Conversion rate has become the standard for determining success in the
casual games space. In both formal and informal meetings within the
casual games industry, conversion rates are both guarded and flaunted
depending on what your numbers look like. Microsoft has taken every
opportunity to mention the conversion rates of the top Xbox Live Arcade
games, and the larger casual games industry has noted the need to
improve conversion rates in order to become even more financially
successful. While improving conversion rates is certainly a good area
of focus, there are limitations to conversion rate that make it an
incomplete measure of the casual games industry.
In addition to Conversion Rate there are three new metrics (penetration, proficiency, and reach) that can be used by large casual game websites to more precisely identify and measure areas for improvement. Looking at Proficiency and Reach in addition to Conversion Rate reveals helpful information in regards the customer’s journey towards purchasing a game and can help identify ways in which to improve customer retention through the sales process as follows:
- Conversion Rate – Quality of the demo
- Proficiency - Quality of the game's webpage
- Reach – Quality of the website
Where Conversion Rate Succeeds
There are many reasons why we use Conversion Rate. It is a very useful number as it ties sales to downloads. Conversion Rate is easy to collect and since it is reported as a percentage it doesn't give away specifics to competitors. At Reflexive we use Conversion Rate instead of Sales as our key ranking metric due to its self-correcting nature. That is to say that while listing the top games by sales is likely to keep the same games at the top of the list as they continually generate more sales, using Conversion Ratio creates a more dynamic list that corrects itself. Increasing eyes on any one game increases its sales, but if the downloads increase at a faster rate than the sales, the game will drop out of the top sales list, maximizing the audience's exposure to a variety of games.
Where Conversion Falls Short
Conversion rate in most industries is a ratio derived by dividing the number of sales of a product by the number of total customers. However, the casual games industry uses a different conversion rate, dividing sales by the number of demo downloads, giving you sales per download instead of sales per customer. This provides a limited definition of who your customer is and does not provide you with any information about them outside of their reaction to the game's downloadable demo. By neglecting to collect information on customers who drop out early in the process, you miss valuable information on ways to turn site visitors into paying customers.
What is Penetration? (Downloads/Customer)
While the conversion ratio used by most industries (sales/customers) and the one used by the casual games industry (sales/downloads) don’t measure the same thing, we can find the missing piece of information by dividing sales/customers by sales/downloads. The resultant number is downloads/customers. This number, which I call Penetration, can then be used along with Conversion Rate to explain two pieces of useful information. From Conversion we estimate how many sales are occurring per the number of downloads. From Penetration we determine how many downloads are occurring per the number of customers (with customers being a unique visitor to the website).
Case Study: Penetration and Geometry Wars
Geometry Wars makes a great case study on the usefulness of Penetration, as only some of the numbers have been released. Using the released numbers, we can see how Conversion Rate leaves us somewhat in the dark in regards to the success of the game.
On January 13th, 2006 Microsoft reported the Conversion Rate of Geometry Wars was 23%. On March 27th, 2006, the Conversion Rate on Geometry Wars had grown to an amazing 39%. What caused the change in the Conversion Rate? How did the change affect sales per customer? Did having a 39% Conversion Rate mean it was selling better than when the rate was 23%?
Using just the Conversion Rate we are lead to believe that the game has become a better seller, and while this may be the case, we can use the numbers reported by Microsoft to illustrate that we don't know this for certain when we use only the Conversion Rate.
Using data which was released very close to the dates that the conversion rates were released, we can estimate the January 13th Penetration rate for Geometry Wars. Penetration is the number of downloads, which was given by Microsoft to be 200,000, divided by the number of customers. Customers we can estimate at 450,000 by multiplying the known number of sold Xbox 360 consoles (1,500,000) by the percentage of owners that were connected to Live (50%) and then by the number connected to Live that had tried Live Arcade (60%). This gives us 44% Penetration.
The March 31st numbers are a little more difficult to complete. Though we know the 39% conversion rate and can estimate customers the same way we did for the January 13th numbers, we don't know either sales or downloads, thus requiring that we estimate them. To get a good range we'll use two estimations, a simple doubling of the units sold to 90,000 and a large increase of units sold to 150,000. Since we know the Conversion Rate, estimating the sales provides a specific number for downloads as well.
Both estimations show a decrease in Penetration Rate. A key reason that Conversion Rate went up was a decrease in downloads per customer which is likely due to purchases made directly (i.e. without downloading the demo).
The decrease in Penetration Rate could also indicate an overall decrease in sales/customer. Without the penetration rate (or some raw numbers) we wouldn't know if the increase in Conversion Rate actually signified a more successful game in terms of sales per customer. While conversion rate gives a piece of the story, penetration can complete the storyline.
Due to the popularity of Geometry Wars we would assume the higher sales numbers are more likely. However, in situations where we aren't dealing with a runaway hit, the Penetration rate can be used to gain insight into the real meaning of the numbers and help identify areas for improvement.
What Penetration Tells Us
A decreasing Penetration Rate can indicate various things such as market saturation, channel/website navigation issues, poor promotion, lack of interest in a game type or genre, or, as in the case of the example above, a higher percentage of customers who are simply purchasing a product without downloading the demo first. Improving Penetration can be done in a variety of ways such as increasing promotion of a game or modifying existing navigation and recommendation systems. As in the case of Conversion Rate, a low Penetration Rate doesn't define a single area of improvement but instead gives direction in a general area and leaves the specific solution to our creative analysis of the situation.
Splitting Penetration Into Proficiency and Reach
Penetration is useful and certainly gives us more information, but for the many large game websites such as Real Arcade, Yahoo Games and Reflexive Arcade there are further opportunities for optimization by splitting Penetration (Downloads/Customer) into two separate numbers, Proficiency and Reach.
What Is Proficiency? (Downloads/Customer)
Proficiency focuses on how proficient a page on a website is at driving the customer (unique visitor) to download the game. So, while conversion rate measures the sales per download of a specific game, proficiency measures the number of downloads per unique visitor to the game's page on the website. The sales numbers are then broken into two component parts:
- How well did the game's downloadable demo drive the sale? (Conversion)
- How well did the game's webpage drive the download of the demo? (Proficiency)
Where Proficiency Succeeds
Proficiency is typically best used in comparing two similar games. For example, looking at two breakout-styled games that each have a 1% Conversion Rate, but have Proficiency Rates of 90% and 40% offers insight into how we can improve sales. The low Proficiency Rate tells us that the webpage for the second game is doing a poor job of convincing people to download the game. Even though the two games are converting at the same rate, the second game will be less than half as successful overall unless the Proficiency Rate can be raised.
Usage of Proficiency
Poor proficiency can be caused by any one thing on the webpage, or more commonly by a combination of factors including the game description text, screenshots, game reviews, download size, system information, ease of download, or even alternative products or ads on the page that distract the customer from downloading the game. Conversely, improving the webpage in each of these areas can increase the Proficiency Rate by driving more customers to try the demo, thereby increasing sales.
Where Proficiency Falls Short
Proficiency can be misleading when comparing games of different genres. For example, comparing a Chess game to Big Kahuna Reef might show that the Chess game has a higher conversion rate of 3%, compared to 2% for Big Kahuna Reef, and a higher proficiency rate of 90% to Big Kahuna Reef's 45%. As both numbers are likely driven by the effect of specialized players looking for a specific game, you would be mistaken if you looked at the Conversion and Proficiency rates of these two dissimilar games and decided to feature and develop only Chess games. While Proficiency provides useful information in comparing games of similar types, Reach expands the usefulness of Proficiency to different genres.
What is Reach? (Page Visitors/Site Visitors)
Reach is determined by taking the unique number of visitors to the game's page and dividing it by the unique number of visitors to the website. Reach is a measure of how well customers are trafficked through the website to the game's page on the site.
Where Conversion Rate tells you about how good the demo is, and Proficiency Rate tells you how good the game's webpage is, Reach tells you how good your website is at getting customers to the games.
Where Reach Succeeds
Reach can help identify several things, such as how well the game is being promoted, how navigable the website is, how much inherent interest there is in a game and how much interest there is in a specific game genre. It can be especially helpful in distinguishing customer interest in older games that are no longer on the front page of a website. Comparing one genre against another can help to identify genres that do a better job of maintaining customer interest or may have more inherent interest.
The wide variety of information gained through the use of Reach can identify many areas of the website that may deserve extra attention as well as provide useful information regarding future game development.
Where Reach Falls Short
As Reach is a measure inversely proportional to a website’s size, it is not valuable for comparing different websites (unless you wish to compare their size). While it can be very useful for individual website optimization, it doesn’t provide information that can be used across the industry. Due to this, Reach is a number that is quite valuable, but is best used internally.
Case Study: Chess, Big Kahuna Reef and Conversion, Proficiency & Reach
Using Reach, Proficiency and Conversion together, we get a much clearer view of our comparison between Chess and Big Kahuna Reef. Looking at the month's worth of mock data below, we note that though Chess is very Proficient at driving downloads and has a higher Conversion Rate than Big Kahuna Reef, the Reach for Chess at just .2% is much lower than the 1.2% Reach of Big Kahuna Reef and is the key reason for it being outsold nearly 3 to 1.
In this case it may be that the inherent interest in Chess is simply lower than the interest in Match-3 games. A tracked promotion of Chess may help us to determine if that is truly the case or if perhaps there are more fans of Chess who simply struggle to find the game on our website. Further comparison of each of the numbers against similar games may provide interesting information about where we might focus our efforts between the demo (Conversion), game page (Proficiency) and website (Reach).
Putting It All Together
Numbers provide a way to better determine how to improve a businesses and they provide insight into the overall health of any industry. Conversion Rate only offers a small look into the casual games industry and provides a limited understanding of how the industry can improve.
Expanding our information by focusing on either basic Penetration or looking in more detail at Reach & Proficiency in addition to Conversion Rate will provide a more useful picture. Our attention is directed to three distinct areas for improvement, the demo (Conversion), the game's webpage (Proficiency) and the website (Reach). When looked at together, these numbers give increased insight into customer activity from the first step on the website and illuminate the customer's experience each step of the way through to the final purchase of the game.