Are your non-paying players valuable?
by Balazs Juhasz
Are your non-paying players valuable?
Nowadays over 80% apps are using the freemium business model and over 90% total app revenue is generated that way. In these apps, only about 5% of the players – and you are quite happy if you hit that rate – convert to become a paying user. Like it or not, about 95% percent of your users are just free riders.
What are the attributes of these free riders? First of all, they are using up your server and bandwidth capacity – actually almost all of it (we are talking about the 95+ percent of your users, remember), keep your customer support busy, occasionally leave one star ratings in the app store, and the most painful point: you probably spent the same amount of money acquiring them as you did on your biggest spenders.
So these bastards are really just sucking your blood? Is there any way to get rid them off? Or even better, can’t you just somehow prevent them from downloading your app? Well, that’s the holy grail of marketing – spending money only on those who will bring you profit. Unfortunately I can’t help you on that – but I can show you why you should still respect your non-paying users, and how they are making you money in several (sometimes indirect) ways.
The trivial monetization method for non-paying user is in-app ads, you might even tweak your app to show ads only to those who are not willing to make in-app purchases. But in app ads won’t pay your bills unless you fly as high as flappy bird did, for example. It’s not a coincidence that publishers are turning away from this business model. (Not mentioning that in game ads tend to annoy players what has a bad influence on the retention or even worse, your direct competitors might pop up in your own app.)
Let’s move to the not so trivial values of non-paying users: They might help you to go viral by having their friends download the app. This saves you a lot of money: just take your average CPI and multiply with the number of players brought by a non-paying user. This, occasionally rather high sum is not an actual revenue, rather “just” a lack of expense, but you can get some high spender whales that way and their spending is a real hard cash to you. The non converting players are easier to incentivize with in game benefits than the pay ones as this might be their only way to catch up: just let them earn the same or comparable benefits that a paid user can buy and they will happily use their social connections to get you new players.
The greatest value of the free riders is keeping the paid users entertained – in case your game let’s some space for player to player interaction. Just image your city suddenly shrinks by 95%: much less variety, much less thing to do, this is what would happen if you didn’t have your free users in the game.
Furthermore, in general, paid users have an in game advantage (they are better equipped, have more resources – have all the benefits they paid for) making them on average „stronger” than their non paying counterparts with the same amount of gameplay experience, even in the most properly balanced games. This will produce a better result (higher leader board rank, have better win ratio, etc.). It’s not about that your free players should act as punching bag for your paid payers – (only if you made a really bad pay to win game), but that a paid user should always have benefits compared to being a non paying one. Even if you sell just personalizing items to your players, they still need the non paying ones to have someone to compare themselves to and feel themselves unique that they made that purchase.
Easy to beat opponents will provide paid users with a better gameplay experience making them feel better, love your game more and probably pay you more than they would without your non paying users.（source：gamasutra）