Every time the “next big thing” app comes out and takes the Internet by storm, many of our first assumptions are that the app creators are now phenomenally wealthy.
After all, millions of people are using it, so obviously, a good chunk of them are buying, too, right?
Wrong.
More often than not, the new apps that take off like a rocket ship actually do pretty poorly from a monetary perspective. At least for a little while.
While they may have nailed their viral loops early on, most products have a LOT to learn about:
The list goes on.
The important thing to remember here is that most financially-successful companies are NOT viral at all.
On the flip side, many absurdly-viral products are NOT financially-successful at all.
One does NOT equal the other.
However, IF you can take the smart path and inject great optimization processes into your product to allow you to become a real business, you can have each of these factors feed each other.
...Bringing in traffic.
However, once you’ve got traffic, you need to:
In other words, your traffic is worthless unless you can build a bridge between growth and revenue.
We’ve already talked about a key transition between activation and retention.
Through that same lens, there’s a similar key transition between retention and monetization.
Like its predecessor, it’s important that this transition be mapped in detail and optimized diligently.
If you’re not careful, you can optimize your product for virality without planning for building business value and monetization into your strategy.
This is because great viral loops often give Advocates a sense of completion after completing the loop.
Many of these users will then leave immediately following completing a loop – which results in you missing out on an opportunity to monetize a loyal user.
Many absurdly viral products that sweep the Internet like wildfire are just old viral loops.
There are NO retention strategies in place, and there are NO monetization strategies in place.
It’s the growth engineer’s version of the “if you build it, they will come” mentality... which kills most products.
Real viral marketing “nirvana” occurs when you are successfully able to blend your viral loop with your retention funnel and your monetization funnel.
So how does one obtain viral marketing nirvana?
Here are two examples:
The retention and monetization methods for your product may not be obvious, but put your thinking cap on, and you’ll get there.
Remember that you’re engineering a viral product to create a self-driving growth engine for your business, with emphasis on the “for your BUSINESS.”
So the (hopefully obvious) question you need to ask yourself is:
In Year 1, which of the following would I rather have?
If you answered something like “10 million signups because I’d have more overall retained users after 30 days,” then you should probably rethink your priorities.
The CORRECT answer is the second choice for the following reasons:
The more efficiently you can bridge the gap of growth and virality with retention and monetization, the more successful your business will be.
But don’t confuse growing fast with growing successfully.
In the next chapter, I’ll show exactly why this is such an important distinction to make using a real-world example, so hopefully, you don’t make the same mistake.
Ever hear of the website Hot or Not?
Maybe you have because, for a time there, they were a viral sensation - but they made one major mistake that cost them millions, maybe more.
It all came down to how they monetized their viral engine.
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