ACQUISITION VS RETENTION beermedia/adobe stock
average. Therefore, while continuously working hard on acquiring new players, the companies in this group stand still in terms of growth and do not ramp up.
This can usually be attributed to one of two things: either the company is not acquiring the right kind of new players - those less suited to its offerings - or the company is not doing an adequate job of converting those new recruits into ongoing, active players. In many cases it is both. By investing in retaining even a small portion of new players, Running-in-Place companies will slowly but surely build a stronger core player base that can help turn them into Rockets.
Rockets: These are companies with annual growth Running-in-Place: These companies have
experienced stagnated growth or declining revenues for the last three to five years, with a five-year CAGR lower than 2% and a player revenue mix skewed dramatically towards new players. Companies with great advertising that continually acquire new players are expected be able to grow quite quickly. However, our data shows that when 90% of a company’s revenue comes from new players, it is a signal that the company is not successful in turning those players into active, valuable players. These companies experience churn rates 100% higher than our sample
of more than 50% for the last five years and a five- year CAGR of over 100%. These companies are usually relatively early in their growth cycle and have been around for less than seven years. While Rockets have a player revenue mix that tilts towards new players, all the Rockets in our sample derive at least 30% of their annual revenues from existing players, and 80% of them derive about 50% of their revenues from existing players. Rockets in our sample managed to retain their acquired players and experience churn rates 50% lower than the sample average. However, the reality is that startups that don’t shift their mix
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