We’ve seen a lot of companies struggle to achieve viral growth: Aardvark, Triangulate, Cake.

What’s going on? Does LTV have a skewed sample, or is it hard to harness viral growth?

by Jeanne Hwang

After three afternoons of work, we got an abysmal 10 sign-ups. The challenge was to create a viral campaign to get as many new members as possible for Gilt’s JetSetter website. Our campaign was to draw travelers into a contest to match photos with a destination, share their own photos and enter a raffle for becoming a member. We knew virality wouldn’t be high, but we thought, “boy, don’t you want others to see your awesome travel photos and share this great opportunity with your best friends?”

The answer was NO. Our viral coefficient was effectively zero (virality (K) = number of invitations sent (i) * conversion %), as new members had no incentive to increase the number of raffle participants, which decreased their chances of winning. It seems obvious now, but we hoped that we could attract most of the new members through our own outbound marketing (Twitter, Facebook, blogs) supplemented by friends who would share with friends because of course you’d want to help out your friends!

In Cake’s case, much of it was due to the inherent nature of the target market (“men in their 40’s just don’t want to share,” as Steve said at lunch). But Jetsetter’s target market and Triangulate’s target market are young, internet savvy consumers. In fact, in Triangulate’s case, dating is an inherently social business, yet I suspect that virality ended with the first cycle of outreach. Sunil said in class that non-single people didn’t want to be associated with a dating site – the wingmen had very little incentive to send out invites to their friends to join Triangulate, as they wanted minimal association with it.

It seems viral growth is only possible when it’s at the juncture point of three scenarios:

If a user shared a raffle link with a friend, their value to the friend would increase, but it would decrease their own chance and thus, the value to themselves.

Asking a friend to rate a hot-potential-date’s-photo on Triangulate would increase the value to the dater, but the friend risks being associated with the dating site by sharing that photo one more time.

This is another way to think of what David Skok states as the key to viral growth, which is to entice them and address their concerns. So the question is, in businesses that have inherent contradictions, is there a way to decrease the effort or the risk, in order to achieve virality?