Understanding the Three Types of SaaS Customers: Minnows, Dolphins, and Whales

Selling software as a service (SaaS) is not just about targeting any customer that comes your way. It’s about understanding the different types of customers and how to cater to their needs. In the SaaS world, customers can be categorized as Minnows, Dolphins, and Whales. Each represents a different kind of customer that requires a unique approach.

Minnows are your cheap or almost free customers. These are the customers who are looking for a bargain and are not willing to pay a premium for your services. They are price sensitive and will only buy your product if it’s affordable. To sell to Minnows, you need to build your application so inexpensively that you could give it away to them potentially and not incur any real costs. Minnows can be a great way to get your product out to the masses, but they won’t generate much revenue.

On the other hand, Dolphins are your power users. These are the customers who are going to be the ones that you actually want to prioritize and focus on asking for new features from. Dolphins are willing to pay a premium for your services and expect a high level of customization and support. To sell to Dolphins, you need to focus on building features that they want and need. These are the customers that can help your company grow and scale.

Finally, there are Whales. Whales are the big businesses and enterprise companies. They have large budgets and are willing to pay top dollar for your services. However, they can also be a double-edged sword. Whales generally suck up more of your company resources than they actually provide real revenue. Sales teams generally prefer selling to Whales because it takes less of their time to court a single Whale over hundreds of Dolphins. However, you run the risk of spending too much time handling all of their special requests before and so it’s best to avoid them altogether.

Letting the Whales come to you under your terms and not theirs is the best way to deal with them. Dolphins usually work for the Whales, so if you do a good enough job, the Whales will come regardless. This story was told to me by Chris Lema years ago at a conference, and the longer I spend in software engineering, the more I see this play out in real life.

In conclusion, understanding the different types of customers and how to sell to them is crucial in the SaaS world. Minnows, Dolphins, and Whales all require a unique approach, and it’s important to prioritize and focus on the customers that will generate the most revenue for your company. By understanding the different customer types, you can build a successful SaaS business that caters to the needs of all your customers.