0:00
[MUSIC PLAYING] Hey, welcome to module 4, lesson 3. We're talking about the third multiplier, increasing your total number of customers. And if I were going to sum up my 15 years in your e-commerce, I wouldn't want-- it would be this lesson, it would be, you've got to attract the right customers, not just any customers but the right customers. So you see customers are different. On one end, you might have your whale customers, your whale customers, they come and they order anything you sell at any price, they come back, they buy again and again, and again, they take up very little service time.
0:36
On the other end, you've got your minnow customers. Your minnow's might be the one and done customers. They come, they order like your smallest AOV of the product, and then they return it, they take up a lot of customer service time, and in between you have a lot of different segments. Well, this is an example of whales and minnows from a nine figure retailer I worked on. The whales, they have a first purchase AOV of over $13,000, spending $26,000 in a year over six transactions buying from basically every category.
1:11
And on other end of the spectrum, you've got the minnows. They buy once, and they buy very little. They buy a swimsuit for $37, so two very different kinds of customers. And if you go into Google Analytics. You can break out your whale segment based on things like recency, and frequency, and total spend. And you can see the discrepancy here, in this case, this was Karmaloop, the whales accounted for just over 1% of my sessions during this time period, and now 1% of my sessions drove 43% of my total revenue.
1:46
So talk about a whale, talk about a whale customer. It's really evident here when you look at the data, you're probably seeing good customers are good drew. So what? Well, look at this again. For the whale customer, in this case, total spend of $27,000 versus $37,000. You know my first day at Karmaloop where the board says, "OK.
2:10
Grow this business $50 million". Imagine if I only had to acquire minnows, if I only had to acquire minnows, I would have to acquire 315,000 minnow customers to get that $50 million in revenue. Whereas if I only acquired whales, I would only have to go out and acquire 9000 total whales. So imagine the difficulty involved, imagine the time involved in the service and the fulfillment involved in servicing 300,000 customers, versus 9000 customers.
2:44
So that's one thing. Another thing is that the cost of acquisition is often the same for both a whale and a minnow. So all signs point to acquire more whales, if can, if you do, that $50 million in revenue gets a lot quicker and easier, plus whale customers do represent sort of a threefer, so not only in acquiring them, not only will you increase your C, increase your total number of customers.
3:13
But you'll typically also increase your AOV in your frequency two, the other two multipliers. And that's because the whales spend more when they buy and they buy, more often. There's an increasing body of research around the idea of building your business around your best customers. I like this book, Customer Centricity by Wharton Professor, Peter Fader, there are a few others out there.
3:36
And the general idea is the more you build your business around your best customers, the easier growth becomes. So to recap this lesson, to unlock truly epic growth, focus on your whales, focus on identifying and acquiring more of those whales when you do your customer acquisition. And in the next lesson, will show you how to do that. How to audit your acquisition programs, and your acquisition channels in order to attract more whales from them.
4:04
[MUSIC PLAYING]
