PSU Insight

The Importance of "Running the Numbers"

Viral Marketing

Compounding doesn’t apply only to financial matters. It’s the central idea behind viral marketing. It’s the old idea of “I tell two friends, and they each tell two friends, who tell two friends….”

In fact, let’s consider that particular, somewhat trite example. If you tell two friends about an exciting new product today, and each of them tells just two friends tomorrow, and each of them tells two friends the next day (and so on), how many people will know about the product at the end of a month?

Even through you now appreciate the power of cumulative percentages, it might surprise you to learn that at the end of 30 days, 1,073,741,824 people (that’s not a mere million — that’s over one billion people) will have heard about the product that you initially told just two people about.

That’s worth repeating —

If you tell something to just two people one day, and each of them tell two people the next day (and nobody in the following days), and each of them tell just two more people the third day, by the end of only one month one billion seventy-three million seven hundred forty-one thousand eight hundred twenty-four people (approximately) will know about it.

That’s the awesome idea behind viral marketing. It’s also the concept behind leveraging. Bankers call it “compound interest” and they make fortunes off of it. And that’s why Einstein called it the greatest mathematical discovery in history.

You can call it compounding; you can call it leveraging; you can call it anything you want. Just don’t believe the “obvious” idea that tiny percentages are unimportant. When it comes to compounding percentages, it is vital that you run the numbers so that you have an idea of the awesome possibilities that await you!