Have you started Segmenting your readers/customers yet?

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Segmentation Tips from Vegas

I've been going to Vegas since I was 4 or 5. Back in the day, my brother and I would hide in the back seats of our car under blankets so that my dad could check in saying there were only 2 people for the room. We loved Vegas.

My dad would gamble at nights after we'd gone to bed. But during the day, we'd go to $2.99 buffets and hang out at the beautifully manicured pools. We were there to rest (I come from a family of work-a-holics).

But we also spent some money when we would go, which was about twice a year. We'd see some shows – and this was back in the day when it was dinner and a show – and the tip you gave the host would dictate where you sat.

Yes, we're talking the 70's. We saw Donnie & Marie (the first time), Tom Jones (the early years), and tons of other famous folks.

We were dolphins.

The House Always Wins

If you've flown into the airport in Las Vegas, you've seen the folks that get picked up by limos to be taken to their suites – suites that they haven't paid for.

They not only get suites – they get all sorts of amenities – all focused on one thing: to keep the spending going.

These folks represent the top 1-3% of people in Las Vegas and they're not like you and me.

They're whales.

And this is why and how the house always wins: they spend the right amount of time and money on each segment of their customers.

The entire segmentation model that Vegas uses is known as Whales, Dolphins, Minnows (WDM), aptly described and applied to the music industry last month by Hany Nada:

In the casino system, fans are divided into three segments: whales, dolphins, and minnows (WDM). Whales often make up the majority of the profits in the casino industry. These are the people willing to pay substantially more for an elite experience.

Here's the amazing thing: while whales only represent the top 3%, they generate almost 50% of the revenue. Dolphins make up the majority of the other 50%, while still being a relatively small group.

But don't get tricked into thinking you don't need minnows – the 80-90% of the population that don't want to spend much (if any) money. They're the ones that bring their friends around and get you the dolphins and whales.

The trick is making sure you don't spend all your time with minnows and are then left unable to focus on, and cater to, your whales and dolphins.

How well do you do Segmentation?

I don't know how you do it, but I'll share with you some of how I do it here at chrislema.com

Minnows

Taking care of minnows in my world is a three-fold approach:

  • Deliver daily / consistent content that helps them
  • Provide quick answers (where I use templates a lot)
  • Recommend others (my minnows aren't yours)

The trick is that I have to keep my cost way way down. I don't write long answers, and I don't invest a ton. Because most of the benefit I get is simply their “eyeballs.”

If you're a minnow, my sense is that the trade is worth it. I'm willing to write posts that help you and for that, I get a tiny bit of your attention and your tweet or facebook post that sends your friends my way. Thanks!

Dolphins

Dolphins, for me, require a two-fold approach:

  • I respond with personalized messages & offer them easy access to additional resources (ebooks)
  • I give them early entry into personalized coaching / training

Again, the trick here is to make sure I'm finding the right folks as dolphins. In this case, the mere discussion of money helps – because minnows really don't want to spend a penny. Dolphins have memorized their card number and are willing to use it if the transaction makes sense.

Dolphins bring the large majority of my affiliate revenue to me because they buy products I recommend. Thanks – I'm sure you'll love those products (because I do).

Whales

Whales bring in the other revenue I make beyond my regular daytime job. Often either in the form of consulting, or in product development.

  • I give them a lot of free advice to help them see if I'm a good fit.
  • I also give them initial discounts on first projects.

In my case, I limit the number of whales I work with every year – because there's a cost and like I said, I have a full time job. But they're the ones that open new doors for me as well. So I make sure I take care of them, and that can mean anything from free phone calls to sending them gifts.

I give Gifts… even if they're not Suites

Never forget the power of a well-chosen gift. This past year I gave away some folders to some key friends. The folder had a nice logo on it. But it wasn't my logo. Why would they want to walk around carrying a folder with my logo on it? That's what a lot of vendors do, and it's stupid.

Instead, it had the WordPress logo on it – because they were all WordPress professionals. And it made them look more professional. And that's what it was meant to do. A gift that helps you isn't a gift. It's marketing. A gift that helps them, well, you know, that's a gift.

If you're not Segmenting, tell me this….

I know, the whole thing sounds complicated. But tell me this. What's your strategy? If you don't have a segmentation strategy, what strategy do you have? The “take any job that shows up” approach? How has it worked?

If it's not going well, consider looking at the model that has made casinos profitable in Las Vegas.

About Chris Lema

Chris Lema has been working with WordPress since 2005. Over the years he's been a blogger, a speaker at WordCamps, a coach for WordPress product companies, and the founder of the conference for WordPress business owners, called CaboPress. Today he's the VP of Products at Liquid Web, where he manages the world's first managed platform for WooCommerce stores.

Chris Lema

Chris Lema has been working with WordPress since 2005. Over the years he's been a blogger, a speaker at WordCamps, a coach for WordPress product companies, and the founder of the conference for WordPress business owners, called CaboPress. Today he's the VP of Products at Liquid Web, where he manages the world's first managed platform for WooCommerce stores.

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