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How to Scale: Viral Loops 101

by Vincent Chan on Jun 10, 2009

viral loop

A “viral loop” is one of the most powerful ways to scale a web business. You may not know what it is but almost everyone have been influenced by its effect.

Definition of Viral Loops

So what are these viral loops? I think the best definition is the one defined by Andrew Chen from Futuristic Play:

[They are] the steps a user goes through between entering the site to inviting the next set of new users

Sounds like very simple? But it’s definitely not easy. They are powerful tactics behind some of the Internet giants, including Google, PayPal, YouTube, eBay, Facebook, MySpace, Digg, LinkedIn, Twitter, and Flickr.

Have you ever seen Facebook/iPhone applications acquiring MILLIONS of users in just days? If you do, then you have witnessed the power of viral loops.

Now, think about it. Have you ever seen such an amazing growth and user adoption for ordinary brick and mortar businesses? Not to mention web businesses are doing that at almost no cost.

Viral Loops in Action

This strategy is sort of like chain letters, pyramid schemes and multi-level marketing in the offline world, but we are putting it to good use. 🙂

How does it work? One of the most famous examples would be Google AdSense:

google-adsense1

First, a site owner posts Google AdSense on his/her site. Then when their users visiting, they will see the AdSense box. If they click the link “Ads by Google”, they will be forwarded to a page showing them how to sign up for the AdSense program. If they are site owners as well and want to earn more money, they will join the program. So suddenly, Google Ads show up not only in their own search result pages but also in millions of sites using Google AdSense to monetize their contents. This is the reason why every web sites develop their own widgets nowadays.

Another common practice is using the “Viral Sign Up/Invite Loop“. Let’s take a look at what LinkedIn has done.

linkedin-signup1

Click

Click the picture above to see the full size on Product Planner

These are their invite and sign up flow steps:

  1. A user receives an email invite
  2. Viewing the email invite (usually from friends)
  3. Then clicks the email invite link
  4. Fills out the sign up form because it is suggested by friends
  5. The user clicks the next button after filling out the basic info
  6. The site then let the user finds existing friends in the network
  7. If his/her friends were not a member yet, invites them to join the network

This loop goes on forever. To me, I will never invite friends to join a site using the above feature because it is kind of like spamming my whole contact list. However, many people seem not to care about that as this tactic has done very well for sites like, LinkedIn, MySpace and all the applications on Facebook. If you get a good portion of the market share, the majority of users will not remember whether you have spam people before.

Viral Loop Features

Besides the Sign Up/Invite loop, other related product features include:

  • Challenge Flow (especially in gaming)
  • “Tell a friend” or “Share” links
  • Add to Digg, Delicious, Yahoo Buzz links
  • Address book importing
  • Widgets

If you want to see more live examples, Product Planner by KISSmetrics is a good resource for you. Its gallery is awesome.

Nevertheless, having these features alone do not automatically create a viral loop for your site. If your product is suck, no one will tell their friends about it. Like Andrew Chen said:

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

Viral Loop Channels

After designing the product features and user flows, you have to choose a suitable network for targeted users entering your loop. The channel can be email, blog, Twitter updates, MySpace profiles, MySpace bulletings, Facebook newsfeed, Facebook invite request…etc.

Andrew Chen believes integration and response rate are the major factors to evaluate a viral network. Also, Jia Shen, co-founder of RockYou reminded us that in every network, the response rate is always the highest when it is brand new. Then it will drop over time because of increasing competition. For example, people were excited about every applications on Facebook in the beginning but right now, those application invites are some of the most annoying messages in the world.

In the early days, Hotmail was a pioneer in using email to create viral loops. They placed a link at the bottom of every email, offering the recipient the ability to set up his/her own Hotmail account. 30 months later, their user base went from zero to 30 million.

One thing is unique about the Facebook channel is that their newsfeed is actually pushing data to you, including those application invites and updates. So users do not have to go to others’ profile page to see the entry point of the viral loop. They can easily enter the loop every time they log into their accounts. No wonder the co-founder of RockYou said:

Facebook has the only platform where acquiring 40K users in two days is our expectation.

Conclusion

Although this strategy is so powerful, it will backfire on you if you used it too often, didn’t care about the user experience or created a really bad product, just like what happened to Plaxo in the past. This will not only hurt your brand and reputation but also give your potential customers a really bad first impression.

According to Fast Company, viral loops are able to create an environment that is almost infinitely scalable in theory. They allow the users to do most of the works for the site. Inviting friends, creating contents, organizing the network…etc.

Ning, an online platform for people to create their own social networks, was designed to utilize viral loops in February 2007. Today, there are more than 230,000 social networks created by their users.

Is your business ready to exploit this power of compounding and predictable growth yet?

Must Read Resources
  1. Ning’s Infinite Ambition @Fast Company
  2. Q & A with RockYou – three hit apps on Facebook, and counting @VentureBeat
  3. What’s your viral loop? Understanding the engine of adoption @Futuristic Play
  4. Viral marketing is not a marketing strategy @Futuristic Play
  5. What is viral marketing? @Seth’s Blog
  6. User Flow Gallery @Product Planner

Photo source: Seb Przd@Flickr


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