Now for the k factor…
*We use 1+k instead of k to represent the total number of new customers, including the existing customer base, not just the additional new customers represented by k alone.
This formula states that, holding other things constant, a firm with a positive k-factor will bring in more net new customers with the same resources.
A larger k-factor will also lower your overall CAC.
example:
Better ICP Ideal Customer Profiles
A startup’s first customers are almost as important as its sri lanka mobile database first employees. They are the first real data point a startup has about its customers and product-market fit.
The key difference between the ideal customer of a funnel and a flywheel is that the customer is only the ideal outcome in the funnel. In contrast, a flywheel customer is also a key growth driver.
The traditional funnel view of your ideal customer persona is a theoretical representation of the people most likely to buy from you.
But this is a very singular, purchase-centric view of the customer. In contrast, a more holistic, growth-focused view of the customer asks: Who will rave about us to their friends? Which customers will help our startup build momentum? Which customers will naturally have a higher k-factor? Which customer’s customer journey will you improve the most?