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Game Business - Customer Acquisition Cost

5 Tips For Reducing Your Customer Acquisition Cost

 5 Tips For Reducing Your Customer Acquisition Cost

Wouldn’t it be great that you can get a lot of users at a low price point? This is the main goal of all developers that create mobile games or apps. If you learn how to get users at a lower acquisition cost, you’re increasing your revenue at the same time.

Your app needs to make money. And the customer acquisition cost is one of the most important things you should keep track of because of your ROI. If you’re not aware of the term ROI it means “Return on Investment” and that you should earn more than you spend on acquiring a user.  

1. Customer Acquisition Cost and Lifetime Value Relationship

Working out your LTV:CAC ratio and the months required to recover your customer acquisition cost helps you analyse the overall health of your business. The relationship between CAC and LTV is pretty simple. Your business will fail if your CAC is higher than your LTV. We’re also going to list some scenarios that might happen to your business so you have a clear picture behind the relationship.

If you’re CAC and LTV ratio is 1:1, you’re losing money from every acquired user. The perfect ratio to have is 3:1 since it means you have a strong business model.

CAC Formula

In a simple form, customer acquisition cost formula would consist of total marketing costs related to acquisition divided by the number of total acquired users. It’s important to mention that retention is excluded from marketing costs.

Game Business - Customer Acquisition Cost

So if you spent $10,000 on marketing costs in a month and you gained 1000 new users, your CAC is $10.

2. Retargeting Campaigns

Once you’ve went through the rough road of finding your perfect customer, we highly recommend retargeting campaigns. We’ve written a detailed post about retargeting campaigns this month. Retargeting campaigns not only give you good results, but they fulfill actions that you want from your users.

For example let’s imagine you have a user that plays your mobile game for over 3 months. He’s active on a daily basis, but he still didn’t buy anything from in-app purchases. What do you think is the best way to get his trust and make him an offer he can’t refuse? Retargeting campaigns with special promotions for loyal users will do. If you played a certain game for 3 months, and the game developers decided to give you a 50% discount for something that you regularly use in-game, would you buy it? Of course not everyone would purchase something just because it’s 50% off, but it would definitely be a good way to start.

Game Business - Customer Acquisition Cost

Source: SharpSpring

3. Micro and Macro Conversions

The best thing you can get out of your advertising campaigns are new users and installs. But if you don’t get a lot of installs, don’t let that discourage you. There’s a reason why micro and macro conversions exist. If someone leaves their email address that’s already enough for you to work with. Depending on your desiring actions and what are your campaign goals, conversions will definitely come.

Keeping track of your conversion rate will give you important data for other metrics, such as CPC (Cost per Click) and CPI (Cost Per Install).

Game Business - Customer Acquisition Cost

Source: Ignite Visibility

4. Retention Rates

We believe you’re already familiar that getting new customers is harder than keeping your existing ones. If you focus mainly on acquiring users, you need to keep track of your retention rate. Are users returning to your app? If so, how frequently are they opening it? And if they open it frequently, how long do they use it? These are important questions you need to know by following everything your users are doing. If you know how they behave, you’ll also find ways of making them stay.

To increase your retention rate, you need to build an attractive app to retain your customers. Also an attractive app means that your user has a whole experience. Users should be satisfied with the whole package. That package should consist of customer support, attractive design and a healthy interface without bugs and crashes.

5. Creative Content

Creating creative content gives you the opportunity to generate leads without spending any money. According to demandmetric, content marketing generates over three times as many leads as outbound marketing and costs 62% less.

Also 2016 Pew Research Center study, almost half of 18 to 49-year-old people get their news and information online. By the end of 2018, this number will only grow on a daily basis.

Game Business - Customer Acquisition Cost

Source: upended creative

With having these numbers in mind, the only thing you should focus on is quality content. It’s not easy to post content that will engage a lot of people. Some people might think that the only thing you need is a good picture and a good description. The most important thing you should have is a good strategy. If you plan your publishing content ahead, you will be able to know how your users will react and engage.

About The Author

Hi there, my name is Kristian and I'm the editor-in-chief of GameBusiness.net. Over the past 5 years, I've been perfecting my craft in mobile marketing & online media. My other passions are music, guitars, FPS games & tennis. At GameBusiness.net we're covering all you need to know about mobile game business!

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