Understanding Your Power Users and Fostering More | Mike Hines

UNDERSTANDING YOUR POWER-USERS(AND FOSTERING MORE)

Casual Connect Tel Aviv

ABOUT

Mi ke H i n e s

AmazonAppstore@MikeFHines

Founder@2FinancialServicesStartupsFounder@2SoftwareStartups

QAEngineer@NowSoftwareQAManager,ProductManager@[email protected]

Mentor@GameFounders,DevBootcamp

GamesJudge@CasualConnectIndiePrize,WhiteNights,andPocketGamerVeryBigIndiePitch

Speaker@GDC,GDCE,CasualConnect,PocketGamerConnects,AnDevCon,WhiteNights,CES,PAXDev

iPHONEiPAD GOOGLE PLAYAMAZON

47.7%57.1% 36.5%64.2%

66.0%

26.3%

7.7%

SHAREOFMOBILEGAMESPENDERSPERAPPSTOREUS,UK,GER,FR2014

LEVELOFSPENDINGAMONGSTALLMOBILEGAMESPENDERSPERAPPSTOREUS,UK,GER,FR2014

56.3%

34.9%

8.7%

64.9%

28.2%

7.0%

58.1%

33.1%

8.1% %MinorSpenders

%AverageSpenders

%BigSpenders

©2014Newzoo |Source:Newzoo DataExplorer

Source:Newzoo TrendReportSpottingTheMobileSpenders

AMA ZON R EACH E S ( B I G ) S P END ER S B E S T

POWER-USERS:THE VITAL FEW

POWER-USERS ARENOT NEW

Well-Known across Industries

Mobile Apps isn't the first industry to recognize the importance of highly engaged customers.

THEY SPEND ON THE THINGS THEY LOVE

Substantial Spenders

When it comes to their passion (whatever it may be), power-users spend more money than the average fan.

KNOWN EARLIER AS THE 80-20 RULE

The Pareto Principle

In 1941, Joseph M. Juran generalized the concept of the "vital few," which he named after Vilfredo Pareto.

CASINOS DEFINED COMMON TERMS

Whales, Dolphins, Minnows

Monetization strategy is segmented, based on different customer experiences at different price points.

Freemium:• Minnows = 90-98% of users• Dolphins = 50% of revenue• Whales = 3-4% of paying users (<0.1% total)

Source: GGV Capital, Feb. 2013 — http://bit.ly/1Ldu5Fu

THE NUMBERS VARY, BUT…We All See Similar Segmentation

• Newzoo: 3.5% of U.S. mobile gaming customers generate 33% of sales

• Google: 1% of U.S. customers generate 14% of monthly sales

• Kongregate: 0.1% of U.S. customers generated 53% of all time sales

Top 1% of customers who spend on mobileSources: Google, Casual Connect July 2014; Kongregate, GDC March 2015

EVERY CUSTOMER HAS VALUE

The Vital Few and Useful Many

Juran originally defined the Pareto Principle as "the vital few and trivial many," but later realized that even non-spenders are important.

They can be:• Potential power-users• Influencers and advocates• Eyeballs for advertising

POWER-USER VS. WHALE"Whale" Has a Negative Connotation of Exploitation

Nicholas Lovell, author of The Curve, differentiates:

• Ethical: Customer spends because they love what you do• Unethical: Customer spends because of who they are

We prefer the term "power-user" to describe the avid hobbyist who loves your work.

AMAZON'S PERSPECTIVE

WHAT DO THEY LOOK LIKE TO US?

Amazon Appstore Power-Users

• Spend $50/month or more• On average, spend >$200/month• Are concentrated in US, Japan, UK, and

Germany

POWER-USERS ARE LOYAL TO A FEW APPS

Focused Passion

80% of customers who spent $1000 in January, 2015 spent 75% (or more) of that on just two titles.

POWER-USERS LOVE ALL KINDS OF APPS

Candy Crush Saga

MMOs are traditionally associated with power-users, but King has expanded our view of what is possible.

POWER-USERS LOVE ALL KINDS OF GAMES

Game of War: Fire Age

Similarly, Machine Zone has had success in a completely different genre.

WHY SHOULD YOU CARE?

NOT ALL IMPORTANT METRICS ARE COMPLETE

ARPU & ARPPU

Averages are most useful when data has a normal distribution (Bell curve).

For example:• Human life-span or blood pressure• Number of petals on a daisy• Cloudy days in Seattle

APP REVENUE HAS HIGH VARIANCEData Points Can Be Very Far Apart and Spread Out

Best-describedbyapowerlaw,inwhichonevalue(suchasrevenue)variesasapowerofanother(suchasrank).Re

venu

e

UserRank

RevenuebyUser

REVENUE DISTRIBUTION INFLUENCES ANALYSIS

Impact on Other Metrics

Optimize the funnel, but look for emergent behavior among power-users and tune those pathways.

• Prioritize features according to monetization segment

• Design separate A|B tests• Identify highest-impact flows

IT'S ALL ABOUT EMOTION

WHAT YOU BUY SAYS SOMETHING ABOUT YOU

Personal Expression

The media you consume expresses who you are, and your emotional connection inspires the willingness to pay.

KRITIKA: THE WHITE KNIGHTSGAMEVIL Offers Avatars that Appeal to Collectors

CONNECT WITH WHO OR WHAT YOU ADMIRE

Stand Out, or Fit In?

Go big: Identify with someone, a broader community, or something that inspires you.

Go small: Establish yourself as part of an elite tribe.

TELL THE WORLD WHY YOU'RE GREAT

Status Update

Highlight your accomplishments or social status. Purchases act as a badge of achievement, or a uniform commanding respect.

UNDERSTAND THE CONNECTION

Emotion & Spending

Knowing why they buy is critical to making your app attractive to power-users—and more importantly, worthy of them.

BEFORE, DURING, AFTER

DESIGN FOR YOUR POWER-USERS

Before

• Foster early engagement• Message at the right time• Keep them in the app• Keep them coming back• Use server-side accounts

LET YOUR CATALOG SUPPORT THEIR DESIRES

During

• Self-expression / aesthetics• Ability• Status / collection• Money for time• Price distribution

Source: Amazon Appstore, March 2014

31%29%

7%

12% 11%

5%3%

1%

14%11%

6%3%

16% 16%

11%9%

0%

5%

10%

15%

20%

25%

30%

35%

$0.99 $1.99 $2.99 $4.99 $9.99 $19.99 $49.99 $99.99

% of Assortment % of Sales

ASSORTMENT BY PRICE POINTTotal Marketplace

28%

15%

10%13%

11%9% 9%

5%

32%

19%

7%4%

10%12%

5% 4%

0%

5%

10%

15%

20%

25%

30%

35%

$0.99 $1.99 $2.99 $4.99 $9.99 $19.99 $49.99 $99.99

% of Assortment % of Sales


ASSORTMENT BY PRICE POINTTop 50 Only

GROW WITH THE CUSTOMER

After

• Understand price sensitivity• Expand your catalog (keep it fresh)• Limit price points to clarify value• Treat all customers well!

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

1 4 7 10 13 16 19 22 25 28

Source: Amazon Appstore, July 2013

Days Owned

+60%

averageselling price

REGULAR CUSTOMERS SPEND MOREPrice Sensitivity Declines over Time


After


69%

100%

145%

0%

20%

40%

60%

80%

100%

120%

140%

160%

1-5 Items 6-10 Items 11-15 Items


# of In-App Items for Sale

ARPPUINDEX: Average = 100%

SELECTION DRIVES REPEAT ORDERSMore Is Better


After


Conversion Rate

INDEX: Average = 100%

DON’T CONFUSE YOUR CUSTOMEROFFER VARIETY, BUT NOT TOO MUCH


147%

101%

52%

0%

50%

100%

150%

200%

1-5 Price Points

6-10 Price Points

11-15 Price Points


After


AMAZON CAN HELP

iPHONEiPAD GOOGLE PLAYAMAZON

47.7%57.1% 36.5%64.2%

66.0%

26.3%

7.7%

SHAREOFMOBILEGAMESPENDERSPERAPPSTOREUS,UK,GER,FR2014

LEVELOFSPENDINGAMONGSTALLMOBILEGAMESPENDERSPERAPPSTOREUS,UK,GER,FR2014

56.3%

34.9%

8.7%

64.9%

28.2%

7.0%

58.1%

33.1%

8.1% %MinorSpenders

%AverageSpenders

%BigSpenders

©2014Newzoo |Source:Newzoo DataExplorer

Source:Newzoo TrendReportSpottingTheMobileSpenders

AMA ZON R EACH E S ( B I G ) S P END ER S B E S T

ANDROID PHONES & TABLETS

FIRE TV & FIRE TV STICK

BLACKBERRYFIRE TABLETS

MORE WAYS TO MONE T I Z E

PREMIUM ADS SELL T-SHIRTSGET PAID FOR EVERY MINUTE OF APP USEIN APP PURCHASE

TAKEAWAYS

POWER-USERSThe Upshot

• Power-Users drive revenue

• Any user may become a power-user

• They spend on what they love

POWER-USERSThe Upshot

• Plan for themEngage early; don't distract; keep them coming back

• Support their (emotional) choicesSelf-expression; collecting; status; advancement; optimization

• Grow with themKeep catalog fresh; clarify value; offer several price points

THANKYOU!

Mike Hines@MikeFHines

developer.amazon.com/appstore

http://bitly/indieundergroundhttp://bitly/marketingtips4appshttp://merch.amazon.com

http://bitly/appstoreapptesting

Technology

Understanding Your Power Users and Fostering More | Mike Hines