*Quantifies how many new users are acquired through referrals* by existing users. It helps measure the self-sustaining nature of user growth in a product or service. > [!formula] > $VC = \frac {\text{AVG tot num referrals existing users send} \times Conversion\ Rate}{\text {Total existing users}}$ > > - [[Referral Conversion Rate]] - **VC < 1**: Growth is insufficient to sustain itself; external acquisition is necessary. - **VC = 1**: Each user brings in exactly one additional user, maintaining a steady state. - **VC > 1**: Exponential growth occurs as each new user brings in more than one additional user. ### Strategies to Improve Virality 1. **Optimize Incentives**: Effective referral programs provide meaningful rewards while maintaining profitability. 2. **Reduce Friction**: Simplifying the referral process and [[Onboarding Completion Rate]] increases adoption. 3. **Leverage Behavioral Psychology**: Social proof, urgency, and exclusivity (e.g., waitlists, invite-only access) enhance viral loops. 4. **Align with User Motivations**: Users share more when referrals align with their interests and social identity. ### Importance in Growth Models - **Crossing the Chasm**: A high VC helps move from early adopters to mainstream users. - **Social Networks**: Growth depends on network effects, where more users increase value. - **Pinwheel Effects**: Virality sustains momentum, reinforcing continuous user engagement. - **[[Sustainable Growth]]**: Unlike paid acquisition, a high VC enables long-term, cost-effective expansion.