Your best customers convert early (and what that means for your monetization strategy)

One of the things I’ve come to believe more and more over the years is that ultimately, you don’t make users spend in your game. You don’t cause conversion. We are used to implementing features and (when we’re lucky) of seeing changes in our game performance and KPIs. But users converting is not the consequence of moving one in-game lever or another. It’s the manifestation of users’ enthusiasm for your product. We can (and should) try to foster enthusiasm, but we can’t cause users to be enthusiastic and spend.

If you were selling lightsabers and other Star Wars memorabilia outside the lineup of “The Last Jedi” on launch day, you’ll probably sell more than if you showed up a month after launch. That would have nothing to do with your product or your selling technique. It would reflect the audience’s level of engagement with the IP. The same rationale applies to mobile gaming – and probably to every other form of entertainment.

Your best customers are those who convert early. And they convert early because they are your biggest fans. What drives them to spend the first time is not the result of a rational cost/benefit analysis. It’s the level of enthusiasm they have towards your game and what they find aspirational about it. Once that’s your working paradigm, you can define your monetization strategy accordingly and increase your conversion numbers.

Conversion is not about modifying the behavior of your users – making someone who wouldn’t spend buy something in your game. It’s about placement: showing the appealing offer at the right moment to the user who’s excited about your game and wants to engage with it further. What that means for your monetization strategy is that it’s more effective to focus on capitalizing on the willingness to spend of some of your users – rather than creating reasons for your users to convert. It’s not about creating customers – it’s about trying to get your biggest fans to manifest themselves. If I’m going to caricature: don’t put your efforts into creating paying users. Put your efforts into maximizing the value of those who have auto-identified themselves as your fans – by playing a certain amount of time, reaching an in-game milestone within a given time frame, logging in at a given frequency, etc..

That has a direct impact on the way you think about your conversion strategy. You don’t appeal to cost/benefit calculations to capitalize on enthusiasm (I actually wonder if the only truly rational attitude when dealing with a free-to-play mobile game is to not spend money and not attribute any value to the virtual items in the game). You appeal to passion and to what’s aspirational. If I were to translate that in terms of affect that means you should try to reinforce the positive emotions of your biggest fans – and not try to artificially create negative emotions (usually by creating scarcity, friction and frustration) your starter pack will relieve.

To be clear: this post is about conversion. The first purchase a user will make in your game. Spending the first time is the necessary – but not sufficient – condition to make a significant contribution to your revenue. There are some differences when defining the monetization strategy around redeposit and maximizing the value of your most engaged and loyal customers (but even then, it doesn’t involve fostering and capitalizing on negative emotions).

This post is not about making unsubstantiated feel-good assertions. It’s about illustrating how you can leverage user data to infer the underlying user motivation behind the first purchase in mobile games. It’s about how to validate scenarios concerning user behavior – and implement a product strategy accordingly.

 

General patterns of user conversion

When it comes to monetization, there are a few general patterns that occur regardless of the game. Two patterns in general stand out. First, monetization metrics are consistently better for users converting early: the best on install day, and solid 1 and 2 days after install.

spendpost

 

Second, both in absolute and relative terms, more users convert early. In absolute terms: a larger number of customers have made their first purchase within the first few days after install. In relative terms: a higher percent of active nonpayers convert in the first few days that follow install – and then that percentage flatlines.

conversion_active_nonpayers_2p

 

You need a guiding principle in order to define a monetization strategy. It’s one thing to have a collection of data points: users converting early have the best LTV; most customers don’t wait weeks to make their first purchase; early converters are not affraid to churn, etc. It’s another to be able to create a consistent narrative about how these data points can be attributed to a similar monetization patterns and user motivation. This is where a hypothesis-driven reliance on data can help inform product strategy and feature development. The above points challenge the assumption that users convert to achieve something for functional (or extrinsic) reasons.

Because these conversion patterns occur consistently regardless the game, it clearly illustrates they cannot be attributed to the specifics of each game (genre, mechanics, offers, etc.). Rather they are representative of common behavior patterns of mobile gamers. What’s more, the fact that 1) early converters go on to spend more and 2) there is a stronger tendency to convert early can help exclude the common assumption that instrumental/functional considerations are the main motivation to convert. If users were motivated by purely cost/benefit considerations, then you would expect a user who converts 14 days after install to spend more in the 30 days following conversion than a user converting on install day. If anything, games tend to get more difficult as they progress, so that means there are more reasons and opportunities to spend later on.

Second, if users were motivated by purely cost/benefit considerations, then you would expect them to convert later. It takes time after installing a new game to properly understand game mechanics and assess properly the instrumental value of different features and offers. What we observe is the opposite. A large portion of customers have converted very soon after install – when they presumably still have a very partial understanding of the game and the way it works (and what is required to be successful). And the longer a non-payer stays in the game, the less likely it is to have that user spend. What’s more, of those few who will convert later a much lower percentage will go on to make a redeposit (make a second purchase).

It’s one thing to exclude the rational/functional explanation. It’s another to pinpoint what the underlying reason might be. If your best customers (those converting early) are not users converting for functional/instrumental reasons, what does this mean? It stands to reason they are converting for more “soft” reasons. After all, mobile games are a form of entertainment – and you don’t hear anyone talking about the rationality of buying a movie ticket or going bowling. Enjoying the game, the theme, the art, the IP are all reasons that are much less tangible, but that are no less real.

 

What this means for your conversion strategy

Users are not driven to convert by an in-game cost/benefit calculation, or by friction and difficulty. That’s pretty clear based on the fact that

  1. Users don’t have a clear understanding of the game at the time they convert (because the bulk of users convert early)
  2. Your users who convert early are those who spend the most (despite the fact game difficulties increase over time and there is more need to convert to perform well later on)
  3. The 2 above patterns occur consistently for all game (despite the fact that the cost/benefit calculation, early friction or offers are vastly different from one game to the next)

 

This means 2 things for your monetization strategy. First, you should focus on early conversion to make sure you get as many fans as possible to make their first purchase. Second, to get your biggest fans to convert early, you should be proactive (and even insistent). Focus on the best placement and the most aspirational content. Don’t think functionality or utility.

The early conversion of your biggest fans is not about pulling the in-game lever that will make them spend for the first time. Ultimately, one key thing we too often forget is that we don’t cause users to spend. We create environments that are more or less conducive for spending tendencies to emerge. You’ll be more successful if you try to capitalize on those users who have a natural inclination towards your game and who enjoy it the most – rather than creating more and more “rational” reasons to spend in your game.

Once you start thinking that way, you whole perspective and monetization strategy will change. You don’t make users convert – but you can capitalize on willingness to spend. And there are some ways of doing that that are better than others. This doesn’t mean there comes a point where you don’t want nonpayers to convert. But it does mean 2 things. First, you need to make sure your attempts to get a nonpayer to convert 15 days after install won’t interfere with your ability to monetize a good payer 15 days after install. Not all customers contribute the same way to your bottom line. And you’re better off maximizing the revenue you get from a dedicated fan than getting a single transaction from a user with lower redeposit potential. Second, you need to also be thinking about the ROI of your product/analytics/dev efforts. Assuming you are not operating with unlimited resources, there is potentially a much bigger ROI for your efforts if you focus on capitalizing on your biggest fans’ enthusiasm – rather than trying to change the cost/benefit calculation of your users who have played for longer without paying. That’s why focusing on early conversions is key.

You’ll always be most successful when you start by observing user patterns and implement features that reinforce that tendency. By doing that you’ll simply be giving users more of what they want. This doesn’t mean you can’t improve conversion, or create situations where users convert (and they wouldn’t have converted otherwise). But it does mean optimizing monetization is about capitalizing over a level of enthusiasm and motivation you can’t manufacture by offers or systems.

Users converting early are the most motivated and enthusiastic users. The best way to maximize your chances at conversion is to focus on capitalizing on the enthusiasm and willingness to spend your game generates. When talking conversion, it’s not about game systems or creating frictions or blockers. Now all this doesn’t mean you should go out of your way to implement a lackluster and useless starter pack. But what this suggests is that a) placement is crucial – when you offer is shown and b) the appeal of the offer lies more in its aspirational character than it’s functional/instrumental value.

Generally speaking, a user who is playing the game 180 days after install will be more engaged than a user who is playing 30 days after install, who in turn will be more engaged than a user playing on install day. The least engaged users – those who don’t find what you are offering appealing – will naturally filter themselves out of your game. And the same rationale applies when considering monetization. Enthusiasm in mobile games is something that manifests itself early. Someone who likes your game will know very quickly if s/he likes it. And those users who like your game the most are those converting the earliest. That’s why the LTV of early converters is consistently higher. It’s doesn’t reflect any in-game dynamic. It’s reflective of the level of enthusiasm of early converters. If you look at a very low level of granularity, you will see a non-negligible part of your installs convert within minutes of installs.

min_to_convert

 

That’s why placement is key. Showing an aspirational offer at the right moment – being proactive – is one of the most important ways to improve your early conversion. So, you need to focus on identifying placements with good potential – and putting forward those items/features your users will presumably find the most appealing. Think about your entire user funnel – the one that begins before your user launches the game for the first time. What drove your user to install the game and launch it (assuming you’re not working on Fortnite) is circumscribed to a few key things: the ad in case of users coming via UA – or features/keyword search for others; your app name and icon, maybe the screenshots and description in your app page. None of this lends itself to a rational decision. It’s all about thematic, aspirational words and images. So, what’s going to drive that user to spend in the first few minutes following install cannot be emphasizing the qualities of a spreadsheet. It’s going to be something gratuitous and aspirational. You best customers are those attracted to the aspirational and thematic aspect of your game. Your best way to maximize conversion is to make that available as early as possible.

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