One of the great opportunities for social game companies is to jettison their focus on so-called “whales” and embrace a comprehensive strategy of customer delight for all customers. Such a strategy would increase the monetization base from a scant 3-5 percent of your customers, enhance ARPPU (average revenue per paying user) for all paying users and improve loyalty.
Why the Focus on “Whales”
Currently, most major social game companies are focused on “whales.” First, I want to define “whales” and tell you why I hate the phrase. In social gaming parlance, “whales” are the one percent or less of a game’s players who generate the bulk of the revenue. The amount that defines a “whale” differs by company and game, but let’s say a player who spends at least $1,000 in a game would be considered a “whale” by company X. Given how much these customers spend in a game, getting them to increase spending by a few percentage points has a very powerful effect on overall revenue, while focusing on moving non-payers to becoming payers (many of whom would only spend a little even if successful) does not have the same immediate impact. Thus, most monetization analysis and testing is aimed at getting these “whales” to spend more.
As an aside, I consider the phrase “whales” very damaging to our industry. These are, by definition, our best customers. Most people, however, do not like being referred to as a whale. The term is both condescending and derogatory. If I was a big spender in a game and learned that the company called me a “whale,” I would probably say F…k them and not spend another penny in any of their products. Even if the term is only used inside the industry, players often read industry blogs and sites to learn about the games they love, so they hear what you are calling them. Moreover, it creates inside the game companies a culture of trying to take advantage and trick their best customers. It also implies there is no reason to treat other customers well, and that often manifests into poor customer service for the majority of a game’s players.
On a tactical level, this is a bad strategy because your highly valued customers (I will never call them whales) are put into conflict with the company. They are trying to optimize their experience; you are trying to get as much pocket share as possible. Long term, they are more likely to go to another game where they feel respected (just as you would leave Bloomingdales if you get a condescending sales person and go to Nordstroms); would you stay in a retail store if the salesman calls you a “whale.”
Customer Delight for All Customers
More importantly, the companies that will thrive in the social gaming space (and in virtually any industry) are the ones that create customer delight for ALL of their customers. Amazon and Zappos dominate their space because they create a great experience for everyone, from the person who starts by buying one pair of shoes a year to the person who spends $5,000 a month. They all get great customer service, value pricing, etc. That is not to say they do not reward their loyal/high value customers but they provide great service to everyone. It is also the way that companies turn casual customers into high valued customers. If people feel great about a company and product, they are more likely to spend, and then spend more.
This post is not about how to create a great customer experience (maybe in a few months when I get writer’s block); and it will be different for different companies. The point I want to make is that one of the largest, primarily untapped lever to increase your profitability and long-term market position is to create a gaming company that provides great service to all your players.
The Business of Social Games and Casino 