The Viral Loop
What is the viral loop?
The viral loop is a type of growth loop that relies on word-of-mouth marketing to acquire new users or customers. This involves incentivizing existing either free users, or paid customers/subscribers to invite their friends and contacts to join the platform or use the product. The invited users then become new users, who can then invite their own contacts, and so on, creating a chain reaction that can lead to exponential growth.
The viral loop usually involves some sort of incentive or reward for the user who invites others to join, such as a discount, free trial, or bonus features. This incentive motivates existing users to share the platform or product with their friends and contacts, which can lead to a large number of new users being acquired at a low cost.
The key to the viral loop is that each new user brings in additional users, creating a self-sustaining cycle of growth. However, it is important to note that the viral loop is not a standalone growth strategy and must be used in conjunction with other growth loops to create sustainable growth.
Five, very well known, examples of companies that used the viral loop are:
Dropbox: Dropbox is a cloud storage service that allows users to store and share files. The company used a viral loop strategy by incentivizing existing users to invite their friends to join Dropbox in exchange for more storage space. This led to rapid user acquisition and helped the company grow to over 500 million users. It’s a case study that is still relevant to company growth today.
Airbnb: Airbnb is an online marketplace that connects travelers with people who are willing to rent out their homes or apartments. The company used a viral loop strategy by offering travel credits to existing users who invited their friends to sign up for Airbnb. This incentivized users to share the platform with their social networks, which led to rapid user acquisition and helped the company become a global brand.
PayPal: PayPal used a viral loop strategy by offering a referral program that rewarded existing users with cash incentives for inviting new users to sign up. This led to rapid user acquisition and helped the company become the dominant player in the online payments industry.
Uber: Uber used a viral loop strategy by offering free rides to existing users who referred their friends to sign up for Uber. This incentivized users to share the app with their social networks, which helped the company rapidly expand to new markets.
TikTok: TikTok is a social media app that allows users to create short-form videos set to music. The company used a viral loop strategy by encouraging users to share their videos on other social media platforms, such as Instagram and Snapchat. This helped to create buzz around the app and led to rapid user acquisition, especially among younger demographics.