Life Time Value (LTV)


Liri Katz
Life Time Value (LTV)

Most companies nowadays regard users as their most valuable asset, simply because good, loyal and long-term users are not easy to find. There is no doubt that customers are the bread and butter of every company’s business model. However, too many businesses tend to focus more on transactional customer value, without dedicating enough thought and resources to the user experience that takes place after the conversion.

Needless to say, it is important to invest in making your product or service better. However, it is equally important to focus on finding ways to ensure your existing customers are satisfied, and stay with you for as long as possible after the conversion is made. Otherwise, the cost of acquiring each and every customer can seriously outweigh the amount of revenue that could be made from them. Specifically when referring to the world of mobile applications, in which both users and budgets are plentiful.

So how do you actually measure their value? Quite easily, through LTV (Life Time Value). In a nutshell, LTV describes the amount of profit that could be generated by a customer throughout their lifetime. Many companies are already using this business metric to help them understand how much a customer is really worth to them, in terms of actual revenue. It is broadly based on the concept that investing more money in early stages and ensuring a high-quality experience can help in gaining loyal customers whose increased business and engagement will yield more profits in the long run.

In other words: If you know that a certain customer is three times more valuable, for example, than some other customer, it would be wiser to invest more in the first one and make sure they fulfil their potential. When it comes to the competitive world of mobile applications and games, measuring users’ LTV may be a highly challenging task. However, once you manage to have it figured out, you will be on top of things and know where it would be most effective to invest your attention and marketing budget.

In order to help our partners gain easy access to these useful insights, we have developed a unique technology-driven platform: The LTV Optimizer. By tracking in-app events and analyzing user behavior, this tool finds and targets the optimal users who are most likely to engage as much as possible with a specific game or application. The optimizer features advanced targeting options, and can provide valuable information on users, including OS, device type, category, and country. It can make your life as an advertiser pretty easy, as all optimization is carried out on our end.

Every time a user completes one of the tracking points, their action is measured and evaluated. The points we measure may slightly vary from time to time, but the general idea roughly remains the same. For example, in order to assess a user’s value in a game, these are the typical four stages that are measured:

1) Tutorial completion: The user receives an initial explanation of how to play the game and explores its features.

2) Registration: The user registers and starts playing the game, becoming actively involved in it and engaging with in-app events.

3) Stage completion: After the user becomes initially involved in the game, they continue playing and progressing within the game, completing more and more stages.

4) Significant in-game stage: Eventually, the user reaches a certain point within the game, which is difficult to complete without making an in-app purchase. This is the most crucial stage in terms of ROI, and a user who completes it receives high ranking. These are the optimal users, as they have made an in-app purchase once, and are likely to do so again. This is why they usually receive the highest score.

The more advanced a stage is, the smaller the amount of users who reach it. I.e., some 70%-80% of users reach the first stage, while only 3%-5% reach the final stage.

The optimizer tracks the users’ action in each and every stage, and analyzes the accumulated information. Factors such as in-app events and social engagement are important as well, and are mapped and categorized, along with all other parameters. These are then added up, weighed and measured, and essentially lay the foundation for a comprehensive user profile. The evaluation and ranking are then carried out accordingly, based on the profile. The concept is fairly simple: The higher a user ranking is, the better their engagement with your app.

The in-app behavior analysis is executed in real time, thanks to our proprietary technology, based on complex large-data driven algorithms. The platform’s metrics-based predictions allow precise optimizations to be carried out per our partners’ requirement, according to factors such as performance, user engagement with the app, social interaction, and potential revenue. Knowing in advance which users are likely to receive a high score can assist in ensuring that more marketing efforts and budgets are allocated towards their direction, in terms of reach and segmentation. This will ensure that your apps/games reach the right customers, who will remain active and loyal in the long-run and increase your ROI.

For more information on how to get that edge over others and seize the future, contact us at [email protected]

Related Articles

Marketing

Facebook Advertising: What Is It Good For?

Facebook, as most of us probably know, is a popular free social networking website that allows registered users to create profiles, upload posts, photos and video, and interact...

Posted on by Liri Katz
Online Marketing

Mars Media Group Marathon Team

Ready….Set….Run! This past Friday, the great city of Tel Aviv hosted the 5th annual Tel Aviv Samsung Marathon. For those who don’t know, the Tel Aviv Samsung Marathon is a...

Posted on by Liri Katz