What is a Viral loop? Types, Benefits, and Examples

Before, when we were not aware of the widespread network of social media. We were afraid of things that go viral because we used to believe that virality was not meant to be a good thing. But things have been changed today.

Now, people want to make their posts, pictures, and videos to get viral. The reason behind it was the change of perception of people for the word “viral.”  Today, “viral” has been linked with almost every marketing goal for generating an internal growth engine for businesses.

Whenever we hear the word viral, our mind thinks of something that has been shared by a lot of people. It can be anything, be it a picture or video that made a massive network between millions of people.  In the business world, viral and referral make a combination of a marketing tool that is known as the viral loop.

Today, every business aspires to become viral in marketing. But getting viral is not a one day show; it requires planning, efforts, commitment, and a lot more.

In this article, we will learn about the viral loop and the best ways to build it. Even we will see how Airbnb, Uber, and Dropbox used it and establish their name.

What is a Viral loop?

A viral loop is a tool that continuously drives referrals for further growth. It is a tool through which you drive your existing customers to refer your brand to others, and in return, you get new potential customers, who also add new people by telling them about you.

It creates a long-lasting chain and leads to the exponential growth of the business—every referral program has the goal of generating viral loop and often experience the same benefits when appropriately performed.

Benefits of developing Viral loop marketing.

The two major benefits of building viral loop are that they are cost-effective and trustworthy.

• Cost-effective: Word of mouth is a free source of advertising; it means when your customers share or refer your product to their friends and family. When this word of mouth is positive, it produces a tremendous result. It leads to a long chain that multiplies the number of customers every time and that too, without spending a penny, apart from the initial investment.

• Trustworthy: According to  Nielsen, more than 90% of people trust the recommendations of their known more than any other source of promotion. Viral loop focus on optimizing this process to make sharing as smooth and open as possible. it is imperative to convert your loyal customers into advocates.

Are Viral loop and Viral Marketing is Same?

A viral loop is similar to viral marketing. Both methods intend to drive continuous sharing, but a viral loop is more focussed on the acquisition of a customer, while viral marketing has the goal of spreading brand awareness.

The type of viral loop we are focussing on in this article is to gain referrals for your business, where customers individually refer friends to your business.

But sometimes, people apply the term “viral loop” to refer to viral marketing. Viral marketing means creating highly shareable content on social media to drive brand awareness.

While viral marketing is less predictable, anyone can design a viral loop if they follow the right approach.

Types of viral loop

All viral loop have the same structure, but you need to decide which kind of viral loop you want to build – necessarily, how you will motivate users to refer. Here are some examples:

1. Savings:

A money-saving offer can drive the referrer. You can offer them a discount or free product. A good discount can encourage them to refer you.

2. Friendship/assistance:

Sometimes, people refer to others because of their friendships or relations. And people do it for others’ happiness.

3. Value

Referrers can be given to both the referrer or the referee. People feel encouraged when they and their friends both get the benefits. For example, Uber, in its referral program, both the referrer and the referee, will get incentives like a free ride.

4. Charity:

The referrer feels encouraged to share because the brand commits to contribute to a charity for every referral they make.

Components to successfully build Viral loop marketing

When building your viral loop marketing program, it is significant to ensure that you have a well-planned funnel and referral framework in place before you start operating and optimizing your campaign. A few things you should keep in mind are 

• Make sure that the incentive you are offering is not only valuable to the customers but also cost-effective for the company.
• Offer both side rewards to make them referrer as well as his friend happy, and it will lure them to add more customers.
• Design cumulative rewards so that users can keep earning rewards every time they successfully refer a friend.
• Decide your loop’s entry points (where and when users need to be invited to the referral program). For example, will users be invited to refer right after they make a purchase? How will you ask them to be part of the viral loop marketing?
• Make sure it’s accessible for customers to find it and use simple steps for the referral program.
• Analyze and experiment with every step of the viral loop to lead your referral program effectively.
• Continuously optimize your loop for the best results. Remember, A/B testing should not be a one-time thing.

If you’re not sure how to start or which KPIs are to analyze in your experimentation, I advise you to take a glance at your pirate metrics. Pirate metrics are an excellent way to classify your KPIs depending on which aspect of the customer lifecycle you want to measure and then divide them into five categories – activation, acquisition, retention, revenue, and referral.

How to analyze your viral loop marketing

There are various elements to consider while analyzing your viral loop.

1. From which channel user users come? And which channels generate the most potential users?
2. Which channels to be added to enable users to refer their friends (SMS, social media accounts, in-app, etc. ?)
3. Should you use the same text or positioning for every program or not?
4. What kind of incentive will lure more customers?
5. What kind of users are more likely to refer? Should you consider those customers you have purchased multiple times?
6. Track key metrics: How many customers have successfully recommended the loop, And how many sustained for a long time?

Examples of useful viral loop

Let’s check a few viral loop marketing programs and why they have been considered effective.

1. Dropbox

Dropbox is a cloud-based data sharing service and, by far, the best referral program of all time. There is a reason behind this: the referral program they have launched got viral and generated around 30 crore, new customers, that too in the initial stage( first 30 days). Now, you must be wondering what made the Dropbox program so effective. 

When Dropbox launched it, it was one of those companies that have approached its advocates in a way that it was easy for them to share with their Gmail contacts- that makes it more accessible.

Dropbox used both side reward programs – in which whenever you share the link with a friend, and they get registered, then both received 500MB of free storage space. It was a pleasing experience for all parties involved. Moreover, to enhance their chances of maximizing each advocate’s reach, the company formed a points system where users could earn up to 1GB of free space.

2. Uber

Uber was launched in 2009; a lot of people loved the idea of getting a car whenever they wanted to go anywhere. Now, after eleven years, Uber is a household name and accessible in over 65 countries. While Uber’s real victory was caused by revolutionizing the traditional taxi industry, the way it built trust and converted everyone through referral programs in which they got discounts and free rides.

Because Uber works as a middleman between efficient drivers and daily riders. Uber has launched a referral program for riders. Whenever a new user signs up for Uber. He receives a free credit to experience their first ride. After the first ride gets completed, they receive a notification to share Uber with friends using a personalized link. When a referral signs up using your link, you and your friend will each enjoy free credit for the next ride.

3. Airbnb

Airbnb is a touring platform that connects owners who want to utilize their space for travellers looking for a place to stay. Airbnb had changed the idea of hospitality. And for doing, it buckled down on building a community through trust and goodwill. Focusing on this basis of trust, they began their process of creating a referral viral loop.

Airbnb’s launched both sided reward incentives, but that didn’t work. But they reviewed the hard data, and marketers found that the referral program had created a positive impact, and its benefits could be generated more effectively.

Airbnb tried A/B tested methods for different call-to-actions (CTAs) to see if people responded differently to receiving $25 themselves or giving $25 to a friend. After testing, the company found that the “offering” message was more productive, and was able to carry that data forward.

During the referral program design process, Airbnb kept the locus on hard data, collecting it at every step of the viral loop and using it to make informed decisions.

Airbnb would measure the effectiveness of its campaigns through such KPIs as:

• Rate of conversion of new users
• The conversion rate of new hosts
• Number of referrals generated per customer
• Rate of conversion of new guests
• Monthly active users sending invites
• Impact on revenue
• The medium of referrals (email, social media, etc.)

Finally, Airbnb, through repeated testing, sharply increased the number of guests staying at its premises, from 21,000 in 2009 to over 500 million today.

Wrap up

In this article, we have seen the fundamentals of viral loop, and now, it’s time to design a viral loop for your business and drive referrals. Plan your program and analysis every step, check which types of incentives you can offer and which channel will lead your referral program to success.

Keep learning and experimenting.