Page 91 - MYM 2016

can we keep everybody engaged, pro table and happy?
One of the major di erences between the app industry and other physical product or service industries is the option of service usage without payment. When a customer wants to buy a shirt, he or she has to rst pay before using it. However, in the digital app world, it is possible to use the basic service without paying for it. is is why there are innovative revenue models like IAP and IAA.
Figure 6 on the following page illustrates
the App CE Matrix for content-driven apps. We propose di erent strategies to treat each of these segments so as to maximize pro ts for the app developer companies. is is important because 50% of the IAP revenue comes from a mere 0.15% of users in the mobile gaming industry (Venture- Beat, 2014) and 95% of the users don’t make an IAP (Tapjoy, 2016). We next describe the various cells in the App CE Matrix.
high Purchase frequency Segment (Subscription + Marketing e orts)
Honey Bees (high usage, high pro tability): We term these customers honey bees due to their
industrious nature and ability to produce honey which is sweet and bene cial. ey are satis ed with what the company has to o er, buy steadily and regularly over time, and o er the highest pro t potential and thus are the most valuable. O er these customers deals with the highest value to maintain their pro tability. In the mobile gaming scenario, they can be o ered in-game features and tools so that they continue to be engaged. In addi- tion, retention bene ts on completion of milestones based on tenure should be o ered.
High Rollers (low usage, high pro tability): We term these customers high rollers (high-stakes players in a casino), because they are very pro table to be with but they remain in the casino only for
a short while. ey are pro table but transient as they are continuously looking for the best deals or experience from other competing apps. ey avoid building a stable relationship with any single com- pany. O er them short term deals to hook them like a sign-up bonus with in-app features. en, retain them via tenure-based loyalty bene ts. e e ort should be to move them towards Honey Bee status. ey are also a candidate to take feedback from as they are not completely satis ed with their experience (CKV).
fig. 5: clV calculation in app industry setting
DisrUPtioN & iNNoVatioN
OCTOBEr 2016 MINd YOUr MarkETING | 91