Measuring K-factor in marketing: What are the effects of paid UA on organic installs?
K-factor is a metric used by app developers to indicate an app’s virality. K-factor measures how many additional users each existing user brings to the app. Adapted from medical terminology used to assess how fast a virus spreads, K-factor in the mobile app economy represents how many of your new users will invite others to try your app.
What is K-factor?
K-factor is an assessment of an app's viral potential or word-of-mouth potential. If one user tells a second and third user about your app, you’re obtaining a new user without any additional cost. In principle, K-factor is used to link organic installs to user acquisition (UA). However, many variables can impact traffic, such as campaign, countries, timing, etc., and lead to a lower or higher K-factor in your UA campaign.
Why is K-factor important?
K-factor is just one of many metrics that inform app marketers’ campaign spending. By understanding how paid traffic and installs impact organic installs, you can have a fuller picture of how your campaigns are performing. If you can prove your marketing is impacting organic installs as well as paid, you can better justify your campaign budgets and spend them more wisely.
How is K-factor calculated?
Below we’ve written the most widely used formula to calculate K-factor:
K = i * c
i= The number of app invites sent per customer
c= The average conversion rate of each invite
Let’s look at an example. Let’s say you have a fitness app in which you decide to reward loyal users who invite their family and friends to the app. So, you offer your loyal users 20% off their next monthly subscription when one of their friends downloads the app from the loyal user’s referral link.
Let’s say each of your users invites two friends. In this case, i = 2.
If one in four invitees convert to a new user, then, c = .25
Now, it’s time to multiply. K= 2 *.25 = ???
Question: What is the value of K-factor here?
The K-factor value would be 50%. (K = 2* .25 = .50)
If your fitness app started with a modest 200 active users with this K-factor, the next month should yield 250 active users.
What is a good K-factor?
A good K-factor is one that is higher than one, even fractionally. This indicates viral growth and that your K-factor surpasses your churn rate. A K-factor of one indicates stability as your app isn’t growing or declining. Conversely, a K-factor below one reveals that your app’s virality is in exponential decline.
In other words, your K-factor is good so long as it surpasses your app’s churn rate.
How to improve K-factor
It’s crucial to identify the influential aspects of your K-factor and optimize them as often as possible. Doing so will boost the number of installs from organic that come from the force of paid. ASO, optimization, and creating sharable apps are three key ways to lift your K-factor. Let’s cover how they each can serve to improve your app’s K-factor.
Effective App Store Optimization (ASO) is vital for app developers desiring more organic downloads. One of the largest ranking factors of ASO is download volume. Therefore, a large install base will help to boost rankings, regardless of whether users are paid or organic. When app stores see consistent traffic and an ever-increasing number of active users, rank increases. This creates a healthy circle of organic influencing paid, leading to a bigger K-factor.
Experiment, optimize, repeat
As you explore various channels, utilize different ad creatives, and try to find the source of the most valuable users, it’s imperative to be able to measure and analyze all your marketing campaigns. Only with accurate measurement and proper analytics can you know how to best optimize your campaigns to maximize your ROI. With a mobile analytics platform like Adjust, you can better understand your app’s K-factor as you effectively analyze and optimize all your campaigns in one place.
The K-factor of an app benefits immensely if the app is made for sharing. Whether it be a multiplayer game, or a travel app that allows users to split the cost, encouraging your users to share the app with friends can turn one paid install into three or four more organic users. Of course, this is something to be determined at the beginning of an app’s development.
If your app isn’t built specifically for interaction with others, you can still consider incorporating a feature that makes your app more interactive. If we go back to our fitness app example, you could develop a chat/competition function where your users can challenge each other to a fitness challenge as well as invite potential users to join as well.
To discover more ways to grow your app, explore “Scaling your app to 1 million users: The ultimate guide.” At Adjust, we’re all about helping you connect the metrics of your campaigns to your ROI. If you’d like to request a demo of our mobile analytics platform, click here.
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