What is cumulative spend?
Cumulative spend refers to the total amount of revenue generated by your active users up to that day. Your paying users might spend $100k in IAP on a specific day. But your active players – regardless of whether or not they have spent that specific day – have maybe spent over time a cumulative total of $30M up to that day. And that could represent a significant portion of the total revenue generated by your title over its lifespan.
In order to look at the cumulative spend you want to sum up your active players’ LTV up to that point. I’ve previously written a post with a sample query to help you get that data for your game (alongside additional information that can be helpful). If you look at this for your game, you might be able to see something like the graph below.
In this post I discuss 3 important (and actionable) conclusions you can reach by looking at the cumulative spend of your active customers and the fluctuations in that metric.
1) It helps put things into perspective
Cumulative spend is a way to consider your game’s performance from the perspective of the game: you don’t look at things from a cohorted perspective (how much revenue do you get from a new install after 1/7/30 days of install) or even so much from the perspective of active users. When you are looking at the cumulative spend of your game, your point of reference is the product itself and the way it evolves over time. It’s a “game-centric” view. Think about it as looking at things from the point of view of the product’s lifecycle, from launch to growth to harvest mode (to death). Your game generates revenue over time, and lives (or dies) with its active users. The cumulative spend of active users in your game can be a great way to assess the current health of your game.
The interesting thing is that this perspective is a way to look at the evolution of your title over time more or independently from the influx of new users/customers. As new customers come into the game, the average LTV of your active customers is likely to decrease. The influx of new customers is driving the average down, because the LTV of a new customers will generally be significantly lower than the LTV of an active customers who has been playing the game for many months or years. But when you look at total cumulative spend, the impact of new installs is only (marginally) additive. And more importantly, the contribution of new users doesn’t make you lose sight of the contribution of your established group of fans (more on that below). Getting less – or even no – new users in the game should not dramatically impact the curve and trends you are seeing. Even if you have no new users coming into your game, your existing fans usually keep on spending, and the cumulative spend should increase gradually over time.
Looking at cumulative spend also helps you appreciate the value of your active fans. If your core group of active users has spent over time a cumulative total of $30M, you can see that the people active in your game today might be responsible for 30%, 40% or even more of your title’s lifetime revenue. This can be a good way to remind yourself of what game a service means, and who you are catering to. There are many more contingencies involved in managing a live game than what cohorted regularities might have you think. You need to cater to the people in your game who are driving your revenue and who are engaging with your endgame and the minute details of your events and live ops.
2) It helps you identify spending trends
What is interesting about looking at cumulative spend is that it helps you identify monetization trends in your game. By default, a healthy evolution of the cumulative spend is an upwards trend. As your engaged users are playing and keep returning to your game, they keep spending. That means their LTV goes up, and the total cumulative spend keeps on increasing as those users keep returning to the game.
The interesting thing here is that when you track the evolution of your game’s cumulative spend, you can identify trends in your monetization patterns. As you add/remove features, change your monetization strategy or your balancing, introduce new rarities or events, your game will accumulate revenue more or less fast over time. The trend of the curves will reflect the ways in which you monetize your active users more or less intensely. Or when you are actually loosing players with high LTV.
3) It helps you identify when a small group of super valuable users stop playing
The longer your game has been live, the more you are likely to rely on a group of dedicated players to generate revenue on a daily/weekly/monthly basis. And those engaged players will more than likely by a smaller subset of your active customers. You could always be tracking specifically what the play pattern of those individuals are. But getting that information is likely to depend on a very error-prone manual process from the analytics team.
Say for example you have a small group of 200 players with an average LTV of $10,000. Focusing on those individual high spenders is likely to lead nowhere because it’s too granular. But if you look at cumulative spend in your title, it will be much more obvious if a portion of them stops playing. If those customers stop playing your game, it will be fairly quick to see that the cumulative spending of your active users has gone down by $1M or $2M.
Generally speaking, anytime the cumulative spend of your game is on a downwards trend, that is a very serious red flag. That means you are losing your most valuable group of customers. And tracking the game’s cumulative spend is usually the fastest way to identify that.