HOW LIFETIME VALUE DETERMINES YOUR SUCCESS AND HOW TO IMPACT IT

Monetization and Lifetime Value

Presentation Overview

Relevant background

Why Lifetime Value

Importance beyond social media

Virality

Retention

Monetization

LTV varies among customers

FROM START-UP TO BIGCO

Relevant Background

Been there, done that

• Grew to top-5 casual game company • Initiated and negotiated sale to Playdom, which was then rolled into $570 million

Disney acquisition

Co-founded Merscom CCO, led all marketing/sales/distribution

• Responsible for Europe, Latin America, Russia and India• Grew it from scratch to 25 percent of Playdom’s revenue

GM of Playdom’s International Publishing team

• Joint venture of EW Scripps and Capitol Broadcasting• Launched Facebook and mobile games

CEO of FiveOneNine Games

Currently consulting for The Jockey Club and Curious Sense, Chairman of Globalization Committee at NC Central’s School of Business

THE THREE MOST IMPORTANT LETTERS FOR YOUR BUSINESS: LTV

Why Lifetime Value

Function of three performance metrics

Monetization

Virality

Retention

Interdepence

Relationship between LTV and CPA

• Success

LTV > CPA

• Failure

LTV < CPA

Think of LTV starting day 1

Green-light

Design and develop

focused on LTV

Beta and other

testing to optimize

LTV

Post launch to focus on

improving LTV

CRUCIAL TO ANY BUSINESS

Importance beyond social media

Online offerings

NetflixEbatesFarmville

B2B

Square

Rackspace

Bronto

SaaS

SalesforceHootSuiteBasecamp

Retail

Restaurants

Department stores

Car dealers

WORD OF MOUTH’S EXPONENTIAL EFFECT

Virality

Definition of virality

K-scoreK=i*conv% (conversion percentage), where

“i” is the number of invites sent out by each new customer and “conv%” is the percentage of invites that convert into costumers

An advanced look

Importance of virality

Lowers cost of customer acquisition

Exponential growth

Improving Virality

K=i*conv%

• Generate virality quickly• Cater to Connectors

Increasing I

• Quality of communication• Provide value for virality

Increasing conv%

CRUCIAL AND HARD TO FIX

Retention

Definition of retention

Customer lifetime

N-day retention

Churn rate

Importance of retention

If they do not come back, monetization improvements are virtually useless

Improving retention

Product qualityGet in their headsMake it socialMake it globalUse email and

advertising for re-engagement

SHOW ME THE MONEY

Monetization

Definition of monetization

ARPU (Average revenue per

user)

ARPDAU (Average

revenuer per daily active user)

Percentage of customers

who monetize

Average transaction

Average number of monetization

events per customer

Importance of monetization

Improving monetization

Product quality

Value

More selection

Balancing

Shopping experience

Promotions and sales

THERE IS NO SINGLE LTV

LTV varies among customers

Cohorts

Time of year

Stage of product lifecycle

Holidays

Segments

Age

Sex

Income

Interests

Sources

Incentived ads

Targeted search ads

Television

Virality

Press Cross promotion

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WWW.LLOYDMELNICK.COM@LLOYDMELNICK

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