Hunting Whales: Is there An Ethical Way To Do This?

[MitchC]

So I decided to explore this idea and write a post, and my conclusion is fairly mundane but here it is:

How to Ethically Attract Whales

Ok, let’s start with the first part of this question.

As we have seen from 3 pages of completely unhelpful trolling, everyone has a different idea of what is ethical, and whether or not it even matters.

So let’s start with the first question which wasn’t even asked, do ethics matter? The answer to this is it’s up to you. If they don’t matter to you, go somewhere else. Open a casino, convince people you’ll make them rich if they give you $10k for a course or agency services or a sales funnel. This thread isn’t for you, and this forum probably isn’t either.

So the next part. What’s ethical? Let’s define it the opposite way because it’s easier.

Anything that isn’t unethical. Now there’s a lot of unethical things you can do and these are going to be different for everyone. We have 3 pages of unhelpful theory on what is and isn’t ethical so let’s stick to the example in the OP. What was unethical about it?

IMO 2 things:

1. Deceptive marketing - They are attracting as many people as possible with deceptive bait and switch marketing with the hope that they catch a couple whales.
2. Addiction - The games are designed to appeal to addicts. I honestly wouldn’t even define addicts as whales like they do, they are just addicts.

Also, it’s not entirely specific to this example, but I think for what you are selling to be ethical, your customers need to be able to afford it. Taking an addict's last dollar until he’s homeless, convincing a broke person you’ll make them rich if they pay your course fees with a high interest credit card, or taking someone to court who has no money to pay you, might not be unethical to some, but it’s not my style.

So if addicts aren’t whales, who are whales?

Let’s start first with what is a whale?

Someone who spends a lot of money with you. In the example it was around 2% of their customers, but I believe somewhere between that and 20% would be true for most brands. It's lower for mobile games due to deceptive marketing resulting in insane churn and the massive spend required of that 2%.

So anyway who are they?

1. People who spend a lot
2. For this to be true they need to have a lot of money

But remember it’s just the top spending with your brand, so if your items are lower ticket, number 2 isn’t necessarily true.

In fact in the example given, the whales were far from rich, they just spent a lot. So really, depending on the brand, it's probably more likely a whale is middle class. Maybe upper or even lower middle.

So how do we ethically attract these customers?

I think we first need to address and learn from these mobile games how to actually get them to spend so much money.

How do we do this ethically?

Well surprise, this forum is based around an entire book on this subject.

The answer is to provide more value.

How do we do this? Similar to the games.
More products
More content
More services
Better services
Solve bigger and more valuable problems
Better products
Appeal to bigger desires

This is going to be specific to your business

Speaking of, what business would attract whales? Almost any I would say but to make things easier, pick a niche where whales already spend a lot of money.

Let’s think about some obvious ones:
Air travel, travel in general
Luxury goods
Business services
Property and property improvements etc
Entertainment
Food

I mean look it’s basically everything

Some specific examples:

LV sell handbags and clothes. How are they able to extract so much from whales:

1. They appeal to a higher mass desire than just selling a bag to put things in, they are selling status, they are selling the opportunity to be attractive to the opposite sex, which provides more value than just a bag
2. They have a shitload of products and high prices, and new products being released all the time, you could spend millions there every year if you wanted to
3. They have better service, whales at LV likely get an unheard of level of service, I’m assuming they get calls when new products come in, stylists, freebies, invitations to events
4. I imagine they also appeal to scarcity, exclusivity, and collectability. For example I know they offer limited runs of products to high spending clients which resell far above retail.

(I picked LV not because it's expensive and extracts a lot of value from everyone, I picked them because they have top 1% clients who will spend millions a year with them).

Airlines:

Much the same but with a more structured loyalty program.

Every airline has a loyalty program with points and status.

Higher status = whale

Higher status gets you, well… higher status, concierge, private lounges, better service, free gifts, better seats

And then for real whales you have private jets which provide even more value

Now I could do this for every example but I think we are starting to see a very common pattern here.

Loyalty programs, products, services etc all designed to reward and encourage as much spending as possible from whales.

So the final question of this thread, how do we attract them?

I almost think this is the easiest part of the thread. Writing this post and comparing these examples to my business made me realise my issue is not how to attract them, but that I don’t even have anything close to enough to offer them. I already have whales as customers, they just have nothing left to buy from me.

So you’ve got your products, services and loyalty dialled in to provide max value to these whales, now what?

I think the answer to this is almost the same as any other business.

Aside from the deceptive marketing designed to get as many people as possible, the mobile games have it right.

Have an offer that attracts as many people as possible, and then some of them will become whales.

Airlines are a good example of this, they offer seats to everyone, and a certain % travel a lot so they reward and encourage that loyalty. A certain % want nicer seats so they offer them

What about exclusive brands like LV? There’s no economy seat LV is there?

Well first I’d argue, kind of, you see LV everywhere, and it’s mostly not rich people wearing it.

And I actually think they do something comparable to the mobile game video.

In that video he mentions transitioning someone from someone who plays the game, to someone who spends money on the game. That is the hardest barrier to overcome. Most people are like I would never spend money on a game, and never do. But once they do, their identity is changed, the seal is broken, and now they are someone who spends money on the game.

So the games offer a ridiculous deal to break this seal, .99c for $150 value, just to break the seal.

I think LV offering wallets and sunglasses and perfume is kind of the same thing. Once you buy an LV item whether it’s a $100 perfume or a $10,000 bag, it doesn’t matter, the seal is broken, you are now someone who buys LV. Now they just need to get you to buy more.

The Diderot effect applies here too, but maybe not in all cases.

There are other more specific ways brands use to get whales but I imagine they are a much smaller way of attracting whales than just having a mass appeal product.

A lot of them are more likely tied to the other aspects of attracting whales mentioned earlier, like appealing to the higher desires. To do this you need the brand positioned in a certain way, which requires being in these places and doing these things, even if they aren’t profitable.

Partnering with other brands that have whales - eg Amex partners with Hotels
Events - eg Dubai watch show
Retail in the right locations eg Gangnum and all the luxury streets
Sponsorships - Yacht racing

Also I’ve kind of gone off topic from whales to luxury, so this would largely be unnecessary unless you were going with luxury as a way to provide more value.

This started out as crappy mobile games with whales, far from luxury, with far from wealthy clients.

Influencer marketing

Influencer marketing has changed, direct response brands are no longer getting a return on it, and brands like LV now use it.

Why is this? I doubt it’s direct response.

I imagine it’s because their whales want to be influencers, so these brands need to appeal to that status.

And influencers can become whales so maybe brands break the seal by giving them a product/deal.

So in summary we are left with fairly boring tried and true business outcomes and methods, just incredibly well executed.

1. Provide value
2. Have a mass desire product
3. Get a heap of customers
4. A certain % will be whales
5. Get the whales to spend more by offering more

So I guess we are left with 2 questions to answer about your business in order for you to attract more whales:
How can you break the seal with more customers/potential whales?
How can you provide more value/better service to potential whales to get them to spend more?

Also, here’s a random article I read a while ago about loyalty programs.

Inside Country Road's loyalty acquisition strategy - Ragtrader

This brand took me from 1 sale to $1000’s of dollars with their loyalty program and deals

However, they also made a mistake

They very quickly turned me from someone who paid full price for what I thought were quality clothes to wear on nice occasions, to someone who only buys their clothes when they are heavily discounted and wears them daily. Whether or not this was their plan I’m not sure, but it’s something to be aware of if that isn’t your intention.

So in conclusion, you can ethically attract and extract money from whales by providing them value.

I know the conclusion of this post is a little mundane, but hopefully it highlights that there are probably 50 things you could do in your business to make more money, and none of them are unethical.

Hopefully you can see that unlike the conclusion drawn by a certain forum member, the chances that your ethics are the thing holding you back is almost zero.

Thanks, your post is worth real $$$. I had a potential client come to me an with an issue, to which I threw out a 10 hour estimate at a rate of $xxx. It still would have been worth more than that to them.

Since I hadn't heard back within 24 hours, I followed up earlier today and offered just 1 or 2 hours (at the same rate) to give them a better idea of the issue, a potential fix that I can offer, and then scope out what the next 10 hours could look like. I realized I had to help them 'break the seal'.

They bit, I'm in.

I'm reaching out to advisors at the moment to help with the legal side of bringing products to market

In my email I said I wanted initial advice regarding 5 different but similar products

I emailed 6 companies

1 replied offering an initial free consult to see how they could help

Another emailed telling me they had a package that would thoroughly investigate each product and outline the entire process for $1700, per product

Another said the best way to get started would be to book an hour of their time to ask initial questions

The other 3 didn't reply

Now this is clearly a situation where you are potentially attracting a whale, the process does not end with the initial information, you need ongoing support to bring it to market, and then again when it's on market

So why the F*ck would someone quote me $1700x5 up front for shit I don't need

They could have done what the other company did and offered a $260 initial package. Chances are if they deliver on that and show they know their stuff, I do the rest of the process with them and they make way more than the $1700x5 anyway

 

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