Why so serious!! Invite Rate [Part II]

As discussed in [ Part I ] the importance of Invite rate for the success of your game is becomes increasingly important as the smartphone market gets saturated.

Sadly enough, as apps become more integrated with our social life, game designers are required to understand both the psychology of “user gameplay” along with having the business acumen of creating in – game feature to bring in new users to the game “ The psychology of viral”

In the past,  pre internet connectivity to your console,  game designer were focused more on the actual game, and making it fun as possible, and the marketing team was responsible for marketing the game and selling the game.

At some point during the Web boom 2.0, the game designers were required to design both the game play and the viral design for the game.

Its no wonder why, a lot of web companies cashed in on the Social Gaming craze before console designer were able to understand the importance of back end technology and the concept of social on the internet.

So how much of an affect does a good viral design technique do for the bottom line?

In the previous post I mentioned how utilizing and finding exploits with the K – Factor on any platform will result in an exponential growth in your users.

Let take a look at revenue related KPI:

I = Number of Invites

C = Number of Conversion.

The objective is to equate to 1 (If so than you don’t need any marketing dollars at all)

This is an extremely difficult task in the current market so, lets add some realistic values in for the K factors:

  • I = 10 Invites per users
  • C = 10%

K = 10 * 10% = 0.1 = 10%

If K = 10%, what this means is that for every users you purchase or obtain organically, you are potentially obtaining 1.1 users instead of 1.

So, how much does a change in Invite rate affect the bottom line.

In this example, i will illustrate the difference between a 10% invite vs 0% invite rate revenue model.  ( I will be making some massive assumptions with my data so that you can understand specifically the effect of invite rate since, the big one being completely neglecting retention rate, and keeping it at a constant)

Let’s start with some key benchmark KPI today, producers attempt to hit (Some nice round numbers)

  • Monetization Rate = 2%
  • ARPPU = $1
  • DAU = 10,000 (I will keep retention at 100% for this demonstration)

Your monthly Revenue for Invite Rate of 0%

Date DAU Invite Rate ARPU Revenue
8/1/2015 10,000 0% $1 $10,000
8/2/2015 10,000 0% $1 $10,000
8/3/2015 10,000 0% $1 $10,000
8/4/2015 10,000 0% $1 $10,000
8/5/2015 10,000 0% $1 $10,000
8/6/2015 10,000 0% $1 $10,000
8/7/2015 10,000 0% $1 $10,000
8/8/2015 10,000 0% $1 $10,000
8/9/2015 10,000 0% $1 $10,000
8/10/2015 10,000 0% $1 $10,000
8/11/2015 10,000 0% $1 $10,000
8/12/2015 10,000 0% $1 $10,000
8/13/2015 10,000 0% $1 $10,000
8/14/2015 10,000 0% $1 $10,000
8/15/2015 10,000 0% $1 $10,000
8/16/2015 10,000 0% $1 $10,000
8/17/2015 10,000 0% $1 $10,000
8/18/2015 10,000 0% $1 $10,000
8/19/2015 10,000 0% $1 $10,000
8/20/2015 10,000 0% $1 $10,000
8/21/2015 10,000 0% $1 $10,000
8/22/2015 10,000 0% $1 $10,000
8/23/2015 10,000 0% $1 $10,000
8/24/2015 10,000 0% $1 $10,000
8/25/2015 10,000 0% $1 $10,000
8/26/2015 10,000 0% $1 $10,000
8/27/2015 10,000 0% $1 $10,000
8/28/2015 10,000 0% $1 $10,000
8/29/2015 10,000 0% $1 $10,000
8/30/2015 10,000 0% $1 $10,000
8/31/2015 10,000 0% $1 $10,000
TOTAL $310,000

 Your monthly Revenue for Invite Rate of 10%

Date DAU Invite Rate ARPU Revenue
8/1/2015 10,000 10% $1 $10,000
8/2/2015 11,000 10% $1 $11,000
8/3/2015 12,100 10% $1 $12,100
8/4/2015 13,310 10% $1 $13,310
8/5/2015 14,641 10% $1 $14,641
8/6/2015 16,105 10% $1 $16,105
8/7/2015 17,716 10% $1 $17,716
8/8/2015 19,487 10% $1 $19,487
8/9/2015 21,436 10% $1 $21,436
8/10/2015 23,579 10% $1 $23,579
8/11/2015 25,937 10% $1 $25,937
8/12/2015 28,531 10% $1 $28,531
8/13/2015 31,384 10% $1 $31,384
8/14/2015 34,523 10% $1 $34,523
8/15/2015 37,975 10% $1 $37,975
8/16/2015 41,772 10% $1 $41,772
8/17/2015 45,950 10% $1 $45,950
8/18/2015 50,545 10% $1 $50,545
8/19/2015 55,599 10% $1 $55,599
8/20/2015 61,159 10% $1 $61,159
8/21/2015 67,275 10% $1 $67,275
8/22/2015 74,002 10% $1 $74,002
8/23/2015 81,403 10% $1 $81,403
8/24/2015 89,543 10% $1 $89,543
8/25/2015 98,497 10% $1 $98,497
8/26/2015 108,347 10% $1 $108,347
8/27/2015 119,182 10% $1 $119,182
8/28/2015 131,100 10% $1 $131,100
8/29/2015 144,210 10% $1 $144,210
8/30/2015 158,631 10% $1 $158,631
8/31/2015 174,494 10% $1 $174,494
TOTAL $1,819,434

The Different in Revenue is a total of $1,509,434

With just a 10% Invite rate change you have a massive difference in Revenue, but this is based on a massive assumption of Retention actually maintained at 100% which is never the case in applications.  therefore when applying these equations, its important to understand how retention affects your revenue as well.

To note for mid core social games, the benchmark KPI’s are as below:

1 Day 7 Day 14 Day 30 day
30% – 35% 10% – 15% 7% – 10% 5% – 7%

If you’re hitting these KPI’s with respects to retention for a mid core game, you are in good shape.

This would be a general understanding of the important of invite rate, but what designers need to understand is the actual dropoff rate and retention side of your game, since managing your DAU becomes extremely important and quite a daunting task if your cycles are broken.

Taking into account the dropoff rate / retention,  2 things a development team relies on to maintaining your DAU, is for the Marketing team to come up with a good User acquisition strategy, or do it yourself. (Which is what im discussing with you today)

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  • 15+ year mobile application industry veteran, probably product managing multiple apps. If he's not busy running this website, you can probably find him at the gym shooting half court shots, while playing the latest mobile rpg game.

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