Word of mouth coefficient
Word of Mouth Coefficient: The WOM Coefficient tracks the rate that active users generate new users via word of mouth, similar to how ARPDAU tracks the rate that active users generate revenue.
For example, if the denominator of your WOM Coefficient is WAU (weekly active users), and the coefficient is 0.1, that means every WAU generates 0.1 new users per week via word of mouth. Or in simpler terms, for every 10 weekly active users, they will generate 1 new user via word of mouth.
The Word of Mouth Coefficient has two components:
- New Organic Users: First time product users that we consider to be driven by word of mouth (i.e. they can't be traced to any trackable source such as a paid digital ad). This is the numerator and what we are trying to predict.
- Active Users: The denominator of the ratio is everyone else: Returning Users + Non-Organic New Users. The time period depends on your retention metric. For most products it is typically Daily, Weekly, or Monthly Active user.
In our follow up post, we’ll walk through these step by step in more detail.
Most relevant during:
GTM Fit phase
Scale phase
PMF phase
Most relevant for:
ACVs < $15K
ACVs $15K-$50K
ACVs > $50K
