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How to succeed in the mobile game space by Lloyd Melnick

Tag: in-app purchases

How to upsell and cross sell more effectively

How to upsell and cross sell more effectively

Retailers derive significant value from upselling and cross-selling customers but mobile and social game companies are yet to master this opportunity. The cost of acquiring customers, particularly paying customers, is high so it is vital to get as much value as possible from these customers. It is also more cost effective, as Marketing Metrics stated it is 50 percent easier to sell to existing customers than new ones.

Amazon cross sell

First, it is important to understand the difference between upselling and cross selling. Upselling is getting a customer to purchase more of an item they are already buying while cross selling is convincing them to purchase complimentary items.

Starbucks presents examples of both upselling and cross selling. If you are about to buy a Grande Latte and the cashier suggests a Venti Latte, they are upselling. If they then ask you if you want a Cake Pop with your Latte, they are cross selling.

Slide1

In the social gaming space, both are possible. If a player is about to buy 5,000 chips for $10, you can upsell by offering them another 1,000 chips for $1. You can cross sell by also suggesting they pay to unlock five exclusive slot machines to use their new chips in for another $10. You can also cross sell them into another game.

A recent post, 3 Slick Upsell & Cross-Sell Methods to Boost Revenue + Profit by Sam Hurley, , does a great job of explaining the three areas you can deploy upselling and cross-selling.

While browsing

When a customer is playing your game or wandering in a casino it is a perfect time to cross sell them with potential purchases. Their game or browsing activity is an opportunity to show them how they can have a better experience by monetizing. At this critical stage in their journey, they may not be aware of your other offerings, or plan to make a purchase. As Hurley writes, “while customers browse your digital properties, product or service bundles should be presented as super helpful add-ons.”

In social casino, one of the most impactful developments was integrating progressive jackpots with an upsell mechanic. Players can enjoy a slot (browse) and then be presented with an offer to bet higher and have a chance to win a huge progressive jackpot. Only with the higher bet, which requires monetization, can players enjoy the progressive jackpot. In real money casino, this is an even clearer upsell, as players need to play at a higher stake (spend more) to have the chance to win more.

One critical element to keep in mind when players are browsing/playing, is that the offer needs to be relevant. If somebody is playing slots, a promotion to sports bet is unlikely to be successful. Instead, try to get them to spend more on the slots and give them a sports betting offer during the purchase (see below).

On paywall

The second great opportunity to upsell and cross sell a player is when they are in the process of purchasing. First, you can upsell by offering them an add-on. This add-on can be additional chips or currency at a discounted price or a different virtual item in the game (the upsell).

This is also a great opportunity to cross sell. When someone is making a purchase, you can give them something of value in another one of your products (the cross sell). This can be free chips or tournament tickets in the other product, access to a special VIP area, sneak peak or exclusive content (which they would not want to lose).

For the purchase event upsell/cross-sell to be most effective, you should imbue a sense of urgency and scarcity. If it is an offer to purchase more, make it a limited time offer only available to X players. With cross sell, it is even more powerful. If you have a poker game and give someone a key that expires in 24 hours for an exclusive slot in your casino product, that is a powerful incentive for them to try your other game.

To optimize the efficiency of these purchase events activities, Hurley recommends several key elements:

  • Keep it tidy. Don’t clutter the deposit page and overwhelm customers (this could actually lose business, instead of gaining it).
  • Keep it simple. Tell customers exactly what they will get via upsells and cross-sells, concisely and considerately.
  • Keep it welcoming. You don’t want your customer to feel they are buying a used car. Hurley recommends “Customers also bought…” instead of “Add these to your cart, now!”
  • Keep it relevant. The better the alignment, the greater your conversion rate and order value.

After purchase

Once you have gotten a player to monetize, it is the optimal time to turn them into a repeat customer. According to Hurley, post-purchase upsell and cross sell has the highest conversion rate of any type of upsell. Look at the purchase as the beginning of a never ending funnel, the beginning of the Paying Customer Journey.

Once a customer has made a purchase, you can both present upsell and cross sell offers. Allow them to make an additional purchase for a limited time or give them loyalty points, where they earn even more by making another purchase. It is also a great time to present your other products, by buying chips in our slots product, why don’t you try our video poker experience.

There are four primary ways to present the post purchase cross or upsell opportunity:

  1. Once someone has made a purchase, set up a drip email marketing campaign tailored to that player. Make follow on offers based on how they used their initial purchase and the size of the purchase.
  2. Customer support (across all channels) is another chance to upsell and cross-sell your customers, but ensure your CS reps have access to the purchase information and do not turn into cheap salespeople (their primary objective is to keep your customers happy).
  3. Push notifications, simple mobile message saying your recent purchase entitles you to a 25 percent discount right now.
  4. Receipts. Include an offer when you send a receipt to a player for a purchase (even if made through the app store use it as an opportunity to send a receipt). Receipts have a much higher open rate than other emails (71 percent versus about 17 percent) and are more likely to be retained by your customer. Include in the receipt a discount off the customer’s next purchase.

Keep upsell and cross sell top of mind

Given the high ROI of upsell and cross sell promotions, you need to integrate it into all elements of product development and CRM. Think of the various customer touchpoints and how you can integrate upsell and cross sell.

Key takeaways

  • It is 50 percent easier to sell to existing customers than new ones, so you should focus efforts on increasing the size of purchases by your current customers (upsell) and getting them to purchase more of your products (cross-sell).
  • There are three elements of the customer journey where you can cross-sell and upsell, when they are playing your game (browsing), during the purchase and after the purchase.
  • Post purchase is the most effective time to upsell and cross-sell, you can offer your customers a discount on their next purchase or an incentive to try one of your other games. This can be done via email, push notifications, your CS team or by sending a purchase receipt that incorporates an offer.

 

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Author Lloyd MelnickPosted on June 4, 2019September 8, 2019Categories General Social Games Business, Social Casino, Social Games MarketingTags cross-selling, in-app purchases, roiLeave a comment on How to upsell and cross sell more effectively

Subscriptions 3.0

Although most of my success is with the traditional free-to-play (F2P) in-app purchase business model, the big opportunity will be on layering additional monetization on this model. One old model that I think represents a great opportunity for casual games is the subscription model, a model that pre-dates online gaming. A recent article on Alist, Subscriptions Reborn for Gaming, does a good job summarizing the history and pointing to the future of the subscription model.

Subscriptions in gaming in days past

First, it’s important to note that the subscription model is not new to gaming. The rise of MMORPGs, think World of Warcraft or Everquest, was driven by subscription revenue. At it’s peak (2010), World of Warcraft had over 10 million subscribers (most at over $20 per month).

The importance of subscriptions, however, subsided with the growth of in-app purchases. Most MMORPGs moved to a mixed or purely F2P model. Now. World of Warcraft is the only major product that is largely subscription based, and it offers free play up to level 20.

Other online entertainment have gone the opposite way

While gaming has moved away from subscriptions, it is increasingly important for other online businesses. Amazon Prime, Amazon’s streaming media and free delivery service, with over 50 million US subscribers and about 80 million worldwide. Music has evolved from selling albums or singles to subscription services like Spotify and Pandora. DVDs sales have plummeted while Netflix now has over 80 million subscribers. Thus, in other entertainment spaces, the subscription model is driving revenue now.

Subscriptions in gaming now

While not many games are offering subscriptions, yet, many gamers are already subscribing. Microsoft and Sony both have tens of millions of subscribers to Xbox Live and Playstation Network, respectively, for access to multi-player gaming and new, free games. Electronic Arts is seeing success with its Origin Access subscription service, which for about $4/month gives players access to classic EA games as well as new games before other customers.

The opportunity for subscriptions in gaming

While there is clearly a demand for game subscriptions, one hurdle that remains is Apple’s restriction on iOS subscriptions. With Apple, to offer an “auto-renewable subscription,” that is a subscription that automatically renews rather than asking the customer to purchase it again after a set period of time, you must provide a product that cannot be used up over time, what they call a non-consumable. A consumable could be an hour-long experience point boost in a game app. On the other hand, a non-consumable could take the form of an unlocking a theme, since it could be restored again later.

If you assume that Apple will not change its policy soon, you should not create separate strategies for Android and Apple given the importance of the iOS platform, instead build a subscription model that works for both. While there is no set of best practices yet in the mobile space for leveraging the subscription model, I suggest following the plan below to test this model

  1. Look at micro-subscription, small monthly amounts. $0.99 or $1.99 is not a large burden on players but not only will it generate revenue but will get them further invested in your product.
  2. Consider multiple subscription tiers. $0.99 for the silver subscription, $4.99 for the gold. This provides opportunities for your most engaged players to get the most benefit but is also accessible for all players.
  3. If you have an in-game VIP or loyalty program, offer subscriptions for players to move up or stay at a certain level. I would pay $10/month to retain my Platinum Status on American Airlines, let other people buy into status (plus it puts a monetary reward on it for players who earned it).
  4. Decide whether it is a company wide subscription (like EA’s Origin Access) or if it is game specific. The former obviously makes sense only if you have, or plan to have, a broad range of titles.
  5. Decide what to include in the subscriptions but always test. Different options include early access to new content or games, discount on purchases (which also may include IAP monetization), special avatars or themes or a regular XP boost. The benefits are game/company specific but should be broad enough to ensure a majority of players would see value.

As the model evolves, it will be interesting to see what does and does not resonate with players. By watching the space, you can learn best practices and build from there.

Slide1

Try it

While the subscription model is unproven in casual games and there is no defined model on how to do it right, you should still try it. It is increasingly difficult to monetize mobile apps, or at least monetize at a level that covers your acquisition costs. By adding subscriptions, you may find a secret to increasing lifetime value and thus enabling growth.

Key takeaways

  • Gamers have responded to the subscriptions model since MMORPGs, though it lost favor to in-app purchases recently.
  • Other areas on online entertainment – music, film, video – are driven by the subscription model.
  • Subscriptions represent an opportunity, though currently unproven, to increase revenue and customer lifetime value.

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Author Lloyd MelnickPosted on May 18, 2016May 1, 2016Categories General Social Games Business, Mobile PlatformsTags in-app purchases, monetization, Subscription1 Comment on Subscriptions 3.0

Dawn of a new era of in-game advertising

Last week I wrote about the rising cost of paid user acquisition. this week I want to dive deeper into how advertising can help mitigate this issue. Ironically, my former employer, Zynga, made a creative move recently in this direction. Zynga announced SponsoredPLAY, an in-game advertising product where sponsors offer special content or levels that enhance rather than detract from gameplay. I do not know enough about the offering to comment on it directly but it shows how game companies need to think to thrive in the coming age of higher cost per installs.

Why advertising is the natural hedge

Last week I discussed the fundamentals of the paid user acquisition space and why it pointed to dramatically higher CPIs (cost per installs) in the near future. There are several options to cope with this situation but one of the strongest is to increase advertising revenue in your game. Once advertising becomes a significant component of your revenue mix, any increase your CPIs due to higher advertising rates should also generate additional ad revenue on the other side of the equation. The more CPIs increase, the more your ad revenue increases.

Advertising 2.0

Unfortunately, increasing advertising is not as easy as putting banner ads in your games. Last January I wrote how consumers are much savvier now and expect their communications with companies to be as smart and sophisticated as they are. The same holds true for advertising.

For advertising to work in 2015 and beyond, it must achieve certain functions that most ads do notSlide1

  • Targeted: The advertising should be relevant to the customer. A 50-year-old man should not see an ad for a Miley Cyrus concert.
  • Contextual: The advertising should fit naturally with the overall game experience. You should not be playing Game of War and all of a sudden see an advertisement with pink fluffy unicorns dancing on rainbows.
  • Beneficial: Rather than having the advertising annoy the player, enhance their experience. Use it to deliver benefits that they would not normally receive.
  • Segment: You do not have to show ads to everyone. You may only want to show ads to non-spenders. If the ads are truly beneficial, you may actually want to show them more frequently to spenders. The important thing is to create as small clusters as possible and then create an advertising strategy that optimizes the value for that cluster (IAP [in-app purchases], subscription, advertisements).
  • Multiple formats: You should not limit your advertising strategy to one type of advertising, just as you would not limit your in-app purchases to only allowing players to buy chickens. Different types of ads will work in different parts of your game and some types will be more relevant to certain users. Use the full arsenal of advertising to optimize your player’s experience and the revenue they generate.
  • Flexibility: The digital marketing world is still in its infancy. Rather than have a laser focus on one ad unit or strategy, keep abreast of developments in the industry and continually evolve your strategy as best practices evolve.

Continue reading “Dawn of a new era of in-game advertising”

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Author Lloyd MelnickPosted on October 21, 2015January 4, 2016Categories General Social Games Business, Social Games MarketingTags advertising, CPI, IAP, in-app purchases, in-game advertising, monetization, sponsored play, zynga1 Comment on Dawn of a new era of in-game advertising

Why your business model should not rely solely on in-app purchases

I have seen many disparate data points recently that when looked at holistically show how the free to play business model needs to evolve from relying on in-app purchases. While previously a strong in-game economy that generated significant revenue from in-app purchases was sufficient to create large profits for successful games, changes in the economics of the industry suggest in-app purchases will not be enough to support even successful games. The obvious answer is the advertising model, but even this model needs evolution to keep up with the times.

The data points

There are multiple data points that suggest CPIs (cost-per-installs) for performance marketing are not only increasing, but are likely to increase at the rate where they will surpass the lifetime value of acquired users for most games.

More apps, more spend

Slide1Most of the major game publishers are planning to grow through the launch of multiple new apps, particularly in the social casino space (where user acquisition costs are already high). While speaking colleagues recently, I learned that two of the major social slot companies have three new SKUs each planned for 2016, with planned spend of over $250,000 per day for each company already budgeted. They also expect their major competitors to each launch 1-2 new SKUs next year (and all in the first half of next year).

CPIs are simply a matter of supply and demand, and given that the advertising inventory is not increasing, it is inevitable that the cost of installs will increase. Even if the new apps are not targeted in your space, there is a limited number of people who will download a game and these companies will start to target your potential customers also because they will dry up their demographic.

Companies scapegoating user acquisition teams and agencies

The second data point is how many companies, including some of the biggest in the space, are replacing the leadership of their UA (user acquisition) teams and firing UA agencies they have worked with for several years. Many people I know have recently been approached for senior UA positions, and many of these people do not have significant UA experience. What is occurring is publishers are seeing a lower return on their advertising investment, or a negative return, and believe the problem is their UA team or advertising agency. Continue reading “Why your business model should not rely solely on in-app purchases”

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Author Lloyd MelnickPosted on October 14, 2015January 4, 2016Categories General Social Games Business, Growth, Lloyd's favorite posts, LTV, Social Games MarketingTags advertising, in-app purchases, LTV, UA, user acquisition2 Comments on Why your business model should not rely solely on in-app purchases

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Lloyd Melnick

This is Lloyd Melnick’s personal blog.  All views and opinions expressed on this website are mine alone and do not represent those of people, institutions or organizations that I may or may not be associated with in professional or personal capacity.

I am a serial builder of businesses (senior leadership on three exits worth over $700 million), successful in big (Disney, Stars Group/PokerStars, Zynga) and small companies (Merscom, Spooky Cool Labs) with over 20 years experience in the gaming and casino space.  Currently, I am on the Board of Directors of Murka and GM of VGW’s Chumba Casino

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