Lifetime Value Part 7: The importance of segments and cohorts to LTV

In previous posts, I discussed the importance of customer lifetime value (LTV), its key elements (monetization, retention and virality) and how to calculate LTV; but it is important to also understand that there is not a monolithic LTV for your game (or product). You may remember that the practical value of LTV is to use it as a metric to determine whether or not an ad spend has a positive return. If the LTV is higher than the cost per install (CPI), it is profitable to advertise (and vice versa).

process from cybaea.net

The key to success, though, is understanding the LTV of the customer you will be acquiring as opposed to the general LTV for the game. Some low cost user acquisition channels may bring in players who are effectively worthless (they leave your game right after they click on the ad) even in a game that has a high overall LTV, so understanding the lifetime value of these users would save you from wasting your money. Conversely, there may be a very expensive advertising channel that brings in great players who all monetize well and have a much higher lifetime value than their CPI.

There are four factors that you should use to calculate separate LTVs (and in different combinations): Continue reading

Lifetime Value Part 6: Guest Post on Calculating LTV

Mark Robinson, the Co-Founder and COO of GamesAnalytics , was generous enough to write the first guest post on my blog, getting into the mechanics of determining Lifetime Value (LTV). This post does a great job of putting many of the ideas I have discussed in my LTV series into practice. Here are Mark’s thoughts on calculating LTV.

Mark

The games industry is quickly learning how to design engaging player experiences and make money from free to play (F2P) games. The transformation from console to online has placed analytics at the heart of game design and management. There are two types of analytics. Game Performance metrics let us interpret the health of our games. Player Behavioural metrics tell us what to do about it to make things better. Continue reading