Top 10% of social gamers make up 75% of revenues
An extreme version of the Pareto Principle applies to social gaming, according to new research by customer retention platform Optimove.
While the Italian economist Vilfredo Pareto’s 80/20 rule is often translated to the business world to explain the fact that for many companies, roughly 80% of business comes from 20% of clients, in social gaming the split is even more pronounced, says Optimove.
“Our data shows that an extreme version of the Pareto Principle exists in social games, as the top 10% of players bring in 75% of a game’s revenue. The top 5% bring in 55% of revenue, and the top 1% of spenders – the biggest of the big whales – bring in a whopping 30% of revenue,” said Moshe Demri, Optimove’s director of strategic services.
These players are what Optimove calls ‘active spenders’, one of six distinct social gamer types it identifies in a new report, The Six Most Common Social Gaming Personas and How to Engage Them.
It came up with the personality types after tracking 235 customers over an 18-month period.
It recommends operators make sure they are aware of exactly who all of their active spenders are, monitoring them on a daily basis and contacting them after big wins and losses.
It also recommends that operators have VIP programmes in place for these players and take action to re-engage any who fall out of the top group.
The other five groups identified were new non-spenders, new spenders, active non-spenders, churn spenders and reactivated spenders.
Operators need to be patient with new non-spenders — those who've registered within the last 14 days but have yet to make a payment — while a more aggressive approach is warranted for new spenders, those who've converted within two days of sign-up.
Social gaming firms should provide good incentives to try and reactivate active non-spenders, as this group is a high risk for churn, with a similar approach needed for those in the churn category, who’ve not be active for more than 21 days.
Quick action is the key to holding on to reactivated spenders as most of these players will churn again within two weeks, Optimove’s data found.
The study highlighted the differences between real-money gaming and social gaming, for example, in social gaming, only 24% of players make a payment on the same day they register, with 44% of players waiting a week or longer.