K-Factor

What is k-factor?

K-factor is a metric used to measure the virality or growth potential of a particular social network. It is usually calculated by analyzing how many new users are invited or referred by each existing user.

In simpler terms, K-factor measures how many new users join a social network as a result of the actions of its existing users, such as sharing content or inviting friends to join. A high K-factor indicates that the network has a strong viral effect and is likely to grow rapidly, while a low K-factor suggests that the network may struggle to attract new users.

K-factor can be a useful metric for social media companies and marketers to gauge the effectiveness of their growth strategies and to identify areas for improvement.

Why is k-factor important?

K-factor is important to app developers and digital marketers because it measures both the value of a user acquisition, as well whether an app’s virality is increasing or decreasing.If an app’s K-factor is rising, so is the app’s popularity and the number of organic downloads.

Similarly, if users from different acquisition channels create differing K-factors as well, that information can help guide awareness campaigns and ad strategies to target new users more likely to encourage more downloads in turn.

How is k-factor calculated?

The most common method of calculating an app’s K-factor is multiplying the average number of download invites sent by each user by the rate at which those invitations are accepted. The formula is expressed as K= i*c where i = the average number of invites sent, and c = the conversion rate of those invitations expressed as a decimal. 

For example, say a mobile retail app offers loyalty points to users who send invites to friends and family to download the app. On average, each user sends an invite to 5 other people, and invitees download the app at a rate of 20% or .2. To calculate the K-factor for the app, one would multiple the average number of invites sent by their users (5) by the acceptance rate, .2, for a K-factor of 1. (5*.2 = 1)

It’s important to remember that this method of calculating K-rate can only track the success of download invites, and does not account for organic acquisition from word-of-mouth style invitations or other forms of social influence that are difficult to track. When judging the success of user acquisition strategies, one should include more metrics than K-factor alone. 

What is a good k-factor?

Though averages differ from industry to industry, any K-factor over 1 is considered good. Keep in mind though, that K-factor calculations can only provide a partial picture of virality, and is only one measurement of success among many. 

Because of the tricky nature of K-factor calculations, it’s less valuable to judge an app’s K-factor against those of your competitors than it is to use it as an internal metric. If your K-factor is higher than your attrition rate, for example, that can be a strong indication that the app is growing and finding its audience. 

How to improve k-factor?

The best long-term strategy for increasing the virality of an app is to focus on delivering a great customer experience and ensuring that users are enjoying the value of your app. Satisfied customers are any brand’s best advocates, though bear in mind the organic downloads they bring in may not always be trackable, so even successful apps with growing user bases can have deceptively low K-factors. 

In the short term, campaigns that focus on encouraging referrals from satisfied users can lead to improving an app’s K-factor. Try some of these strategies:

• Reciprocal Incentives – Empower your users to offer discounts to friends and reward them as well. Higher incentives will often increase the number of referrals as well as increase the conversion rate on those referrals, so be sure to offer something worthwhile. (Plus, it’s almost always less expensive than acquiring new users via paid channels.)

• Leverage your Loyalty Program – Since members of your loyalty program are already invested in your brand, they’re more likely to want to recommend your app. Make it quick and easy for them to do so and help them achieve rewards faster by thanking them for referrals with loyalty program incentives. 

• Focus on Your Best Channels – Just as in the medical world (it’s called going viral for a reason!) a small percentage of users can have a huge impact on how quickly your app’s popularity is spread. Focus your efforts on those most likely to want to share your app and encourage others to enjoy it as well. Offer timely and inviting incentives for your best potential influencers and let them spread the word!