With the ever increasing cost of user acquisition, keeping and reactivating churned players is critical to success. Most game companies, however, take a shotgun approach to reactivation, treating all churned players the same. There was an excellent article in the Journal of Marketing last year, Regaining “Lost” Customers by V. Kumar, Yashoda Bhagwat and Xi Zhang, that provided excellent details on how to create a strategy to reactivate churned customers.
Not only does the cost of a new customer highlight the value of reactivating a lapsed customer, there is also a competitive benefit. Given that these customers have a propensity to your game, it is likely that if you lost them they went to a competitor. Thus, they are probably providing additional profits to your competitor, who can then use that revenue to compete (bidding on the same new users, investing in new features, etc.).
Kumar and his colleagues point to three reasons to devote significant resources to winning back customers. First, these people have shown an interest or use in your product, much better than cold calls or almost random performance ads. Second, they are already familiar with you and your game, so you do not have to create brand awareness. Third, you can use data to craft the best win-back strategy for each segment since you already know how they behaved when they were a customer.
While there is little argument as to the value of reacquiring churned players, companies devote little analysis to whether and which customers are worth the cost of reacquisition. As with any acquisition program (either first time players or reactivation), there is a point where the value no longer exceeds the cost. The authors write, “firms may unnecessarily waste time and resources reacquiring customers who are unlikely to return to the firm in the first place. Even more problematically, firms may reacquire unprofitable customers or spend too many resources on winning back customers who will defect again very quickly.”
Given that we all have limited budgets and need to optimize ROI, game companies should aim to optimally allocate their resources to win back the best customers. To execute on this goal, you should look at three things:
- How likely is the player to return
- If the player returns, how long will they stay
- How profitable will this player be each month
The other key element is using the right strategy to win back the player. While one segment of players might respond to a special offer, another segment might be interested in new content. Matching the reactivation strategy to the target customer will yield a higher return rate.
Find out why they left
The first key to an optimal customer win-back strategy is segmenting your churned users based on the reason they left. This is an area where machine learning can help you create optimal micro-segments but also one that any person or company can do by reviewing their data. Some (though by no means all) potential reasons players have left your game are:
- Ran out of currency
- Got blocked on a level or mini-game
- Lost too frequently
- Won too frequently
- Found a better product
- Friends stopped playing the game
Analysis can help you bucket each segment. Players with no currency left can be assumed to have left because of their wallet size. Players who reached a certain level and then could not progress for a prolonged period may have left due to getting stuck there. Players whose friends’ activity decreased and then they stopped playing may have churned because of their friends.
One additional way to understand why customers have churned is to ask them. Many will be anxious to tell you what they did not like and what drove them away.
From this data, you then create as many micro-segments that are meaningful. This will help you understand what they value and thus present them with a strong reason to return.
Decide how likely they are to stay
The next element to consider is whether you are likely to retain the reacquired player. You do not want to devote significant resources to reactivate players who will return only to churn again in a few days.
There are two keys that help understand the likelihood of a reactivated player staying. The first is whether they originally went to a competitor who offered a better value. If you have a slots game but you lost players to a competitor running a 5 X sale, you may be able to lure the player back with a 10X sale but they are then probably going to leave again when your competitor has a better offer.
If the player left because they both thought a competitor had better value and they had complaints about your product, they are even more likely to churn a second time. These are constant complainers who you can never satisfy.
Other key factors
Kumar and the other authors also identified other factors that predict how likely a churned player was to reactivate. Not only does this data help you segment churned players and prioritize which to try to reactivate, it provides insights into retaining the player initially.
The more positive the initial experience the more likely the player to return. If the player referred many friends to the product or monetized, they are more likely to come back in the future. This research indicates the importance of getting the player engaged early, even if they do churn.
Also, if the player had a problem initially but a positive service recovery, they were more likely to return post-churn. As the authors write, “sarily dissatisfactory and does not exacerbate customer frustration with the initial service failure. Rather, it shows the firm’s willingness to expend efforts to correct its mistake. This willingness of the firm to recover its failure lowers customers’ perceived risk and mitigates the uncertainty they may feel about trusting and returning to the firm.” This finding shows the importance of resolving issues and providing a good CS experience.
The win back offer
You also want to craft the correct offer to reactivate and retain lapsed players. While a win-back offer that offers both a price discount and a product upgrade is the most effective in reacquiring customers, it is also associated with the lowest second-lifetime duration and profitability relative to price-based and feature- based win-back offers. The win-back offers that discount price are associated with relatively higher second lifetime duration, and the win-back offers that provide a free service upgrade are associated with the highest second-lifetime duration.
The key to successful reacquisition
The key to reacquiring churned players is the first lifetime experience. Also, player experiences and behaviors (i.e., referral behavior and monetization level) are indicators of the quality of the first-lifetime experience and how the customers who had positive first-lifetime experiences were more likely to accept a win-back offer. Although the reason for defection is a good indicator of one’s experience and a good predictor of the likelihood of reacquisition, it also suggests how a reacquired customer will behave.
- Given the increasing costs of acquiring new users and players, more emphasis should be placed on reactivating users who have lapsed.
- Lapsed users are attractive targets as they already have shown an interest in your product, they are familiar with it and you can use their historical data to craft the best win-back proposition.
- To run a successful reactivation campaign, you need to segment lapsed players by how likely they are to return, their value once they return, what offer is most likely to re-engage them and what win-back strategy will be most profitable.