Analytics Help 77Sparx Steer Pricing, Marketing Strategy
77Sparx is a company that designs, develops and distributes learning and phonics games for young children. The company was founded in 2012, at a time of great debate within the games industry about business models. Initially, 77Sparx's games were launched as premium apps, but the market was clearly moving toward freemium. Many of 77Sparx's parent customers were providing feedback that they wanted to try the apps before they purchased them for their children.
However, when 77Sparx weighed the benefits of going freemium, it wasn't sure it was the most responsible choice, considering the products are geared toward young children. To help makes its decision, 77Sparx needed to do some testing to determine what the market acceptance would be for various models and pricing points.
"We needed an analytics tool help us figure out the right business model," recalls Andrew Kao, co-founder and CEO of 77Sparx. "We looked at a number of options, including Flurry, Google Analytics, Mixpanel and Optimizely, and we still use some of those other tools occasionally, but we decided to go with Kissmetrics as our primary platform because of its easy integration, open API, and its ability to present the data in a way that's easy to grasp. Also, Kissmetrics' Analyze product works with what we currently have, rather than requiring us to pull our data back out and re-input it into another system.
"Since Angry Birds has had such great success selling for 99 cents, many app developers have assumed that they have to accept that as a reference point and go with the same pricing," Kao adds. "But we didn't believe that. We believe that we're creating quality digital toys, and that our apps should be priced accordingly as toys. That's an extremely unusual approach in this market. We used Analyze to run extensive tests to determine what the market would support. We ended up at the $14.99 bundled price point, which mirrors the price of an affordable toy, but is much higher than 99 cents."
Pricing is just one example of how 77Sparx has used analytics over the past two years. The company has also used analytic data to help determine product strategy.
"We wanted to implement a ‘parent gate’ control that would ensure that in-app purchases were being approved by parents," says Kao. "Other app developers had gotten into trouble for making it possible for kids to hit the ‘Buy’ button without parental approvals, and we definitely didn't want to do anything like that. And yet, we also didn't want to implement something that caused so much friction it would cause people to drop off in the purchase process. Using Analyze, we were able to test out a few different ways to gate — e.g., using reading questions or math equations. We were able to determine the best way to block kids from making nonapproved purchases. Consequently, we've been able to avoid getting caught up in the controversy, even during a time when ‘freemium and kids’ is still very much under scrutiny."
Since 77Sparx's implementation of Kissmetrics’ Analyze platform, the company has seen a nearly three times return on its investment.
"We've had fantastic results using Kissmetrics’ Analyze," Kao notes. "It's actually such an integral part of how we do business, it's almost difficult to separate out what we would have been able to do without it. One of the things we love about Analyze is that it allows us to do everything we need to do internally. For us, the key is not just to understand the data, but to be able to act on it as well. Analyze provides us with the information we need to make great decisions."
Maura Ginty is the vice president of marketing at Kissmetrics, a person-based analytics platform.