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Balance High Volume User Acquisition And Retention For Maximum Profit

By Yulia V Smirnova
February 1 2017

Whether you are launching a new app or running a mature game, mastering retention strategies can help you grow faster. Most mobile marketers make the mistake of managing user acquisition and retention campaigns as two separate initiatives.

If you want to get the most from your user acquisition and retention, you have to find a balance by using proven principles of designing ads around the user experience and allocating budget around app milestones.

The big mistake – Separating acquisition and retention campaigns

The number one mistake that many marketers make is in how they view retention and user acquisition. They separate them as two different tracks, and allocate their budgets as such, in a random way.

For example, early on when launching a game, they scale user acquisition by allocating 80% of their budget to this campaign and 20% for the retention campaign. By doing this, they stop seeing the obvious opportunities in how they can monetize each user from the very first touch.

The fact is that selling doesn’t end with the initial user acquisition campaign that led to an app install. In the first week since install, it is critical to continue to market the value of your app using various offers and promotions inside and outside the app. As an app marketer, you’re on a mission to develop a new habit, and this takes multiple touch points.

Retention and re-engagement the smart way

You need to approach user retention and re-engagement in a smart way to get the most from your user acquisition. Your strategy would depend on your app’s maturity and product cycle so that you won’t lose the growth momentum.

Bidalgo client example

Bidalgo client example

Bidalgo client example

 

Here are some practical tips to improve app retention and re-engagement:

 

1   Visualize app experience

 

To stop breaking up your campaigns into two different tracks, you need to visualize the app experience for your user from the first touchpoint and beyond. In other words, you view all your campaigns as app monetization campaigns with a single focus of how to increase the average revenue per user (ARPU).

That’s what we do here at Bidalgo. In fact, the real job starts after a user installs your app. From here, you need to take users through a series of steps or conversion milestones across your app’s lifecycle.

 

2   Think beyond one time spend

 

Once you acquire a user, you might have monetized them once, or even a few times, but this is not enough. You need to maximize the value of the experience. Early on, you must approach the new user with reminders, and triggers driven by emotions. You need to create positive reinforcement to convert the new user into a loyal one, (especially the one who spends above your target ARPU).
But even after this, the process doesn’t stop.

 

3   Use principles vs. shortcuts

 

To think beyond the launch you need to rely on tried and tested principles, rather than shortcuts and tactics that work by chance. You need to build specific offers and creatives around the milestones that make up your app’s user experience enticing, inviting, appealing and desired.

Instead of using general timeframes in the mobile marketing space like 7, 30, and 60-day campaigns for your game app, you need to understand the lifetime value of each kind of a player. You need to know what triggers them to spend more, and how to convert them to the next level faster. This way, you can get users to play more, and spend more in a systematic way. Which in turn, is the surest way to improve your ARPU.

You still can use the data around the conventional timelines for planning (see the six personas below), yet add a layer of context around your app experience as well to make your campaigns more effective.

 

4   Consider app maturity

 

Another factor to consider as you plan your campaigns is the app maturity. In the beginning, you will focus more on building the consumer base for your app. Initially, you will have little data to help convert them to loyal and daily players. But as you set up spend-and-play reinforcement events within the game experience, you learn what draws users in, and what is unique about your specific game.

To do this at scale, you need the help of partners like Bidalgo and Optimove to help you break through from the initial stage to maturity. Because Bidalgo works with different other clients even though the information that they might share is anonymized, it’s still very helpful to build your unique game intelligence faster. You can tap into predictions and personalization using algorithms on the partner side, whether it’s Bidalgo or Optimove.

 

5   Build infrastructure early on

 

As you go through this learning experience, you are building the infrastructure piece by piece for better and more profitable re-engagement. This kind of scalable new user acquisition compensates for the natural churn.

 

Six user cohorts to use for re-engagement campaigns

Optimove conducted extensive research based on a year of data from 100 million consumers that place over quarter a billion transactions in 50 plus mobile environments across all territories. They found that six unique personas exist across these apps.

How you can engage with any of the personas and maximize the customer value

 

(1)   New, Non-Spender

 

This persona includes customers who have registered during the last 14 days and haven’t made a transaction yet. With them, the goal is to push them to their first payment.

This data shows that 24% of the customers convert to becoming paying customers on the day of registration, 10% on day 1, 5% after three days and so on. We see that over 50% of conversions take place on day zero, and day one.

Now, the key takeaway here is that, in the mobile space, we don’t need to rush to convert our customers. We can wait. What we suggest to do is within the first seven days, to share a lot of content with your customers. Make them fall in love with the brand. Only then after day seven, you want to push aggressively to convert them into paying customers.

source: Optimov data, webinar with Bidalgo, Nov 2016

source: Optimove data, webinar with Bidalgo, Nov 2016

(2)   New, Spender

 

This life cycle stage consists of customers who make their first payment in the first 14 days. Now, the goal with this life cycle stage is to push them to become second time payers. Meaning, once they place their next payment, they become much more engaged for the long run.

This chart shows the time between the first and second payment for all customers who had the second payment. Now, the data shows that 25% of all these customers place their second payment on the same day. 14% of the customers place their second payment a day after their first payment. By the 30th day, 88% of these customers placed their second payment.

The key takeaway from this is that it’s very very important to push customers to their second payment within the first 14 days. Beyond this, you’ll see little results.

source: Optimove data, webinar with Bidalgo, Nov 2016

source: Optimove data, webinar with Bidalgo, Nov 2016

(3)   Active, Spender

 

This persona includes customers with at least two payments in the last 21 days. The idea is that after we successfully engage our new spenders, they now become active spenders. Our goals with these customers are to keep them active for as long as possible.

The data we see here is a Pareto Analysis from the mobile gaming world: 5% of players generate more than 50% of the revenue. Now, this is a unique and important group.

The action item here is that if you don’t have a VIP program in place, it’s ludicrous. Because if you lose one of these customers, you lose a lot of money. On the other hand, if you grow this group, you become much more profitable. The idea here is to have a unique VIP program in place.

source: Optimove data, webinar with Bidalgo, Nov 2016

source: Optimove data, webinar with Bidalgo, Nov 2016

(4)   Active, Non-Spender

 

These are customers who have paid more than 21 days ago, yet aren’t playing or aren’t showing any activity in the game. Now, this is a bad life cycle stage to be in because, in the gaming space, there are people that have deposited something, but can play the game for too long without placing their next payment. Either there is a problem with the game economy, or these customers are about to churn.
This chart shows the likelihood of these customers making another payment in the upcoming month. For instance, if a certain customer placed one payment, he has a 1% chance of making another payment in the next month.

Let’s look at the right-hand side of the chart. A customer that has placed more than ten payments has a 6% likelihood to pay again in the upcoming month.

The action item in here is first and foremost to incentivize these customers to make their second payment. Such incentives could be in the form of an exclusive preview of a new feature, or an exclusive deal. Once we expose them to that offer, they’re more likely to place their second payment, and their next payment, and so on.

source: Optimove data, webinar with Bidalgo, Nov 2016

source: Optimove data, webinar with Bidalgo, Nov 2016

(5)   Churn, Spender

 

These customers haven’t paid in the last 21 days. What we want to do with churn-spending customers, intuitively, is bring them back to activity.

Now, this a chart for mobile gaming. What we see here is that chances of making another payment for these players are a function of their seniority. That is the number of days since their first payment.

We see that players that have up to a 30-day seniority have a 10% chance of returning to the game. Players that have up to 90 days seniority have a 15% chance of returning to the game. Now, what we expect to see here is a linear graph.

The more senior you are, the more likely you are to return to play. However, we see that there is a decrease after 90 days.

User churn is a big issue for app marketers. At some point in time, namely after 90 days, it’s more likely that a customer wouldn’t return to activity. Now, that means within this timeframe, you could think about cross-marketing such a player to a different game rather than investing into returning them back to activity.

source: Optimove data, webinar with Bidalgo, Nov 2016

source: Optimove data, webinar with Bidalgo, Nov 2016

(6)   Reactivated, Spender

 

Is the last life cycle stage which consists of customers that have churned and returned to the activity. Now, it’s important to maintain this group because customers that have been reactivated are not necessarily new customers, nor are they active yet. They’re somewhere in between. Our goal here is to win their interest and engagement again, get them back so to speak.

This chart shows the survival rate of returning customers over time. The purple line is the number of players that came back to activity after paying, and the yellow line represents customers that came back to activity after just playing a specific mobile game.

Now, looking at the delta between both lines, what we learn is that reactivation campaigns should feature a payment call to action rather than a game session call to action. Customers that return after paying are more likely to survive for the longer run. However, if that doesn’t work, do try to engage your churn customers to come back to play the game.

source: Optimove data, webinar with Bidalgo, Nov 2016

source: Optimove data, webinar with Bidalgo, Nov 2016

 

As you can see, looking at your app users based on their activity can lead to very insightful findings and practical strategies. Depending on where you are within your app marketing strategy, you can choose which of these to focus.

 

To sum it up: balance retention and acquisition strategy from the start. Rather than separating these campaigns, you need to unify them as cooperating and assisting teammates for maximum results.

To do so, look beyond the initial conversion (app install) to visualize the entire app lifecycle that the customer will experience to map both kinds of campaigns alongside specific app/game milestones.

Segment your customers by the above six personas to increase your ARPU, and in turn, overall app revenue.

 

Want more detail? Watch the record of our webinar on this topic.

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