fact that it’s “Add to your network”rather than “Add a friend”

Optimization isn’t obvious.

the ultimate leveris retention

LTV =rev + rev*R + rev*R^2 + rev*R3 + …

LTV = 1/(1-R) * rev

At a 50% retention rate:LTV = 1/(1-0.5)*$1*1000 = $2000

At a 75% retention rate:

LTV = 1/(1-0.75)*$1*1000 = $4,000

‣ Product design

‣ Notifications (optimize, optimize, optimize)

‣ Ease of use (kill frustration whenever possible)

‣ Saturation effects

reinvest in acquiring more

users

‣ Paid user acquisition is usually an upfront expense whereas the revenue comes in over time

‣ Your revenue per paying user depends on a mix of revenue sources

‣ You pay “cost of service” across all users, paying, free, visiting, etc.

Further Reading& Research

‣ “Viral Loop”Adam Penenberg

‣ “Influence: The Psychology of Persuasion”Robert Cialdini

‣ “Landing Page Optimization”Tim Ash

‣ “Metrics for Social Games”David King & Siqi Chen