Viral coefficient (K-factor) measures how many new customers each existing customer brings in. It determines if your referral program drives exponential growth. Viral coefficient formula: K = Invitations Sent × Conversion Rate Interpreting viral coefficient: - K < 1: Growth is declining (need paid acquisition) - K = 1: Growth is stable - K > 1: Viral growth (exponential) Improving viral coefficient: - Increase referral rate (more customers refer) - Increase conversion rate (more friends convert) - Improve incentive attractiveness - Reduce friction in sharing - Target high-referring segments Example: If each customer invites 5 friends and 20% convert, K = 5 × 0.2 = 1.0