The Average Is a Polite Fiction: Why We Must Tour the Tails
Why your 'Average Deal Size' metric is masking a cash flow crisis, and how to use histograms to find the truth hiding in the extremes.
The Ghost in the Middle
Come, look at this chart. No, not the summary table with the bold green numbers. Look at the raw export.
Do you see the column for “Contract Value”? If we highlight this column and look at the status bar in Excel, it whispers a comforting number to us: $10,200. This is your Average Deal Size. You put this number in your pitch deck. You tell your sales team to optimize for it. You forecast next year’s revenue by multiplying leads by this number.
But look closer. Scroll down.
Do you see the emptiness?
We have a cluster of deals here at $1,500. And if we scroll all the way to the bottom, we see three massive contracts for $85,000. But in the middle—right around that beautiful $10,200 average—there is… nothing. There is a void. The “Average Customer” you are building your strategy for does not exist. We are designing a product for a ghost.
The Lie: The Average implies consistency. It suggests that if we close ten deals, they will look somewhat alike. It tells us that our revenue is predictable, stable, and scalable. It masks the volatility by painting everything with a single, beige brush.
The Truth: The shape of the data tells a violent story. We are not a stable mid-market company; we are a chaotic mix of “Barnacles” (low-value, high-churn clients) and “Whales” (high-value, dangerous dependencies).
[TO EDITOR: Please insert a simple histogram diagram here. Left side: High bar labeled ‘Barnacles ($1.5k)’. Middle: Completely flat line/gap labeled ‘The Void (No one is here)’. Right side: Short spike labeled ‘Whales ($85k)’. Title: “The Shape of Risk”]
Walking the Tails
When we rely on the average, we blind ourselves to the two forces that actually control our cash flow: the Tails.
Let us walk to the left tail first. These are the Barnacles. In the average, they look like just a bit of drag. But when we look at the raw count, we see they consume 80% of our support tickets while contributing only 15% of revenue. The average hides their noise. If we visualized support hours per dollar earned, this section of the chart would be glowing red.
Now, let us walk to the right tail. The Whales. You might feel pride looking at those $85,000 cells. But to a Visual Investigator, this is not revenue; this is risk concentration. If one of those three whales leaves, the average drops, but the business crashes. The average told us we were diversified. The tail tells us we are held hostage.
Finding the Signal in the Noise
So, how do we stop lying to ourselves? We must stop asking “How much?” and start asking “What shape?”
We do not need new software for this. We need to respect the texture of the data. Next time you export your sales data, create a simple distribution bucket. Group your deals: $0-$5k, $5k-$20k, $20k+.
When you do this, the ghost in the middle disappears, and the reality appears. You might find you are actually running two different businesses that hate each other: a high-volume commodity business and a high-touch boutique consultancy.
The average tries to marry them. The data demands a divorce.
If we build our strategy on the average, we will starve in the middle. But if we serve the shape, we can decide: do we hunt the whales, or do we automate the barnacles? We cannot do both.
FAQs
Why is the average bad if it shows growth?
Because the average is easily bullied by one massive outlier. It tells you the middle point of the math, not the reality of the customer base.
What should I use instead of an average?
Use a histogram. Look at the Median. Look at the shape. See where the clusters actually live.
Do I need complex software for this?
No. You need the raw CSV export and the `FREQUENCY` function in Excel. That is all.