One of the things we do is design, instrument, and execute viral marketing programs, and we find in working with our clients that breaking down the nature of viral marketing into its primary components helps get everyone on the same page.
Two separate ideas underlie every viral marketing effort out there. Looking at them separately can help you prioritize your efforts and improve chances of success.
The first requirement of any successful viral campaign is recognizing the need to meet each individual user's purchase value threshold ( or sometimes also thought of as “willingness to pay”). Let's call this the direct user value. In the old days, this used to be called things like "winning customers one at a time" or even more vaguely "know your customer". While it sounds blatantly obvious, we also see over and over how this is simply overlooked. While you might argue that when you have thousands of customers, the network effects will create fantastic customer value (more on this later), it’s too easy to forget that you need to provide real value, early on, to every single adopter.
Keeping the early focus on those first adopters should make you reconsider each feature of your offering. Is your "AllYogaMats.com" site really going to grow virally from having social networking functionality or would just making it easier to use with a better "Find the Right Mat" search interface make customers buy? Those first eBay adopters (was it Pez collectors?) were well served right out of the gate by the simple-to-understand auction model and easy-to-use site, even though it didn't have a big audience yet.
The second component of viral business models is what most people actually think of first: the network effect. While everyone is familiar with this effect by now, it simply states the value of the network increases with the square of the number of users. The classic example is fax machines. It was not much use to be the first purchaser of a fax machine unless you had a thing for thermal paper rolls. Real viral models must provide some additional user value due to the size of the network- real network effect value.
The problem is we are often optimistic about both the numbers of users our campaigns can reach (at a reasonable cost) and the network effect's actual value a user gets. But it’s also hard to convince users that at a future date when they and lots of others join there will be some value for them. Distinguishing between direct user value and network effect value helps focus where efforts should be applied at each stage of business growth.
direct user value + network effect = viral growth!