K-factor is a metric used by app developers to identify the virality of an app. It helps in measuring how many additional users each existing user brings to an app. So, without further ado, let’s understand the importance of the K-factor, how it is calculated and how you can improve this factor for your app.
What is K Factor?
The K factor meaning can be defined as a key performance indicator (KPI) to understand how viral your app is. Adapted from the medical terminology used for assessing how fast a virus spreads, the K-factor in the mobile app economy indicates how your existing users invite others to try your app.
For example, you have an app with 100 existing users. Now, if each user convinces 3 of their friends to install the app, your app gains 300 new users.
Using this metric, you can assess your app’s viral potential or word-of-mouth potential. Here you are obtaining a new user without any additional cost. K factor is therefore used to link organic installs to user acquisition (UA). However, variables like campaigns, countries, and timing, among others, can impact traffic, which leads to a lower or higher K factor in your UA campaign.
Importance of K-Factor
K-factor helps you understand how well your inorganic growth (users acquired through paid advertising) affects your organic growth (users acquired without paying any fees). The data from this metric can also help you with your decision on user acquisition campaigns.
You can use a small budget to test your app in various countries and invest in the ones with the highest K factor. One of the biggest advantages of using this metric is that you can get a broad picture of how your campaigns are performing.
A successful UA campaign means that you are more likely to climb the App Store charts and increase your chances of organic user discovery. It can also mean that more users spread news of your app via word of mouth.
Both of these can lead to a positive return on investment in UA and aid in identifying your user acquisition rates. Therefore, it is crucial to understand how to do K factor calculation and identify ways you improve this rate.
How to Calculate K Factor?
The K-Factor is calculated by taking the number of invites sent by each existing user and multiplying it by the percentage of successful conversions. The invites are usually in the form of a referral URL redirecting the potential user to a website’s sign-up form or the application’s app store page.
A conversion occurs when a new audience completes the sign-up process, installs the app, or finishes the process to become a new user after clicking the referral URL.
When you observe a high number of sent invites per user, it indicates that the existing user is highly or actively recommending an app or site. Therefore, a high conversion rate means that people are using the referral links to complete the app install process and become new users.
K-Factor Formula
I x C = K
Where:
- I = Average number of invites sent per user
- C = Conversion rate of these invites
Let’s understand how you use this K-value formula with an example. Suppose you have a gaming app where you reward loyal users who invite their friends and family to the app. You offer 20% off their next monthly subscription when one of their friends downloads the app using the loyal user’s referral link.
Let’s say each of your users invites 2 friends. In this case, I = 2.
If one in four invitees convert to a new user, then C = 0.25
By using the K factor formula = 2 x 0.25 = 0.50
Therefore, your K-Factor is 50%.
So, if your gaming app started with 200 active users and now according to the K formula, the next month should yield 250 active users.
What is a Good K-Factor?
A good K-factor is higher than one, even fractionally. A high K-factor indicates the viral growth of your app and that it surpasses your churn rate. The churn rate can be defined as the abandonment rate or attrition rate which indicates the percentage of users that become inactive after a set period.
If an inactive user stops engaging with the app or digital property, it leads to abandonment including failing to log in and uninstalling the app. The churn rate period is typically equal in length to that of an innovation cycle as it helps an app punisher compare how many users they are gaining using word-of-mouth with the number of users they are losing because of abandonment.
So, ideally, you want to gain more users than you lose for each invitation cycle or set period. If your K-factor is 1, then it indicates that your app isn’t either growing or declining. And if the value is below 1, then your app’s virality is in exponential decline. Therefore, as long as this metric is above your churn rate, then you have a good K-factor.
Compare your K-Factor with your churn rate by dividing your practical K-factor by your churn rate. This can help you understand whether your user base is naturally growing or declining.
How to Improve an App’s K-Factor?
To boost your app’s virality, it is important to identify the elements which impact this metric. Follow the best practices and recommendations to boost your app’s user growth:
- Build a High-Quality App
The most basic and simple step you can take to achieve a high K-factor is to build a high-quality app. When your app is well-designed, easy to use and serves a purpose, you will attract users. Make sure your users enjoy the product so that they recommend it to their friends and family.
- Understand Your Audience
You can only increase your user acquisition rate when you clearly understand your target audience. By analysing the data and profiles of new users acquired through virality, you can gain valuable insights into your audience and what you can do to increase this rate.
Evaluate your app’s demographics, and adapt, modify and improve the application along with your user acquisition campaigns.
- Optimise your App’s Shareability
When your app has elements that make it easy to use, more users are likely to share or talk about the app. These features can depend on the type and purpose of your game. For instance, if you have a health-related app, you can increase its shareability by connecting the app with their social media accounts where users can share about achieving their milestones.
You need to analyse and evaluate your app to identify if it has elements that can decrease its shareability. For instance, if your app has repeated pop-up notifications asking users to rate or review an app, it may impact negatively on even uninstalls. Too many privacy permissions or overly complicated login systems may also decrease the shareability element.
- Encourage Users to Invite Newcomers
The K-factor is highly dependent on the word-of-mouth of your existing users. By incorporating in-app incentives for inviting new users, you can increase your chances of successful conversion.
For example, suppose you have a gaming app. When a user installs and logs in using the referral URL, you gain a new user. You can, in turn, offer your existing users with free quantities of in-game currency in exchange for new invites.
Effective app store optimisation (ASO) is critical for app developers who want organic downloads. Since the ASO factor largely depends on download volume, therefore, a large install base helps to boost the rankings, regardless of whether the users are paid or organic. An increase in app store traffic, active users and rank increase leads to a bigger K-factor.
- Never Stop Experimenting
You should explore different channels, ad creatives, or platforms to identify the source of your most valuable users. Use a variety of tools to analyse your UA campaigns, collect the data and compare them to find how you can best optimise your campaign to gain maximum ROI.
Conclusion
Thus, the K-factor provides a clear picture of your app’s virality. Use this metric to find out how many new users your existing users are bringing. By using this KPI, you can further improve your app, leading to its significant growth and usage.
At Next Growth Labs, we help you increase your app’s reach so that you can increase its user base and profitability.