The Management of Whales

From Seth

A seemingly apparent piece of wisdom, but I found it pretty mind blowing, just this little act of bringing it into awarenenss like this. Thanks Seth.

The Management of Whales

In online gaming, a whale is someone who plays far more than the typical player. It's not unusual for 2% of the player base to account for 95% of all the usage.

The same thing is true at the local gym. All the money is made on the customers who pay and never come--the folks who are at the gym or the pool for 5 hours a day use far more resources than you could possibly charge for if everyone acted this way.

The management of whales, then, is a delicate balancing act—the people who love you the most are also costing you the most. If you have too many or they take too much from the buffet, your economics are shot.

In a traditional business, one where people pay based on usage, a whale is the difference between profit and loss. That person who eats at your restaurant once a week, or goes to see Hamilton six or twelve times... This is one of the best uses of customer data. You have the chance to find people who truly are your best customers, and to treat them accordingly. A business that gets this right will outperform one that doesn't by as much as 5:1.

There are also whales when it comes to word of mouth. Most people tell no one. A few people tell a friend or two. But some people tell everyone. And they do it with authority. With leverage. And with persistence.

A whale like this is priceless. You can't bribe someone into becoming a whale, but you can dissuade them and disappoint them merely by not caring enough to notice.

Best of all, you have a chance to become whale-worthy. To design products and services that are precisely the sort of thing that heavy users will happily use, and that powerful sneezers will happily talk about.

Actually, it's not really about the management of whales at all—it's more like seeing them, leading them and respecting them.