How to Recognize Digital Whales
:: By Tomer Ben Moshe, CoolaData ::
It is often said that 20 percent of an online company's users represent 80 percent of their revenue.
"Whales" (those spending freely and liberally, and taking the most action on websites) take this to a whole new level and as a result are often the most desirable (and valuable) users for a company. Though the ratio of whales may differ from company to company, it’s safe to say that they could represent between 10-30 percent of a brand's revenue. It’s easy to think of these users anonymously because they’re still a bit of a mystery, but the key to understanding them is to keep in mind that they are simply human beings with distinct habits and behaviors.
There are many questions to be asked when analyzing data. For example, online gaming companies may have questions like: why players start or continue a game? Why they face certain difficulties within a game? At what stage do users opt for the most “in-app purchases”? And the list goes on. So what are the types of questions an online business should ask to recognize its digital whales? To answer these questions, there are a few issues that must first be understood:
1. Today’s whales aren’t tomorrow’s whales
Strong users of today aren’t necessarily going to be strong users tomorrow. Often, a company’s whales will be desirable to its competitors. These competitors are very likely to know who these whales are and will encourage them to jump ship with offers and smart marketing. So what can businesses do to save their whales? Recognize changes in their behavior including usage and spend behavior (there’s a significant difference between the two).
Businesses also need to act fast, and in real-time, with offers according to past behavior. In this way, companies can really understand motivation and offer a more personalized and enjoyable experience. The key is catching these important users before they get used to what the competition is offering.
2. Turing Users into Whales
In order to improve whale retention, companies must try to recognize potential whales in advance to attract them in time (and actually turn them into whales). One way to achieve this is by analyzing what converts regular users into whales. By analyzing existing whales, online businesses can understand where in the whale phase most of the problems exist. The key is to understand where a change in their behavior occurred from a regular user and how they turned into a whale. Companies also use expected lifetime value to recognize a promising customer. Then they can drive a user to become a whale with promotions and offerings as they already know how to drive them into becoming whales.
3. Segmentation is Key
Segmentation has always been a key part in analysis. This is especially true for segmentation within the "whaling phase." Has a whale always been a whale or is this a whale that comes and goes sporadically? What is the difference between these two whales? Segmenting different types of groups and analyzing their behavior is really what it is all about. This leads to the subject of behavioral analytics. Using behavioral analysis tools to gain and understand this information is vital to understand users. Behavioral analytics enables companies to correlate seemingly unrelated data points in order to identify errors and predict future trends for the way users behave within different applications.
After examining some of the analytical issues that data scientists have to deal with, asking the right questions becomes much easier. As an analyst, recognizing whales and understanding what drives them into the whaling phase is one of the most important processes within predictive analytics. With this knowledge about their big whales, online businesses can open a new (and a very important) door toward generating revenue.
Tomer is CEO and co-founder of CoolaData, which he founded in July 2012. He also serves on the board of GamEffective. Prior to this, Tomer worked in various senior management roles at Amdocs where he last served as Senior Vice President, COO of Amdocs Cloud Services. Before that, he was the CTO of Microsoft Israel. Tomer has a Bachelor’s degree in Mathematics and Computer Science from Bar-llan University.