Delivered at Casual Connect Tel Aviv 2016. A small group of customers often generate an unexpectedly large percentage of total revenue for a mobile app or game. Who are the members of this group, and how can you better engage them? How do you encourage others to join the ranks of these power users? Amazon has a unique perspective on power users in aggregate. We’ll share tips on what is currently working best for cultivating new and existing power users, keeping them engaged and maximizing their revenue potential.

1. UNDERSTANDING YOUR POWER-USERS
(AND FOSTERING MORE)
Casual Connect Tel Aviv

2. A B O U T
M i ke H i n e s
Amazon Appstore
@MikeFHines
Founder @ 2 Financial Services Startups
Founder @ 2 Software Startups
QA Engineer @ Now Software
QA Manager, Product Manager @ Microsoft
Evangelist @ Amazon.com
Mentor @ GameFounders, Dev Bootcamp
Games Judge @Casual Connect Indie Prize, White
Nights, and Pocket Gamer Very Big Indie Pitch
Speaker @ GDC, GDCE, Casual Connect, Pocket
Gamer Connects, AnDevCon, White Nights, CES,
PAX Dev

3. iPHONEiPAD
GOOGLE
PLAY
AMAZON
47.7%57.1% 36.5%64.2%
66.0%
26.3%
7.7%
SHARE OF MOBILE
GAME SPENDERS
PER APPSTORE
US, UK, GER, FR
2014
LEVEL OF
SPENDING
AMONGST ALL
MOBILE GAME
SPENDERS PER
APPSTORE
US, UK, GER, FR
2014
56.3%
34.9%
8.7%
64.9%
28.2%
7.0%
58.1%
33.1%
8.1%
% Minor
Spenders
% Average
Spenders
% Big
Spenders
© 2014 Newzoo | Source: Newzoo Data Explorer
Source: Newzoo Trend Report Spotting The Mobile Spenders
A M A Z O N R E A C H E S ( B I G ) S P E N D E R S B E S T

4. POWER-USERS:
THE VITAL FEW

5. POWER-USERS ARE
NOT NEW
Well-Known across Industries
Mobile Apps isn't the first industry to
recognize the importance of highly engaged
customers.

6. 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.

7. 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.

8. 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

9. 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 mobile
Sources: Google, Casual Connect July 2014; Kongregate, GDC March 2015

10. 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

11. 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.

12. AMAZON'S PERSPECTIVE

13. 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

14. 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.

15. 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.

16. POWER-USERS LOVE ALL
KINDS OF GAMES
Game of War: Fire Age
Similarly, Machine Zone has had success in
a completely different genre.

17. WHY SHOULD YOU CARE?

18. 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

19. APP REVENUE HAS HIGH VARIANCE
Data Points Can Be Very Far Apart and Spread Out
Best-described by a power law,
in which one value (such as
revenue) varies as a power of
another (such as rank).
Revenue
User Rank
Revenue by User

20. 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

21. IT'S ALL ABOUT EMOTION

22. 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.

23. KRITIKA: THE WHITE KNIGHTS
GAMEVIL Offers Avatars that Appeal to Collectors

24. 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.

25. 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.

26. 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.

27. BEFORE, DURING, AFTER

28. 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

29. LET YOUR CATALOG
SUPPORT THEIR DESIRES
During
• Self-expression / aesthetics
• Ability
• Status / collection
• Money for time
• Price distribution

30. 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 POINT
Total Marketplace

31. 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
Source: Amazon Appstore, March 2014
ASSORTMENT BY PRICE POINT
Top 50 Only

32. GROW WITH THE
CUSTOMER
After
• Understand price sensitivity
• Expand your catalog (keep it fresh)
• Limit price points to clarify value
• Treat all customers well!

33. 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%
average
selling price
REGULAR CUSTOMERS SPEND MORE
Price Sensitivity Declines over Time

34. GROW WITH THE
CUSTOMER
After
• Understand price sensitivity
• Expand your catalog (keep it fresh)
• Limit price points to clarify value
• Treat all customers well!

35. 69%
100%
145%
0%
20%
40%
60%
80%
100%
120%
140%
160%
1-5 Items 6-10 Items 11-15 Items
Source: Amazon Appstore, March 2014
# of In-App Items for Sale
ARPPU
INDEX: Average = 100%
SELECTION DRIVES REPEAT ORDERS
More Is Better

36. GROW WITH THE
CUSTOMER
After
• Understand price sensitivity
• Expand your catalog (keep it fresh)
• Limit price points to clarify value
• Treat all customers well!

37. Conversion Rate
INDEX: Average = 100%
DON’T CONFUSE YOUR
CUSTOMER
OFFER VARIETY,
BUT NOT TOO
MUCH
Source: Amazon Appstore, March 2014
147%
101%
52%
0%
50%
100%
150%
200%
1-5
Price
Points
6-10
Price
Points
11-15
Price
Points

38. GROW WITH THE
CUSTOMER
After
• Understand price sensitivity
• Expand your catalog (keep it fresh)
• Limit price points to clarify value
• Treat all customers well!

39. AMAZON CAN HELP

40. iPHONEiPAD
GOOGLE
PLAY
AMAZON
47.7%57.1% 36.5%64.2%
66.0%
26.3%
7.7%
SHARE OF MOBILE
GAME SPENDERS
PER APPSTORE
US, UK, GER, FR
2014
LEVEL OF
SPENDING
AMONGST ALL
MOBILE GAME
SPENDERS PER
APPSTORE
US, UK, GER, FR
2014
56.3%
34.9%
8.7%
64.9%
28.2%
7.0%
58.1%
33.1%
8.1%
% Minor
Spenders
% Average
Spenders
% Big
Spenders
© 2014 Newzoo | Source: Newzoo Data Explorer
Source: Newzoo Trend Report Spotting The Mobile Spenders
A M A Z O N R E A C H E S ( B I G ) S P E N D E R S B E S T

41. ANDROID PHONES & TABLETS
FIRE TV & FIRE TV STICK
BLACKBERRYFIRE TABLETS

42. M O R E WAY S TO M O N E T I Z E
PREMIUM ADS SELL T-SHIRTS
GET PAID FOR EVERY
MINUTE OF APP USEIN APP PURCHASE

43. TAKEAWAYS

44. POWER-USERS
The Upshot
• Power-Users drive revenue
• Any user may become a power-user
• They spend on what they love

45. POWER-USERS
The Upshot
• Plan for them
Engage early; don't distract; keep them coming back
• Support their (emotional) choices
Self-expression; collecting; status; advancement; optimization
• Grow with them
Keep catalog fresh; clarify value; offer several price points

46. THANK YOU!
Mike Hines
@MikeFHines
developer.amazon.com/appstore
http://bitly/indieunderground
http://bitly/marketingtips4apps
http://merch.amazon.com
http://bitly/appstoreapptesting