How to calculate the virality effect / spreading rate of your application
In every application from which you can invite friends to join, there can be a virality/spreading effect. With applications like Facebook or Snapchat, it’s easier to track the dependencies, but the virality effect also applies in many marketplaces where there are referral systems like Uber for instance.
One could argue that even without a referral system, you could track the dependencies among your user base thanks to the social graphs out there. Fair enough, but this is another discussion.
Until you hire or fully understand those kind of formulas, here is a simple way to assess the spreading rate of your app:
If you’re doing well, you have a pretty good looking cohort, your retention/churn rate is acceptable. You’re basically growing. However, you have no deep and clear insight on the virality effect of your user base. You need to track and analyse the dependencies between your users. And it’s pretty simple:
Track the dependencies between your users
Apply a dependency number to every user
Make a cohort according to those dependencies
Calculate the compound growth of each branch (dependency)
If your compound weekly/monthly growth rate is positive, the virality effect is positive. Then you can play with the numbers to extract more data on how those numbers are evolving, why…
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