In 2016, a measly 20% of US businesses’ customers accounted for more than half the money brought in by 854 of the 1k largest companies. And it’s all thanks to “whales.”
If you’re on a sales team (or if you’ve talked to someone who is), there’s a good chance you’ve heard the term “whale” come up in conversation.
For those of you who just smiled and nodded, here’s what the fuss is about — and for all you Captain Ahabs: stay tuned, we’ve got some “fish facts” that might surprise you.
First, what’s a whale?
Whales are the small subset of big-spenders that account for the majority of a company’s revenue.
Companies from Walmart to Uber fall into what we’ll call the 80/20 ground beef ground rule: the average customer in the top 20% spends around 8x as much as the customers in the bottom 80%.
That means, at the end of the year, the pressure’s on for sales teams to reel in their annual “big kahuna” contracts, so they don’t have to scramble to net a bunch of small fish.
Certain industries rely more on buyers making a big splash
Consumer insights firm Second Measure found that in ~300 of their top 1k companies, the top 10% brought in the majority of revenue, spending 15x more than the bottom 90%.
Industries like luxury goods and gaming are particularly prone to dependence on a few heavy-hitters. Case in point: Farmville creator Zynga’s top 1% of customers spent over $4k apiece, compared to almost every other customer, who spent an average $87.
Subscription models like Netflix, Hulu, and Spotify and all have super steady spreads (probably because you can’t exactly “ball out” on an unlimited streaming subscription).
There are pros and cons to both models:
On the one hand, the Hulus of the world might not be hit as hard by the loss of a few top customers — but they’re also not gonna get that big sales bump when they land a mega-client.
And sometimes ya gotta risk it to get the biscuit.
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