ACQUISITION VS RETENTION
Acquisition vs Retention
Striking the right balance between new and existing players can make you a rocket or leave you running in place. Shauli Rozen, Head of Strategic Services at Optimove asks: What is the ideal player mix?
G
aming is among the most extreme Pareto verticals in the online universe, coming in a close second after Fintech. For many gaming operators, the top 5% of customers generate a whopping 60% of
revenues, while three fourths of all revenue comes from the top 10%. These are the operators’ VIPs, and in today’s hyper-competitive gaming scene, retaining these customers can make the difference between flying and sinking. However, the long tail of customers is by no means something online gaming operators can ignore. They must focus on growing their player base through new user acquisition while simultaneously keeping their existing players happy and engaged. Investment, however, is a zero-sum game, and the reality of most businesses is that, due to limited resources and budgets, investment in acquiring new players often comes at the expense of nurturing relationships with existing ones, and vice versa.
necessary to try to slow down players’ spend rate in order to keep them engaged over a longer period of time without ‘burning’ them too quickly. In this context, optimizing the company’s new-to-
existing player revenue ratio – the “player revenue mix” – is more important than ever.
Analyzing New:Existing Player Ratios
We turned to Optimove’s player database, covering
more than 100 brands in a variety of growth stages, to examine the possible correlation between a company’s growth and success to its new:existing player ratio. We limited the research to companies more than five years old and with more than $10M of annual revenue. To assess each company’s state of affairs, we used a combination of top-line factors that included year- over-year growth during the past three years and five- year CAGR (Compounded Annual Growth Rate). We then identified clusters of companies with a similar player revenue mix that also share core attributes such as years in business, growth stage, conversion rates, retention rates, churn rates and changes in Customer Lifetime Value over time.
Key Findings There is a general agreement that the industry is
continuously shifting from major investments in the acquisition process to bigger investment in retention. What the industry understands today is that you can no longer bring in the big crowds for a quick round trying to get as much money as you can from them over this short period of time. Instead, you have to get them to stay, and sometimes it even becomes
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Our research revealed four groups of companies, which we named Running-in-Place, Rockets, Healthy Grown-Ups and Old Cash Cows. A look at their common characteristics offers insight into the optimum player revenue mix and the dynamics through which a healthy player revenue mix promotes growth – or hinders it. The following chart shows the new:existing player revenue mix for each of these four groups.
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