I love Las Vegas.

But, this isn’t a travel post … I’m going in a different direction.

The Vegas User model is a mental model I use to think about product development for a certain set of products. It’s also useful for thinking about customers of business models with the same properties.

When you think about the “users” of Vegas … two very distinct classes of consumers emerge.

High Rollers (aka Whales)

We all know high rollers. Those that go to Vegas and spend what some earn in a lifetime. Small in numbers, but high in Vegas revenue. They tip well, place big bets, and drop big bills in the club. These are the people who lose thousands gambling and more partying without thinking twice.

HARD EIGHT, (aka SYDNEY), Philip Baker Hall, 1996, (c) Rysher Entertainment/courtesy Everett Collection

“I like your face. Here’s a hundred”

The Small Spender (aka Minnow)

Most casino floors are filled with groups of women and guys on budgets. They’ll play a few hands at the $10 table, sit down at the slots waiting for a drink, and cry once they blow through their $300 weekend budget. They are large in numbers and combined make a meaningful part of Vegas’ revenue, but independently spend small little.

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“Where is the drink girl? I’ve almost spent $10!”

Products & Businesses with this user distribution exist outside of Vegas. Several consumer (and most enterprise) products share this same trait.

Free to Play Gaming (think Farmville) shares this phenomenaI (I used to work on F2P games). Only ~2.2% of users ever pay (cite: gameindustry.biz). From that,  ~0.15% of users make up 50% of all in-game revenue (cite:venturebeat) . From my experience, these numbers are spot on.

But, this isn’t just gaming:

  • The dropbox user filling 100GB with videos and photos vs. someone with 10MB of documents
  • An Amazon customer spending $15,000 a year vs. $150
  • The weekly business traveler vs. the 5 flights in a lifetime traveler
  • A TV network that sells $1,000,000 Super Bowl ads vs. $1,000 late night commercials

But … many products couldn’t reach a Vegas Model if they tried.

Spotify charges a fixed monthly fee. If I wanted to spend $10,000 … I can’t. Free users (who make money through ads) can only listen to so many hours of music. No high rollers.

In addition, customer value isn’t always easy to quantify. Is someone doing 5,000 tweets a day 10x more valuable than someone making 500? Maybe … maybe not. Given followers, quality, and network dynamics it’s hard to use just the number of tweets.

 

For the Vegas Model to be useful in your product thinking, look for a few key things

One (and only one) Metric stands out as most important

Revenue, Information Submitted, Comments Posted, Content Created … whatever. Having one key metric is key. This means you can track everyone against one number.

This doesn’t work when a mix of things (articles read & articles shared, photos submitted & photos consumed, etc) are all very important. This way of thinking is too simple for you.

There is no upper bound for any one user

Thinking about Spotify, revenue might be the most important number. For a given user, it’s capped on the maximum subscription price.

Your high rollers should be able to contribute or spend in orders without bounds. How else will they reach the 1000x multiple to be called a high roller?

The distribution of {insert key metric} per user is skewed, seriously skewed

When you look at your top users, they should be 1000x (if not more) than your average. They should be so large that they warrant special attention, different features, and maybe a personal email from the CEO (*cough* Zynga).

High Rollers make a large portion (>40%) of all {insert key metric}

If there is only 10 people out of a 1M (0.00001%) are giving you 1000X … that’s only 0.001% of your total {x}. They may be interesting, but they aren’t worth special attention. These high rollers need to make up a big part of your bottom line to really claim the Vegas Model.

 

If you think the product you are working on or launching fits this model, own it. There are specific things you should be thinking about in how you attract retain and groom these high rollers, in a way that doesn’t alienate the rest of your user base.

I’ll go into this more next time …