What time to convert can tell you about the quality of your payers: the 3 categories of payers
Looking at the time it takes to convert is interesting when considering who is contributing to your title’s lifetime IAP revenue (I’m intentionally leaving ad monetization out of this post). Specifically, if you were to segment payers based on the day they converted and look at how they go on to contribute to your title’s lifetime revenue, you can see how early payers punch above their weight.
This is what I mean by punch above their weight: day 0 payers might represent 28% of lifetime payers in your title, but they account for 35% of all lifetime IAP revenue (as a reminder, 100% of payers account for 100% of IAP revenue). So this clearly means users converting on day 0 are higher value payers than users converting later. And better in pretty much every respect: arppu, redeposit rate, etc. The most straightforward way is to look at LTV per install day. No matter how you choose to look at it, it’s pretty much guaranteed users converting day 0 will be your best payers. If you want to be thorough (which you should), you can compare spending behavior in the 30 days that follow conversion (so you are comparing your payers over a same period of time).
By looking at things this way, you can clearly highlight how LTV is associated with the day on which the first IAP purchase took place: a user who will convert on install date (day 0) will eventually be spending more than a user converting the day following install – who in turn will also be spending more than a user converting a week after install. But one thing that’s also important to keep in mind is that there isn’t a linear, continuous relationship between time to convert and LTV. In other words, a user converting day 6 is in the same category as a user converting day 26. When looking at payers from the perspective of the time it took them to convert, it appears there are 3 general groups.
- Users who will convert on install day: those users will tend to be your best payers. Period.
- Users who will convert soon after install, but not quite on install day: those tend to be high spending users (they still punch above their weight)
- Every other payer
Clearly, regardless of the game, you should see that users who make their first purchase on install date – and if you’ve looked at it, you’ve probably seen there are quite a few – will be the ones who will spend the most in your game. Users who will spend quickly after install – but not on install day – will still be payers with high LTV compared to your entire payer base. This intermediary category will vary more depending on the game and the specifics of its monetization (the relevant time frame for your game might be day 1, 2, sometimes up to day 3 – but it won’t run until day 6 or 7). But the general idea is that we are talking about a group of payers better than most, but not quite as good as your day 0 payers. Then you will have every other payer who will display comparable monetization performance. To sum up: you have users who convert on install day, users who convert fast, and every other paying user.
How can you make sense of conversions on install day? It’s not about utility
Because your best payers are usually those who convert on install day, you should focus your conversion efforts on day 0 monetization. Two other important reasons further justify this: on one hand a large majority of your payers make only a marginal contribution to your revenue, on the other hand a significant portion of your install will convert on install day. So optimizing revenue isn’t about reaching the most customers possible. It’s about maximizing the revenue from a select group of customers. A user converting day 0 will ultimately be worth much more than a user who converted day 30.
It’s difficult to make sense of the fact that users converting early – especially users who convert on day 0 – end up spending more in your game. More specifically, it’s difficult to make sense of that by referring only to game specific features. First, games moderately well balanced become gradually more difficult as users progress: best practice dictates your level 10 should be more difficult than your level 2 (and that’s usually the case). As a result your game should require a higher investment from your users later on. Second, a $4.99 purchase should carry you longer earlier on rather than later on – especially considering the fact that early on there are beginner offers and starter packs that provide more value than your default IAP bundles. A functionalist interpretation of the situation would therefore suggest that users converting later will have a higher redeposit rate (because a higher percent of users will need to spend again to keep progressing) and/or that redeposits will occur faster for users converting later (because your paying users will be confronted to the need to spend again sooner). Most data seems to confirm that this is not the case: users converting earlier tend to have a higher redeposit rate, and for those users spending a second time the time to next redeposit is lower. If you look at the data in your game, you should see trends similar to the graphs below.
In order to make sense of this, we need to look away from those levers we have the most control over (the difficulty and win rate we tuned, the scarcity we designed, or the friction points we created). It is not the tuning of your game, the scarcity of your in-game resources or the challenges inherent in your game’s progression that can account for users converting early. A game-centric perspective – focused on your systems and the internal progression/success requirements – cannot account for the fact that making your first IAP purchase is associated to more spending in the long run. More importantly, a game-centric perspective cannot account for the fact we are seeing similar trends across a wide variety of games and genres.
Making sense of this requires moving away from game-centric considerations, and considering audience-specific characteristics. The explanation for this doesn’t lie in the specifics of your game – it’s rather a characteristic of your converting users. Converting day 0 and spending more in the long run are both the result of the same thing. Users who will convert quickly – most likely before having fully understood the game systems, and the requirements to perform in an optimal way in your game – are your most engaged and enthusiastic players. And in the same way (very tautologically), your payers who will spend the most are your most engaged and enthusiastic players. Converting early and spending the most is the indication you are dealing with your biggest fans and your most engaged users.
To rephrase this: converting early doesn’t cause users to spend more. It’s because those are your most engaged and enthusiastic players that they are converting the fastest and spending the most. Converting day 0 is a way your best users are auto-identifying themselves as such. Looking at when users are converting is a way to identify your payers with the best potential. More importantly your most engaged payers are not driven (for their first IAP) by utilitarian considerations.
What can you make of this? Capitalize on passion rather than create a reason
Ultimately, no data will ever remove the necessity to connect the dots between objective behavior – converting on day 0 is associated to higher LTV – and the subjective motivation that leads to that behavior. In this case (and building on my previous posts) there are 3 main high-level principles we can reasonably infer from the data at hand:
- Users decide they like your game fast
- Users who like your game the most convert the fastest
- Customers who feel the strongest about your game will ultimately spend the most
The data is pretty consistent. Users converting on day 0 will be those who end up spending the most in your game. And the most common-sense inference from this is that a user converting early – on the day install occurred – is converting because s/he simply likes what your game is about. Your best payers are driven to convert by the very intangible things that make up you game: the thematic of the game and how it resonates with them, the overarching narrative and mythology that permeates every aspect of the game, the way separate features interact and intersect to make a game, the overall feel, fun factor, etc. The fact that such a large portion of your payers convert early suggests monetization in mobile game might not be driven by functional/utilitarian considerations as much as by considerations of “entertainment value” and “wow factor”.
Users are not converting on install day to accomplish some clear, tangible and measurable goal: beat a specific level, progress at a specific pace, reach a team power of 25,000. My firm belief is that your users converting on install day – your best payers – are converting because they simply like what they see, the overall feel of the game, and are attracted by the promise of engaging more deeply with your game. Users converting on install day are attracted by the promise of a premium experience. They want to convert to engage with other facets of a game they’ve quickly decided they liked – preferably unique and exclusive facets. They are not primarily looking to engage better (in a more optimal, high-performance way) with the features they’ve already experienced.
So how do can you improve your early conversion if it’s not mainly driven by performance and utilitarian considerations? This involves a bit of a paradigm shift: you don’t MAKE your best users convert (just in the same way you don’t make people love something or someone). Focusing your efforts on the payers with the highest potential – those users converting on day 0 – has to do much more with enticing passionate users to spend than creating reasons to spend. It’s more about capitalizing on existing feelings than changing the cost/benefit equation to make users want to spend. You can’t generate passion by tuning a feature or optimizing your prices. In other words, it’s more about the intangibles of what makes your game what it is (rather than the systems that preside over progression and success rate). You need to emphasize what defines your game. What separates it from the competition and makes it unique.
The best way to optimize conversion on day 0 is not focus on making users convert. Try to find ways to capitalize on the enthusiasm your game is bound to generate (the better the game, the more enthusiastic players you will have to work with). Don’t try to create scarcity, make things difficult or create frustration points. You don’t frustrate users into spending – especially on install day (the most effective way to address such a frustration is to uninstall your game). That doesn’t mean you don’t put offers and price points in front of your users (on the contrary, you definitely should). It means you appeal to positive emotions rather than negative ones.
So find a way to build upon the enthusiasm of your biggest fans, those who convert early. Create as many opportunities as possible to translate user passion into conversion. So that means precisely being proactive with offers. Put compelling things in front of your users to entice them to convert. Have offers that feature inspirational content – rather than something that is mainly functional. You need to try to capitalize on the potential interest of your users rather than creating a need. So instead of making users fail early to sell them something useful, go all in to show users what’s cool and unique about your game. You should seek to provide them mostly with entertainment value. If your game is based on an IP, what is the most iconic aspect of that IP? Sell that to your users. If your game is an RPG, what is the coolest/most badass character you can offer (it’s can’t only be about the stats on install day)? Offer users the option to spend money to engage with what’s the most aspirational aspect of your game.
You don’t need to offer them value from a systemic point of view (something that will help them collect more gold, advance faster, etc.). But you also don’t need to be dogmatic or obtuse. Getting more of anything (gold, XP, etc.) is always better then getting the standard amount (or less). So adding functional perks to what you are selling day 0 can only make what you are offering more enticing. The main idea here is that this functional aspect won’t be what’s instrumental in getting your users to convert on install day. In this case, writing “more” of anything on the offer might be as important (if not more important) than what the actual additional benefit is (differently stated, “more” has a greater impact for its symbolic and connotative dimension than its representational dimension).
One last important thing to keep in mind: you don’t want to compromise revenue you could get from your most engaged payers in order to cater to a wider segment of potential payers. In other words – especially on day 0 – your priority should not be to lower price points in order to increase conversion. Your most engaged payers – those converting on install day – are those who spend the most. Just in the same way they are not mostly driven by utilitarian considerations, they are not mostly driven by price considerations. Your users converting day 0 are those with the highest potential to spend. Giving them an option to spend lessis not capitalizing on that willingness to spend [as a side note, you should aim to offer more value without decreasing the price – give more for a same price, don’t make things cost less]. If you decrease the price of your starter pack by half, it’s very unlikely you will double conversion (unless your initial price was incredibly off to begin with). And this will be an “artificial” increase in conversion rate that is likely to have little to no long-term impact on monetization. You might increase the amount of users converting day 0 with lower price points, but you’ll be decreasing the quality of your paying users – and the overall revenue you’ll get from your day 0 payers. So the trade off might not be worth it.