Lean Analytics: Use Data to Build a Better Startup Faster (Lean (O'Reilly))

by Alistair Croll

The key metric for this engine is the viral coefficient — the number of new users that each user brings on. Because this is compounding (the users they bring, in turn, bring their own users), the metric measures how many users are brought in with each viral cycle. Growth comes from a viral coefficient of greater than one, but you also have to factor in churn and loss. The bigger the coefficient, the faster you grow. Measuring viral coefficient isn’t enough. You also need to measure the actions that make up the cycle. For example, when you join most social networks, you’re asked to connect to your email account to find contacts, then you’re given the option to invite them. They receive emails, which they might act upon. Those distinct stages all contribute to virality, so measuring actions is how you tweak the viral engine — by changing the message, simplifying the signup process, and so on.