This article clearly shows why you need to focus on your best customers or VIPs,. Development, product management and marketing need to all understand the need to attract and retain VIPs. I also appreciate the fact that the post does not suggest that your revenue should be a bell-shaped distribution; as I previously wrote, there is nothing wrong with a heavy-tail distribution.
As I mentioned in an earlier post, I just started the Networked Life course taught by Michael Kearns from the University of Pennsylvania on Coursera. Part of the coursework has been about “heavy tail distribution,” a phenomenon typical in a large-scale network (like Facebook). To summarize, a heavy tail distribution (see image below for an example) means there is a clustering of vertices (users or in the case of Facebook, friends) with a very low number of connections but a long tail of vertices (users) who have a lot of contacts. Thus, in the case of Facebook (or any other typical network) the large majority of users have only a few Friends but there is a long tail of people who have a lot of friends (say over 1,000). These latter people are called “Connectors” in network theory. What is particularly interesting is that this structure, which again is typical of large-scale networks, is effectively the inverse of a traditional bell shape distribution, which would show a few users at the low end, a peak (the top of the bell) and then quickly trail off. The heavy tail is typical of all social networks, Facebook, Twitter, LinkedIn, etc.
What I find interesting is that you find a similar curve in virtually all free-to-play social games when it comes to users’ monetization tendencies. Continue reading “The heavy tail of monetization”