The Average Customer
A few whales, one misleading number. An executive celebrates an $8,000 average customer value. Dr. Bayes asks for the median and finds out who is really pulling the mean.
Behind the joke.
Customer value is usually right-skewed: many modest customers and a few very large ones. Those large values pull the mean ($8,000) far above the median ($3,100), the value half of all customers fall below. The mean still matters for totals such as revenue, but it describes a customer who is rarer than it sounds. To picture a typical customer, look at the median and the whole distribution.
The transcript.
For readers who prefer dialogue without zooming in.
Read the dialogue ↘
Executive: Our average customer is worth $8,000!
Dr. Bayes: Interesting. What's the median?
Executive: $3,100.
Dr. Bayes: Ah.
Executive: Doesn't that make the average misleading?
Dr. Bayes: Only if you mistake it for typical.
Dr. Bayes: A few whales are pulling the mean. Your average customer is someone most of your customers have never met.