This post was originally written by Jeremy Richardson on
Everyone in social media knows that virality is the number one metric to track
if you want to be a success. If a game goes viral, then thereÂ’s no stopping
it, right? On the surface, this may seem correct. However, I believe that
thereÂ’s a much better metric for businesses to pay attention to: Retention.
The viral growth rate, or Â“K-factor,Â” is the accepted way to measure the
virality of a product. ItÂ’s computed by multiplying the percentage of current
users who invite other people (X), the average number of people who are
invited per user (Y), and the percentage of invited people who accept an
invitation (Z). Many companies use this Â–- and only this Â— to determine the
success of a product.
Now donÂ’t get me wrong Â— I believe that virality is a very important metric
and should always be tracked. But I do not believe it is the be-all-end-all in
determining the long-term viability of a product.
Why Track Retention?
There are two primary reasons why tracking retention is important for any
business. The first is the fact that it will not only improve the K-factor,
but it will also make virality itself last longer. The second is that itÂ’s a
great way to measure the overall sustainability of a product. Even if you
donÂ’t have high virality, a sustainable business will last.
Retention and Virality
As I stated, the K-factor is the product of three numbers, so to increase that
product, we want to make all three numbers as large as possible. The first and
last numbers, X and Z, are conversion rates. By definition, they are always
going to have a finite limit Â–- 100% engagement. While having perfect
conversion rates would be amazing, it wouldnÂ’t really mean much if Y, the
number of people invited, was only one.
So, if conversion rates are maxed out, then the only thing left to tweak is
the number of invites sent out. There are two main contributors to this:
Invite Rate: The frequency with which users send out invites
Engagement Period: The duration that users actively use a product
On a platform like Facebook, the
daily number of invites that can be sent is capped, limiting the invite rate.
The engagement period, however, is never going to have a limit. Users will
play a game as long as they get value from it. This is where tracking
retention becomes vital to the success of a social game. The ability to
measure user retention rates will give you a better understanding of where you
need to improve in order to increase that Y variable. If rates are on the low
end, not only can you work to improve them overall, but you will also learn
when in the engagement timeline you should try new distribution strategies to
get users to invite more people.
There are many other ways to take advantage of this information. For example,
if you know the customer life cycle of your product (i.e. the time between
when customers start using it to when they stop), you can use that information
to determine how long you have before you should launch a new product.
Zynga (creator of popular Facebook games
Wars, and others) does a great job with
this: Their marketers know exactly how long their engagement periods are and
make sure to cross-promote a new game before the customers are completely done
with the first one. This gives them a chance to push the older users onto the
newer game before they stop playing completely.
Retention for the Long Term
Just because something becomes viral does not mean it will stay viral for
long. Even if a situation arose where all the stars of virality are aligned Â—
all of the users are inviting all of their friends, and all of their friends
accept -Â– if there is no real retention, this phase will not last. The number
of users will reach a saturation point, and then start to decline. If
retention isnÂ’t being tracked, then we have no idea why this is happening.
The Facebook app Â“FunwallÂ” (now known as Â“FunSpaceÂ“) is an example of
a rapid user explosion, followed by a crash. During their heyday, Funwall had
20 million users. Its growth spread virally; it was a success. When Facebook
decided to replicate its features, Funwall didnÂ’t have a complete picture of
whether or not the engagement period of the active users was declining. By the
time they realized that the utility of the app had decreased, it was too late.
Had they put more emphasis on measuring retention, they might have known how
user engagement was affected immediately. In the long run, growing and
optimizing the virality of the app did not matter. Retention did.
Think Value, Not Hype
Companies are becoming more and more metric driven, but not all data is
created equal. Distribution and growth are obviously very important, but when
it comes to long-term, planning we need to start moving toward metrics that
better reflect the end goal. A sustainable model should be the goal of any
business, and retention is a core metric that can help drive that.