Viral product design is far more effective for product adoption than email marketing or banner ads
Can firms engineer products so they’re more likely to go viral, so there’s contagion and dispersion? This was the question Sinal Aral and Dylan Walker of the NYU Stern School of Business asked and answered in their research paper Creating Social Contagion Through Viral Product Design: A Randomized Trial of Peer Influence in Networks.”
What the two discovered is that firms can increase adoption of a product 400 to 500 percent by adding simple design elements to make it go viral. The two elements they tested were active personalized invites (e.g., “Hey Dave it’s Steve, check out this cool app”) and passive broadcast notifications (e.g., “Your friend Steve is using this new app”).
Using a Flixter competitor on Facebook for the basis of their study, they found that while the active personalized features were effective (6 percent conversion rate), far less were sent than the automated broadcast notifications (2 percent conversion rate) that were sent out automatically in the course of using the application.
In either case, the uptake of adding these viral product designs far exceeded the effectiveness of other forms of traditional online advertising. According to Aral’s research, the click-through rate (not conversion rate, a more valuable metric) of broadcast emails ranges from 2 to 5.9 percent, and banner ads (Facebook or Web) are at most .07 percent.
Another unexpected result of Aral and Walker’s study was that as peer adoption increased so did the engagement of the person sending out the messages, whether active or passive. So by adding viral features it actually reduces customer churn in the product, said Aral. The reason for this is network externalities. I get more value from the product as my friends use the product, Aral said. My friends adopting the product make me more likely to use the product in a sustained way. It creates a virtualized feedback loop.David Spark, a partner in Socialmedia.biz, helps businesses grow by developing thought leadership through storytelling and covering live events. Contact David by email, follow him on Twitter and Google Plus or leave a comment below.