The Mathematics Behind Any Viral Game Marketing Campaign

by Game Marketing Genie, on 12-Nov-2020 10:00:42

Data and analytics lie at the heart of marketing, and are an indispensable secret to the success of most viral game marketing campaigns. As a game developer, there are many diverse metrics that you can watch, understand and optimize.

So, what are the marketing metrics that your campaign needs? Let’s have a quick look at the maths that can make your game marketing campaign a great one and how it can help you to understand your product’s progress and design your marketing and sales strategies accordingly. 

1. Average sales from customers

Average sales gives you an overall view of your sales status, and helps you gain insights into your customers’ behavior and purchase patterns. 

It also indicates the effectiveness of your sales team, showing how well they manage or push products into the sales pipeline and convert leads into customers. 

The key factors that are involved in calculating average sales are the sales frequency that you want to observe for a specific period (day/month/quarter/year etc.) and the total sales made in that time period. Use the following formula to deduce your average sales from customers:

Average sales from customers = total sales from customers/number of customers

Calculator on a piece paper

2. Break even analysis

When your business incurs neither losses or profits at any given time during any stage of its life cycle, it is said to have reached a break even point. 

After all, every business has to deal with both fixed and variable costs. Fixed costs include utilities, rent, insurance and similar expenses, whereas variable costs include sales commissions, direct labor costs, and more. 

Break even analysis deals with the amount of sales required to cover all the fixed costs and variable costs to smoothly run the business. It is a metric that helps you see whether your game is sellable in your market. Use the formula below to calculate break even analysis for your business: 

Break even analysis = fixed cost/(price per unit – variable cost per unit)

3. Churn rate

Churn rate is a metric that helps you watch the number of customers your business is losing in a given period. Also known as customer attrition rate, this is best for SaaS businesses in particular where the business runs on a subscription model. The higher the churn rate, the greater risk your game is at and vice versa. 

If you want to reduce this metric, you need to carefully assess your game and understand why current customers are leaving. Calculate your churn rate to discover where people are dropping off and how you can bring them back with this formula:

Churn rate = customers lost/total customers

4. Conversion value

Based on the action or goal that you’re gauging, conversion value is a numeric indicator of the number of actions that your customers take on your site. You can calculate conversion value for email subscriptions, signups, downloads, purchases, clicks and more. 

In Google Ads, conversion value is directly displayed in your billing section and can be calculated for short term or long term periods. Conversion values calculated for short periods of time help businesses to increase customer acquisition and maximize immediate profits as well whereas long term values will help you maximize profits in the long run. 

Choose conversion values that are in line with your marketing goals. Use the following formula to calculate this metric for your business:

Conversion value = value/conversions

Golden chocolate eggs

5. CLTV (customer lifetime value)

One of the most understated marketing metrics that very few game developers look at is customer lifetime value. This is the total value that an individual customer brings to your brand in their entire lifetime - from awareness to retention. 

The higher the CLTV is, the more loyal customers you have. The lower the CLTV is, the less likely they are to purchase your products or will end up making a one time purchase from your business. This metric plays a significant role as it helps you see the amount you need to invest in retaining your current customers. Here is how you can calculate customer lifetime value:

CLTV (customer lifetime value) = gross contribution * [retention rate/(1 + discount rate – retention rate)]

6. CPA (cost per acquisition)

Cost per acquisition is the total cost incurred to acquire or convert a customer through a marketing campaign. It involves calculating the cumulative costs required to convert a customer through the marketing funnel. 

It helps you understand how much it costs to convert a new customer, track your marketing budget, check if you’re inline with your marketing goals, re-strategize your campaign and reduce your CPA to make your business function better. 

Acquiring new customers costs businesses five times more than retaining current customers, and as many as 44 percent of companies are keen on new customer acquisition - meaning that you need to precisely know how much it’ll cost you, as if you don’t acquire them, your competitors will. Calculate your game’s CPA using the formula given below:

CPA (cost per acquisition) = cost/conversions

7. Lead close rate

Lead close ratio, otherwise known as close rate or closing ratio, is the rate at which the percentage of leads generated are converted to sales. A low close rate indicates that there may be issues with either your quality of leads or your bottom of funnel content. Typically, close rates stand at around 19 percent and average close rates may fluctuate between 15 percent to 30 percent. Use the following formula to calculate your lead close rate:

Lead close rate = new customers/leads

Woman receiving a bag of paper

8. Margin

Margin is one of the metrics that every business is familiar with. It is the difference between the cost incurred for a single unit of the product and the price at which the business product is sold. It is another way of helping businesses to assess their profitability. The higher the margin, the higher the profitability. Here is how you can calculate your game marketing strategies' margin and revenue per unit:

Margin = unit cost/revenue per unit

Revenue per unit = selling price per unit - cost price per unit

9. Market penetration

Market penetration is an essential indicator in the world of marketing. It reveals if your sales and marketing strategies are bringing the results that you’ve envisioned. Market penetration tells you how much your product or service is being used by your audience compared to the total estimated market for that industry. You will have to reconsider your marketing and sales strategies if this metric is low, as it is about your brand’s survival. Use the following formula to calculate your market penetration:

Market penetration = number of customers who purchased a product/total number of prospects

10. Market share

Market share is the chunk of industry’s sales that is owned by a specific organization. It is a marketing indicator that helps you understand your game’s competence in the market. In other words, it helps you see where your game stands in the industry, determine who the market leader is, and further assess who your closest competitors are. Use the following formula to calculate your game’s market share. 

Market share = sales in units/total market sales in units

Sharing a bowl of tomatoes

11. Marketing expense to revenue

Marketing expense to revenue metric, also known as the operating expense ratio, helps you determine the efficiency of your organization by comparing two important aspects: your operating expenses and the total revenue generated from a particular campaign. The smaller the ratio, the greater is your company’s efficiency and vice versa. Marketing expense to revenue metric is indirectly proportional to your company’s operational efficiency. Use the following formula to calculate this metric: 

Marketing expense to revenue = total marketing cost / revenue generated

12. NPS (net promoter score)

If you want to know if your customers are satisfied with your product offerings and want to measure their loyalty to your game, net promoter score (NPS) is your answer. NPS is the go-to metric for your business to understand customer satisfaction, customer loyalty, and their willingness to recommend your products to their friends and acquaintances. It helps you to determine your prospects for growth in the industry. In terms of NPS, customers can be classified into promoters, passives, and detractors. While promoters are those who strongly recommend your products to their acquaintances, detractors are those who strongly discourage recommending your products, whereas passives may or may not recommend your products to their network. The formula given below helps you to deduce your game’s NPS: 

NPS = percentage of promoters – percentage of detractors

13. Percent change

Calculating percent change in your sales, customer numbers and more helps you make strategic decisions for your business. For instance, an increase in the number of products you’ve sold indicates that the number of your customers is likely increasing, directly impacting your sales and profitability. To calculate the the increase and decrease in percentage use the following formulae: 

Percentage increase = (increase: new number - original number)/original number * 100

Percentage decrease = (original number - new number)/original number * 100

Person with red shoes walking on stairs

14. Price increase

A price increase is one of the critical decisions that may face a business. Additionally, communicating the price increase to your customers may be a challenge - even to a sales savvy team. There may be different reasons for businesses to adopt this strategy, but it will play a key role in setting you apart from your competitors. The price increase metric is calculated by first taking the difference between the price point of your product now and earlier and multiplying it with the total number of products sold. Use the formula shown to calculate this metric yourself:

Sales price increase = number sold * (average price now – average previous price)

15. Price premium percentage

The price premium percentage metric helps you to measure the difference between your sale price and the benchmark for your industry. This metric gives you the leverage to either place a premium on your products and services or create discounts based on your marketing goals. Use the following formula to calculate your game’s price premium percentage. 

Price premium percentage = average retail price of product/average retail price of all similar products

16. Profit

Running a profitable business is one of the most important goals of every business. You can calculate profitability by looking at the difference between the revenue generated from the product from the cost of the incurred for the product creation divided by the total revenue. If this metric is high, it indicates that your business profitability is high, and if it is low, you should check your marketing and sales strategies to propel your business towards profitability. 

Profit = (revenue – cost)/ revenue * 100

One dollar bill

17. ROAS (return on ad spend)

ROAS, meaning return on ad spend, is a revenue-based metric that calculates the revenue that you generate from the total advertising costs you spend on marketing. Though it may sound like return on investment (ROI), it is different in regard to how it gauges the revenue stream. In simpler terms, ROAS is specific to advertising costs alone and gives you a total picture of the revenue your game generates every marketing campaign. This helps you evaluate your campaigns and drive your focus on campaigns that perform well. Here is how you calculate your ROAS: 

ROAS (return on ad spend) = revenue from ads/cost of ads

18. ROC (return on customer)

Return on customer is the value a particular customer brings to your business. It is not just the profit generated by a customer in the current timeframe, but also any changes in their lifetime value (CLTV) during that period. ROC helps you maximize your customer’s portfolio value as the more value you add to your customers, the more profits they can bring your business. Calculate it using the formula below:

ROC (return on customer) = current cash flow from customer + change in CLTV/CLTV at beginning

19. ROI (return on investment)

One of the most important metrics that marketers use is return on investment (ROI). ROI helps you measure and quantify all your marketing efforts and investment across the board. This is how you calculate ROI: 

ROI (return on investment) = net profit/total investment * 100

Net profit = total revenue - total expenses

20. Sales from new customers or products

It is important for businesses to concentrate on new customer acquisition, but it is equally essential for them to quantify the sales generated from new customers as well. You can calculate sales generated from new customers by subtracting sales generated from your current products from the total sales that your business generated for a given period of time. Identifying how much you made from new customers helps you get the bigger picture that shows you if your marketing and sales efforts are producing results. Follow the formula below:

Sales from new customers or products = total sales – sales from existing customers or products

Mathematics formula

Game marketing strategies to succeed

Hope you enjoyed this article! For more insider game marketing information, check out The Ultimate Guide to Game Marketing: Everything You Need to Know.

Doing these number crunches are vital to understanding not only where your game stands in the industry and amongst your competitors, but also to understanding your business, and its growth, profitability, and possibility of marketing campaign success. If you're not confident about your team handling these calculations, then you need to work with a proficient game marketing agency to create, execute and understand successful game marketing campaigns. 

Game Marketing Genie understands these digital marketing analytics very well and our team can help you gauge the performance of your game from end-to-end to provide a comprehensive report to help you move towards your business goals. 

Want to know more? Check out our marketing strategy page for more information.

Topics:Video Game Marketing StrategyVideo Game MarketingDigital Marketing StrategyDigital Marketing

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