This post is the difference between ACTUAL LTV and ACTUAL CLTV
I don’t dare to talk about Predictive LTV as many different companies use different models and the market and you game changes too much to adjust your variables accordingly, so I’m going to only talk about ACTUAL LTV.
As they say, in order to looking into the future, you need to look at the past, and knowing your ACTUAL LTV will help make better decision on fixing your funnels to make for ROI positive product.
Let’s get started.
Actual LTV will require you to pull your Retention Rates and your Avg. ARPDAU for a specific product, and calculate the Accumulated sum of the the lifespan of your average user.
Let’s say that the avg. ARPDAU for a product is $0.50, you can immediately assume that any player you acquire into your game will pay out $0.50. Therefore simple math will assume that if you keep your CPI under $0.50, your ROAS > 100% on Day 1, which is great.
To calculate your Actual LTV will be the
The sum of True Arpdau * (Retention) + 1 to the infinity
Visually it would look something like this:
Based on your Lifetime Retention Data, you can calculate your payback period or set benchmark data to help identify and prioritize your feature development schedule.
Going through this exercise will help pinpoint the weakness in your product and where you need to improve to make for a profitable product. One of the weakness’ of this approach is that sifting through organic and paid installs to assume patterns in your product will always be second guessed since organic installs can be extremely random and at times there aren’t any specific reason why you experienced revenue spikes in a specific period.
Actual CLTV is the concept of only looking at Customer behavior in the game and prioritizing feature sets to have your user based perform the below objectives:
- Customer Conversion
- Customer Re-conversion
Very similar to the your Actual LTV model, this time we are looking at your Customer Retention Rate.
One of the advantages of this is that you’ll that your Customers stick around a lot longer than your average users in the game. The only problem here is that it’s extremely expensive these days to acquire these players.
Newzoo has mentioned that there is over 2.3 billion mobile gamers around the world, but if you assume only 1-2% of these players actually spend money on a mobile app, than the customer market size is actually 23- 46 Million customers in the current market.
This is a pretty small number considering how many games are available in the market.
The half cup full approach at this data is that in the 2019 the mobile gaming market size has risen to over $140 Billion, which means if there is about 50 million customers in the mobile market, 1 customer has the potential to bring in $3000. Which is insane, or my math and assumptions are completely wrong. I would assume the former, but i’m trying to provide context on how you can see how this approach will be a better approach for revenue projection.
The hurdle here is that you’ll need a lot of re-conversion / loyalty features to potential create a ROI positive product which is subject for debate on what the most ROI Positive Meta feature set that should be developed.
Probably in another install ill discuss proper re-conversion techniques to increase your CLTV.
But for this post, i’m going to conclude with this.
Good luck 😉