Onboarding is the secret sauce powering viral loops

The accepted App funnel is:

  • Acquisition
  • Activation/Retention
  • Referral
  • Revenue

In this post covers the relationship between onboarding and Referral.

Onboarding generally is seen as the bridge from Acquisition to Activation and Retention. The goal is to get the user oriented in the App and get them to an “ah-ha” experience. In the past the prevailing wisdom was that the onboarding logic must be coded into the application.

However Apps like Canva are growing incredibly fast and one of their secrets is the ability to adapt quickly and run experiments to measure uplift.

…their growth experiments were built by their development team. This process took 4-6 weeks and included several more steps. Each experiment was prioritized into development sprint cycles, coded by front-end and back-end developers, QA’ed by another team, reviewed by a peer, then reviewed by another peer, before being deployed into their product.”

So the hard reality is that companies experiencing fabulous growth radically use onboarding and experimentation tools to get the uplift. One of the key goals Canva tries to achieve is the “sharing your first design”. This is a viral (or Referral) moment in a user’s journey.

Referral and Viral Loops

You may associate viral loops with social games, where the whole concept of playability is hinged around the concept of invites and cooperation. However, you don’t have to go to that extreme to benefit from an understanding and implementation of viral loops.

A viral loop is a self-fuelling cycle of users generating more users – it looks like this:

Referral and Viral Loops

First, your App is shared. People in the sharer”s network see this, click through and engage with the App. Through a series of optimised steps, these people go on to invite the next set of new users.

Apps such as Facebook, Instagram and WhatsApp have all relied on viral loops to accelerate their dominance. However, this simple concept just evolves from the basic idea of personal recommendations.

Your best customer acquisition is one that is recommended by a friend. Think about it, if a friend recommends a cafe or a website, you usually check it out. According to a study by Nielson, 90% of people surveyed places at least some degree of trust in a recommendation from people they know. This is much higher than the trust placed in information seen in traditional and online advertising.

But with the ease of sharing these days, people are not only recommending things that they are absolutely addicted to. They just recommend something that is interesting or helpful and then they move on. So the trick is to have your App “Referred” (recommended or shared) before a user churns off.

Placed Tips and Tours

This checklist helps optimize your onboarding flow to get a user to this event:

  1. What task is meaningful in Activation for a user?
  2. Does your App design facilitate the user’s completion of that task?
  3. Can you segment these users in real-time. For example, platforms like Contextual know how the user is interacting”InApp”.
  4. Try a Placed Tip or guide to get the user to complete the task.
  5. Try some “off-boarding” that supports sharing:
    • Did the user completed the task?
    • Have they shared yet?
    • If not, use a Placed Tip or even a CTA modal to encourage Referral.

Building in sharing or referral as part of the user’s onboarding process will get you growth – if your user has completed a task (a “Job To Be Done”) then


Placed Tips and Tours


Think of a viral loop as bonus return on investment for all your acquisition techniques.

Why Referral Drives Hockeystick Growth

 Once every couple of new users, one successfully passes through the viral loop and invites someone that brings them on board.

That user is like a bonus that you did not have to spend any money to acquire…Why Referral Drives Hockeystick Growth

That user is like a bonus that you did not have to spend any money to acquire, allowing you to stretch your acquisition costs over more customers. Thus your CPA drops. You don”t need a completely viral product to benefit from viral loops.

Let”s highlight the benefit more by looking at a numerical example. Say that one in every 5 new users successfully recommends the App to a friend.

  •  We start with an advertising campaign that brings in 400 users
  • These users will bring on another 80 users due to recommendations, based on the 1 in 5 rate
  • The 80 will then each bring on 16 users
  • And so on…
  •  Eventually, this will equal a total of 500 users that signed up because of this campaign, 100 more than those that were brought on directly.

This 25% bonus to your customer acquisition is a great reason why viral loops are worth setting up right.

At the same time, since this is compounding, an increase in virality (not virility or vitality!) makes a huge difference in the final outcome. If instead of 1 in 5 users successfully recommending to a friend, it was 1 in 2, the eventual outcome of the campaign that brought in 400 initial users would be an increase in 800 users instead of 500 users.

Onboarding = Referral

Investment in an agile approach to onboarding will pay dividends as the tools can be shared from the Product Managers out to the Growth or Marketing teams. I’m not saying it should be open-slather on people running experiments but it can allow rapid iteration around getting users to drive your viral engine of growth.


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    Contextual & StreetHawk Inc 2023.