Feeding the Funnel: Turning Users into Profits

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    Feeding the Funnel: Turning Users into Profits - Presentation Transcript

    1. Feeding the funnelTurning users into profitsNicholas LovellGamesbriefwww.gamesbrief.com
    2. Who am I?
      Founder, www.gamesbrief.com
      Clients include Firefly, Huddle, Rebellion and others
      Non-executive director, nDreams
      Strategy director, ChannelFlip
      Former CEO, GameShadow
      Former CFO, ShopSmart.com
    3. What am I talking about?
    4. The funnel
      Users
      Profits
    5. How most people start
      1% convert = £1,000.00
      1% convert = £10.00
      Say each costs £0.10
      Only if the average user stays for 100 months!
      I’ll get some visitors
      Some who visit will register
      Some who register will subscribe
      Subscribers will spend an average of £10 per month
      I’ll put my Maserati on order
    6. The funnel
      Unique users
      Registered users
      Active users
      Paying users
      Profits
      Revenues
    7. Feeding the funnel
      Marketing
      PR
      SEO
      SEM/PPC
      Unique users
      Harness users to create virality:
      • Referrals
      • Facebook Connect
      • Importing contacts
      • Twitter
      Cross-promote from other titles
    8. Converting the funnel
      For your business:
      Draw the funnel
      Reduce to as few steps as possible
      Know the conversion rate for every step
      Tweak, iterate, test until you know exactly how your funnel converts
      Unique users
      Registered users
      Active users
      Paying users
      Revenues
    9. Adding friends - Foursquare
    10. Finding the levers
      Users are not the only metric
      The others depend on your business, but might include:
      Page views
      Video views
      Game downloads
      Purchase of a virtual item
      A metric that you can’t influence is no good
      Focus on LEVERS
    11. Digression 1: Calls to Action
      On every page, you should know what you want your users to do
      Then SHOW THEM
      e.g. Register/Log In/Buy/Subscribe
      But also:
      Tell a friend
      Play a game
      Connect with Facebook/Twitter
    12. Great homepage design
      www.shidonni.com
    13. Monetizing the funnel
      There are many sources of revenue
      Virtual goods / microtransactions are flavour du jour (and my favourite)
      In your own business, focus on ARPPU
      Advertising
      Virtual Goods
      Revenues
      Subscriptions
      Downloads
    14. Digression 2: what users buy
    15. Making profits
      Profitability
      Assumption: Variable cost = 10% of sales
      Any profit can be spent on acquiring customers (CPA)
    16. The equations
    17. Why the funnel matters
      The funnel matters because it is your entire business
      To emphasise that, we need Equation I
      CPA < LTV = good business
      CPA > LTV = trouble
      Where:
      CPA is cost to acquire a user
      LTV is the Life Time Value of a user
    18. Harnessing virality
      A viral business can be an insanely profitable business
      CPA is close to zero, so even if LTV is low, your business is great
      Time for Equation II:
      Viral coefficient = A% x B x C%
      Where
      A% = Percentage of your users who invite a friend
      B = Number of friends they invite
      C% = Percentage of friends who accept the invitation
      If viral coefficient > 1.3, time to order the Maserati
    19. But what if I’m not viral?
      For most Web businesses, the choice exists between:
      Viral: low CPA, low LTV
      Monetized: High CPA, high LTV
      Either is fine, or even a blend, but keep focusing on the conversion rate
    20. It’s all about the levers
      Find the metrics that have the biggest impact on the bottom line
      Try to reduce the metrics to one!
      Three is more usual
      Make sure they are LEVERS
      Laser-like focus on pulling and improving these LEVERS
      The result will be a better business and a happier team
    21. Glossary and contacts
      ARPU - Average revenue per user
      ARPPU - Average revenue per paying user
      CPA - Cost per acquisition
      LTV - Life time value
      Nicholas Lovell
      @nicholaslovell / @gamesbrief
      www.gamesbrief.com
      nicholas@gamesbrief.com
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