the division is the whole model Cost over contribution is the only arithmetic here. Every strategy in the industry - a welcome offer, a loyalty scheme, a retention bonus - is an attempt to move one of the three numbers in that division, and the arithmetic does not care which.
Hold Desk / Months to payback
Figure 08
A monthly contribution of a few pounds against an acquisition cost of fifty takes about a year
The whole economics of this desk come down to one division: what a customer costs to acquire, divided by what they contribute in a month. The result is a number of months, and the retention needed to deliver those months is the figure that decides whether the acquisition was worth making.
Figure stub
- Sheet
- HD-58-09
- Subject
- Payback and retention
- Acquisition cost
- £55.00
- Months to repay
- 11.96
gross winWhat was kept: everything staked minus everything returned to players
the holdThe gross win divided by turnover, measured over a period and a whole book of play
net revenueWhat survives the bonus line, and the definition a reader should check first
Direct answerTake the contribution a customer produces in a month - gross win less bonus and less the marketing spent on the existing base - and divide the acquisition cost by it. In the sample, £55.00 divided by £4.60 is 11.96 months, which requires an average customer life of about a year, which in turn requires monthly retention near 92%.
Contribution, not gross winPayback in monthsRetention sets average lifeSmall changes move it far
Worked example - the sample operator's payback (illustrative)
Gross win per active customer per month: 8.00
less bonus per active customer: -1.20
NET REVENUE per customer: 6.80
less marketing per active customer: -2.20
CONTRIBUTION per customer per month: 4.60
Acquisition cost per new customer: 55.00
Months to repay the acquisition: 55.00 / 4.60 = 11.96 months
Average customer life from a monthly retention rate r is 1 / (1 - r) months:
at 85% retention: 1 / 0.15 = 6.67 months -> 6.67 x 4.60 = 30.67 of contribution
against 55.00 spent: a shortfall of 24.33 per customer
at 91.6% retention: 1 / 0.084 = 11.90 months -> break-even
retention needed: 1 - (1 / 11.96) = 91.6%
The gap between 85% and 91.6% is six and a half points of retention, and it is the difference
between losing 24.33 on every customer and neither gaining nor losing.
The five steps of the calculation
- Start from the gross win per customer. The monthly figure from the customer page, and the same caveat applies: it depends on how active was defined.
- Deduct the bonus per customer. The realised bonus cost, not the granted one. This is the difference between a gross and a net contribution.
- Deduct the spend on the existing base. Marketing does not stop when a customer is acquired; the part aimed at retention is a cost of keeping the customer, and it belongs in the contribution rather than in the acquisition cost.
- Divide the acquisition cost by the contribution. The result is a number of months, and it is only as good as both halves of the division being built on the same definitions.
- Compare it with the average life of a customer. Average life is one divided by the monthly churn rate, so a retention of 85% means an average life of 6.67 months and a retention of 92% means about 12.5.
Why retention moves the answer so far
Average life is not linear in retention: it is a reciprocal, so the last few points of retention are worth much more than the first. The bars below are the same contribution of £4.60 per month at four retention rates, drawn as average life in months against the 11.96 needed.
70% retention
80% retention
85% retention
91.6% retention
below break-even the threshold the acquisition cost needs
Only the last bar clears the acquisition cost. That is why the industry's own reporting leans so heavily on retention and on the value of an existing customer, and why an offer that acquires a customer who leaves in a month is a straight loss however good the headline looks.
one
two
the risk sits with whoever buys Pay-per-acquisition puts the retention risk on the operator. A share-of-revenue arrangement passes it to the partner, which is why the two price an identical customer differently. Neither is wrong; they are different bets on the same retention curve.
three
a unit that describes nobody The average customer is a unit, not a person. A population that contains both a customer worth £500 a month and one who played once averages out to a number that describes neither. The unit is a tool for a business decision, not a claim about individuals.
What this page is not. It is not a claim about any operator's real retention, contribution or acquisition cost, and it is not a method for anything a reader should do. It is the arithmetic of a business measure, shown so that a claim about payback, lifetime value or retention can be checked rather than accepted.