K-factor (marketing)

In viral marketing, the K-factor can be used to describe the growth rate of websites, apps, or a customer base. The formula is roughly as follows:^[1]

${\displaystyle i={\text{number of invites sent by each customer }}}$ (e.g. if each new customer invites five friends, i = 5)

${\displaystyle c={\text{percent conversion of each invite }}}$ (e.g. if one in five invitees convert to new users, c = .2)

${\displaystyle k=i*c}$

This usage is borrowed from the basic reproduction number in the medical field of epidemiology in which a virus having a k-factor of 1 is in a "steady" state of neither growth nor decline, while a k-factor greater than 1 indicates exponential growth and a k-factor less than 1 indicates exponential decline. In epidemiology, the k-factor is derived from the rates of distribution and infection for a disease. "Distribution" (${\displaystyle i}$) measures the average number of people a host will contact while still infectious, and "infection" (${\displaystyle c}$) measures how likely an average person is to also become infected after contact with an infectious host.^[2]

In the context of viral marketing, while a higher k-factor is desirable, a k-factor below 1 can still lead to viral growth. In their early days, Dropbox and WhatsApp boasted k-factors of 0.7 and 0.4, respectively, which were major contributors to their financial success.^[3] K-factor is limited to measuring how directly effective word-of-mouth or member invitation schemes are, but there are other ways for a user to come to a new app.