We are often asked some version of the question: How much is a rakeback customer worth? The number is, of course, a crucial one. Based on this number, a rakeback provider can determine how much can be spent to acquire a rakeback customer. The short answer is $520.31*.
Now, it is important to know everything there is to know about this number. It is lifetime value. It is commission, after paying the player, not MGR. It is before promotions are paid. It only includes players who generate greater than $0 MGR. The 80/20 Rule applies. The sample size is substantial. Lifetime value of a customer includes what they will be generating 2 years or more from now.
Therefore, if you go out and spend $150 to acquire a revenue-generating customer, expect to be under water on that customer for some period of time. This number is an average, and because of the 80/20 rule, many customers will never generate anywhere near $520.31 in commissions to you. In addition, the number $520.31 only includes customers who actually made some money for the rakeback provider. People who created rakeback site accounts, or even created poker client accounts, but generated no gross revenue are not included in this average. For example, of all accounts that came via a player-to-player referral, only 40.79% ever generated dollar one of gross revenue.
Therefore, when considering performance numbers, always make sure active trackers is your reference point. The lifetime value of a rakeback customer who came in via referral is $223.73. (This number includes everything bulleted above plus the payout to the referrer.) While still a very high number, it’s not nearly as high as $520.31. This 57% haircut is relevant. It tells you that your player value will vary widely depending on where your customer comes from.
These days you cant find a place where sharks without rakeback exist. But you’d be well advised to find that source where baby sharks swim. It will drive your average player value up. And while we encourage sharing as much as possible at PAS, if you find that spot, don’t tell a soul.
In my post next week, I will elaborate a little bit and talk about time to generate $X and how that plays into your marketing decisions. I will also talk about a little bit about where these high value players came from.
*Past results not indicative of future performance. Then again, some publishers do go substantially higher. Can you?