There’s a great and growing corpus of writing about viral loops, the
step-by-step optimizations you can use to encourage maximum growth of
online products by having customers invite each other to join. Today, I
was comparing notes with Ed Baker
(one of the gurus of viral growth). We were trying to broaden the
conversation beyond just viral customer acquisition. Many viral
products have flamed out over the years, able to capture large numbers
of users, but proving transient in their value because they failed to
engage customers for the long-term. Our goal is to understand the
metrics, mechanics, and levers of engagement.
Levers of engagement
Let’s start with the levers of engagement. What can you do to your product and marketing message to increase engagement?
- Synthetic notifications. The
most blunt instrument is to simply reach out and contact your customers
on a regular basis. This is such an obvious tactic that a surprising
number of companies overlook it. For example, IMVU
runs frequent promotional campaigns that offer discounts, special
events, and other goodies to its customers. From a strictly
“promotional marketing” point of view, they probably run those
campaigns more than is optimal (there’s always fatigue that diminishes
the ROI on promotions the more you use them). But there is a secondary
benefit from these activities: to remind customers that IMVU exists,
and encourage them to come back to the site. The true ROI of a
synthetic notification has to balance ROI, customer fatigue, and the
engagement effects of the campaign itself.
When you live with
your own product every day, it’s easy to lose sight of just how busy
your customers are, and just how many things they are juggling in their
own lives. A lot of engagement problems are caused by the customer
completely forgetting about the provider of the service. Direct
notifications can help ameliorate that problem. - Organic notifications. Facebook, LinkedIn,
and other successful social networks have elevated this technique to a
high art. They do everything in their power to encourage customers to
take actions that have a side-effect of causing other customers to
re-engage. For example, from an engagement standpoint, it’s a pretty
good thing to automatically notify a person’s friends whenever they
upload pictures. But it’s exponentially more engaging to have each
person tag their friends in each picture, because the notification is
so much more interesting: “you’ve been tagged in a photo, click to find
out which one!” Similarly, the mechanics of sending users notifications
when new friends of theirs join the site is a great organic
re-engagement tactic. From the point of view of the existing customer,
it goes beyond reminding them that the site exists; it also provides
social validation of their choice to become a member in the first place.
As
with synthetic notifications, organic notifications are subject to
fatigue, if they are not used judiciously. On Facebook, “poking” seems
to have fairly high fatigue, whereas “photos” has low (close to zero?)
fatigue. Ed adds this account: “When I first joined Facebook, I used to
poke my friends and get poked back for the first few weeks, but now I
rarely, if ever, poke people. Photos, on the other hand, is probably
the primary reason I go to Facebook every day. Because they are
constantly new and changing, I doubt I will ever get tired of looking
at my friends photos, and I will probably always get especially excited
to see a new photo that I have been tagged in.” - Positioning (the battle for your mind).
The ultimate form of engagement is when the company doesn’t have to do
anything explicit to make it happen. For example, World of Warcraft
never needs to send you an email reminding you to log in. And they
don’t need to prompt you to tell your guild-mates about the new epic
loot you just won. The underlying dynamics of the product, your guild,
and the fun you anticipate takes care of those impulses. This is true,
to a greater or lesser extent, for every product. After you’ve acquired
a customer, why would they bother to come back to your service? What do
they get out of it? What is going on in their head when that happens?
I wrote about this challenge for iPhone developers, in an essay on retention competition:
the battle over what icon the user will click when they go to the home
screen. At that point, there’s no opportunity for marketing or sales;
the battle is already won or lost in the person’s mind. It’s analogous
to walking down the aisle in a supermarket. Just because you’re already
a Tide customer, doesn’t necessarily mean you’ll always buy Tide again.
However, if you’ve come to believe that Tide is simply the only
detergent in the world that can solve your cleaning problems, you’re
pretty unlikely to even notice the other competitors sitting on the
shelf. Great iPhone apps work the same way.
Marketing has a
discipline about how to create those effects in the minds of customers;
it’s called positioning. The best introduction to the topic is Positioning
(I highly recommend it, it’s a very entertaining classic). But you
don’t have to be a marketing expert to use this tactic; you just need
to think clearly about the key use cases for your product. Who is using
it? What were they doing right before? And what causes them to choose
one product over another? For example, a common use case for teenagers
is: “I just got home from school, I’m bored, and I want to kill some
time.” If your product and its messaging is all about passing time
while having fun, you might be able to get to the point where that is
an automatic association, and they stop seriously considering other
alternatives. That’s exactly what the world’s best video games do.
Seeing the engagement loop
We’re
just starting to weave these techniques into a broad-based theory of
engagement, that would complement the work that has been done to date
on viral marketing and viral loops. Notice that all of these techniques
are attempting to affect one of a handful of specific behaviors that
have to happen for a product to have high engagement. Do these sound at
all familiar?
- A customer decides to return to your product, as a result of either natural interest, or a notification (organic or synthetic).
- They decide to take some action, perhaps influenced by the way in which they came back.
- This action may have side effects, such as sending out notifications or changing content on a website.
- These side effects affect other customers, and some side effects are more effective than others.
- Some of those affected customers decide to return to your product…
This
is essentially a version of the viral loop. Let’s look at a specific
example, and start to think through what the metrics might look like if
we attempted to measure it:
- Customer gets a synthetic message saying: “upload some photos!” Some percentage of customers click through.
- Some percentage of those actually upload.
- Those
customers get prompted to tag their friends in their photos. Some
percentage of them do (A), and these result in a certain number of
emails sent (B). - Each friend that’s tagged gets an email that lets them know they’ve been tagged. Some percentage of them click through. (C)
- Of those, some percentage are themselves convinced to upload and photos. (D)
Calculating the “engagement ratio”
If
we combine the quantities A-D using the same kinds of formulas we use
for viral loop optimization, and the result is greater than one, we
should see ever-increasing engagement notifications being sent. This
will lead to some reactivation of dormant customers as well as some
fatigue, as existing customers get many notification. Our theory is
that the key to long-term retention is creating an engagement loop
where the reactivation rate exceeds the rate of fatigue. This will
yield a true “engagement ratio” that is akin to the viral ratio.
This
makes intuitive sense, since the key to minimizing fatigue is to keep
things new, exciting, and relevant. For example, user-generated content
that includes of friends, especially if it includes you (“Joe tagged
you in a photo. Click here to find out which one!”) is usually going to
be newer, more exciting, and more relevant than synthetic notifications
(“Did you know you can know upload multiple photos at a time with our
new photo uploader?”), or even than more generic organic notifications
(“You’ve been poked by Joe.”). High “engagement growth” with low
fatigue is how you get the stickiness of a product to near 100%. You
can try to churn out, but your friends keep pulling you back in. That’s
an engagement loop at work.
Seeing the whole
Engagement
loops are a powerful concept all by themselves, and they can help you
to make improvements to your product or service in order to optimize the drivers of growth for your business.
But I think the value in this framework is that it can help make
overall business decisions that require thinking about the whole rather
than just one of the parts.
For example, let’s say you have a
viral ratio of 1.4. Your site is growing like wildfire, but your
engagement isn’t too good. You decide to do some research into why
customers don’t stay involved. When asked to describe your product,
customers say something like “Product X is a place to connect with my
friends online.” Turns out, when optimizing your viral loop, this was
the winning overall marketing message. It’s stamped on your emails,
landing pages, UI elements – everywhere. Removing a single instance of
that message would make your viral ratio go down, and you know that for
a fact, because you’ve split-tested every single possible variation.
As
you talk to customers, you notice the following dilemma. Customers have
a lot of options of places to connect with their friends online. And,
compared to market leaders like Facebook and Myspace, you discover that
your product isn’t really that much better. Consequently, you are
losing the positioning battle for your customers when they get home
from school and ask themselves, “how can I connect with my friends
right now?” Worse, your product isn’t really about
connecting with friends; that’s just the messaging that worked best for
the viral loop, where customers aren’t that familiar your product
anyway.
To win the positioning battle, you could try and make
your product better than the competition, or find a different
positioning that allows you to be the best at something else. Let’s
assume for the sake of argument that your competitors offerings are
“good enough” and that you cant’ figure out how to beat them at their
own game. So you decide to try to reposition around a different value
proposition, one that more closely matches what your product is best
at. You could try and drive home that positioning with an expensive PR
campaign, superbowl ads, and whatnot. But you don’t have to – you have
a perfectly good viral loop that is slowly but surely exposing the
entire world to your positioning messages.
Here’s what this long
example is all about. When you go to change your messaging, imagine
that your viral ration drops from 1.4 to 1.2. Disaster, right? Not
necessarily. Since your viral ratio is still above one, it’s still
getting your message out, albeit a little slower. But if your new
positioning message improves your engagement loop by more than the cost to your viral loop,
you have a net win on your hands. Without measuring your engagement
loop, can your business actually make tradeoff decisions like this one?
Connecting engagement and viral loops
The
two loops are intimately connected, in a figure-eight pattern.
Customers exit the viral loop and become part of the engagement loop.
As your engagement improves, it becomes easier and easier to get
customers to reenter the viral loop process and bring even more friends
in. And as in all dynamic systems, there’s no way to optimize a sub-part without sub-optimizing the whole.
If you’re focused on viral loops without measuring the effect of your
changes on other parts of your business (of which engagement is just
one), you’re at risk of missing the truly big opportunities.
Hopefully,
this theory will prompt some interesting responses. We’d love to hear
your feedback and hear your stories. Have you struggled with engagement
and retention? What’s worked (and not worked) for you? Share your
stories, and we’ll incorporate them as we continue to flesh out this
theory. Thanks for being part of the conversation.
(Image source: farm3.static.flickr)
