K-factor

What is K-factor?

The term “K-factor” originates from medical terminology that is used to examine how fast a virus spreads. Today, it is used to determine the viral growth of a product or app and how likely existing users are to invite new users to try an app. Measuring the K-factor can help marketers understand the effect of paid traffic and user acquisition (UA) campaigns on organic installs and how to allocate marketing budgets to increase their app’s virality.

How to calculate K-factor

The most commonly used formula to calculate the K-factor is:

K = i x c i = Number of app invitations sent per user c = Average conversion rate of each invite

If a new user of your app sends out 4 invites, then i=4, and if 2 out of the 4 invited friends install the app, c=0.5.

Hence, the K-factor would be: 4 x 0.5 = 2 or 200%.

Let’s say your app initially had 100 users. If the K-factor is applied, this means that every time new invites are sent out, the user count would increase by 200, growing from 100, 300, to 500, and so on. As a result, you can determine the virality of your app as the K-factor value and predict the estimated growth potential.

Limitations of the formula

While the base formula is straightforward, real-world applications of K-factor are much more complex, with numerous other variables affecting virality and conversion rates. It is impossible to categorize user behavior into a one-size-fits-all equation, let alone interpret an individual’s action patterns as quantitative data. Organic traffic like word-of-mouth (WOM) is very difficult to measure, and there is no guarantee that a user installed the app directly from the WOM traffic. Marketers also have to consider factors such as market size, the actual number of accepted invites, and churn rate to get an accurate measurement of how many users actually came from the viral marketing source. Once these variables are taken into account, the K-factor can be simplified into a definitive value and bring additional insights into UA campaign analyses.

UA campaigns, organic installs, and K-factor

K-factor is most helpful for understanding the impact of non-organic installs (paid users) on organic installs. When an app gains users from paid activities like UA campaigns, it increases the chances of the app being featured on the app store for organic discovery, and paid users are likely to spread the word about the app. Such organic traffic sources that occurred as a result of UA campaigns define virality, and the K-factor value indicates the exact ability of the app’s paid campaigns to spread this virality and acquire new users.

By finding the difference between the number of installs produced from UA campaigns and the new install count measured immediately following the campaign, the K-factor can be determined.

What is a good K-factor?

Any K-factor that is greater than 1 is considered a good K-factor that attributes to growth and virality. A K-factor of 1 indicates stability and no changes, while a K-factor of less than 1 means that the app’s virality is declining.

In addition, a conversion rate greater than the user churn rate also indicates exponential growth. Thus, as long as conversion rates are showing an upward growth curve and their gains are bigger than losses, the app is maintaining a good K-factor.

How to improve an app’s K-factor

In-app referral systems

App developers should place referral systems within their apps where users can send out invites to their friends and family to spread the word about the app. Increasing the shareability of the app and allowing users to connect with each other to share their experiences will significantly expedite word-of-mouth marketing and reach a wider organic audience.

Incentivizing existing & new users

Along with in-app referral systems, app developers should consider offering rewards to users in return for sharing or installing the app. For instance, many food delivery apps provide incentives that offer users a $10 discount if they share the app with a friend and they install it. At the same time, the friend or new user also receives $10 off for their first order. Providing monetary incentives that provide value can easily sway users to participate in the WOM marketing task and heighten organic traffic.

App store optimization (ASO)

App store optimization (ASO) is the process of increasing an app’s visibility in the app store. The install volume of an app is a major factor for boosting ASO, regardless of paid or organic traffic sources. Therefore, marketers should initially invest in increasing their app’s install volume and make sure that there is a stable group of active users. Doing so, apps can easily gain a quality ASO and brand exposure, which increases the chances of the app organically reaching prospective users.

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