Improving Customer Lifetime Value using cohort analysis

This was originally posted on Betable's Game Monetization blog.

Our first meetup event, “Money Talks”, was a great success. With over 75 attendees, we had a packed house full of game developers itching to learn. Our three great speakers gave our audience great insight into game monetization:

spyra logo

The first speaker was Roxanne Gibert, whose game monetization and product strategy background comes from years at premier social game companies including Zynga, Playdom, and Playfirst. Now running her own company, Spyra, Roxanne presented a great overview of game monetization and the framework that you need to implement to make impactful monetization decisions, regardless of game type.

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There are four core components to any social or mobile game, and key metrics to track for each component:

In order to effectively build a game, these are the baseline metrics that you need to track. These metrics give you the basic health meters for your game, which can serve as an early-warning system when something is threatening the health of your game. Another important reason for building these metrics into your game is to see if your feature changes and gameplay improvements are having an impact. With these metrics in place, you can “listen” to your players and see if your work has increased their engagement with your game or their willingness to pay.

However, these metrics only give a high level overview and for many games this is only the first step into a robust metrics solution. Those looking to dig a little deeper should track their users by cohort in order to understand how different user types behave in their game. Roxanne recommends that you segment your cohorts by age (time since signup), level (in-game level), and purchase frequency. This gives you the ability to segment players into targeted subgroups.

chocolatier

For instance, you could potentially target a monetization mechanic to your new users that haven’t purchased yet. Playfirst did this with their Facebook game Chocolatier when they found that their new users weren’t converting to paying users. By adding a meter that tracked the chocolate players’ sold, and then giving players a bonus for reaching a goal amount of chocolate, they increased new user free-to-paid conversion by 200%. This improvement wouldn’t have been possible without the tracking that brought the opportunity to the surface.

Cohorting by frequency of purchase and time to first purchase also gives you the ability to effectively target specific items to certain groups of players. For instance, as Roger Dickey outlined later in his talk, players that purchase frequently are more likely to buy unique, limited time items because they want to differentiate themselves from other dedicated players. Another possible application that Roger highlighted is to give players that have spent a long time without a first purchase a greater incentive to make that first purchase by giving them a special offer. Roxanne and Roger showed that by cohorting your install base, you can surface the most relevant items for each type of customer [Click to tweet].

Going one level deeper, Roxanne suggested cohorting your users by the channel that they came from. Full funnel tracking, from click to install to play to pay, can give you great insight into where to spend your marketing dollars. When looking at the top of your marketing funnel, you often times will get caught up in which gives you the most clicks or installs, when you should really be tracking how many users pay. In doing so, you canfocus on which channels bring in the most valuable users when marketing your game. By keeping your eye on the prize, you can ensure that your entire game is built around making it into a profitable business.

This talk given by Roxanne Gibert at our “Money Talks” Game Monetizaton meetup in San Francisco. Tomorrow, we will dive deeper into game monetization with Roger Dickey, creator of Mafia Wars and former GM at Zynga. Roger dropped some serious knowledge at our event and we can’t wait to share it with you. Also tomorrow, we will highlight the presentation by Chris Griffin, CEO of Betable, and how Betable plans to challenge the status quo of virtual currency-based game monetization.