Maximize the Lifetime Value of a Social Game Player

You have been working on your social game, and now you are ready to start making some money from it.

What are some of the things you need to think about? Who will actually purchase something? What can you expect to make for how much money you put in? 

These are all questions a social game developer will ask at some point, and the answer is: it depends. I know this answer is vague, but couldn't be more true. The delicate balance between what will work and what will not is highly dependent on so many variables that include things as: type of game, market, timing, game play, marketing budget, viral channels etc.

Also it doesn't help that social games are reliant on the ever-changing landscape of social networks either. The best thing a start-up game studio can do is to remain as agile as possible and to a/b test all marketing campaign efforts before scaling up ad spend. This will not only help you save time and money but will also allow you to collect real time data which can be used to refine your product to what the market is telling you it wants.

With this said however, there are still a few key tips that you will still need to think about:

Your virtual goods need to make sense

Just because you have built a social game and have stocked your store with what you think are the coolest & best looking virtual goods does not mean that people will buy them -  regardless of how many users you throw at your game . Virtual goods need to make sense to a user's experience in relation to the game and in order to do that, you need to first understand the why before the what. Why will your players want to buy a virtual good in your game?  By understanding players motives, it will make it much easier for you to integrate this into your social game.

There is no one fit solution to knowing what virtual goods will sell and which will not.  

The demand and popularity of virtual goods will depend on the type of game you are building. Go beyond the basics, e.g:, 'Coins in a Casino', 'Seeds in a Farm game', and think instead something that will enhance a players experience such as 'Lottery Tickets to a Casino's progressive jackpot' or 'Super grow fertilizer for the Farm'.

As a game designer it is very important to make sure that your virtual economy is not an after thought but an integrated component in the actual game play and user experience.

Who buys Virtual Goods?

Studies show that only a small fraction of players will actually put any money into a social game at all.  (Make note, this does not mean non-paying players have no value, because they do - I will save this for a future post). 

You can expect in a general social game, 2-4% of your user base to make an in-game purchase. For social casinos, we have seen research that suggests as high as 6-7%. 

The amount of money of a paying type of customer also varies which we have divided into 5 segments to give you a better example:

• Whales: Have a lifetime value (LTV) of over $500
• Sharks: Loyal repeat users who have a LTV of $100
• Dolphins: Spend in the first month only, LTV of $20
• Fish: make only one purchase, LTV of $5
• Plankton: never spend any money (makes up 96-98% of your entire player base)

Analyzing this data:

By analyzing this data, it will help you think about how to engineer your game to maximize sales.

From this we know that a repeat customer (Shark), has a 25x value of a one-time purchaser (Fish). We also know that once a player has made a single purchase, they are most likely engaged in your game, meaning it is generally easier for them to buy again.  Ask: So what can we do to convert these Fish to Sharks? and from there, you can then ask yourself what can we do to turn these dolphins into whales? 

Wrap up:

Why do people buy Virtual Goods?

In the social game world, the main reason people buy virtual goods is to enhance their experience. Enhancing their virtual experience includes such things as upgrade tools, saving time, being more powerful, looking better.

Why Virtual Currency?

1) Distinguish the difference between 'Value' & 'Cost'.
2) Virtual currency is perceptively 'cheaper' than 'money'
3) More flexibility to train user behavior
4) Builds an economy and promotes user generated content such as gifting, sharing, helping

In a Nutshell:

• Get more users into the game (plankton)  --- aka acquisition
• Convert more users into spenders (plankton > fish)  --- aka conversion
• Get spenders to spend more (fish > dolphins) --- aka retention
• Serve & keep your big spenders happy (sharks & whales) --- aka value add

Hope this gets the game design gears in your head turning, happy monetizing! :)

-s-


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