BU247 Lecture Notes - Switching Barriers
Document Summary
Whale curve a plot of cumulative profitability versus the percentage of customers, where customers are ranked from the most profitable to the least profitable. In a typical whale curve, the most profitable. 20 percent of customers generate between 150 and 300 percent of the company"s profits. The unprofitable customers incur losses that cumulatively bring the company"s profits down to 100 percent. A company cannot lose a large amount of money with a small customer because it does not do enough business with it to incur large losses. Only a large customer, demanding high discounts from list price and also making many demands on a company"s technical, sales, distribution, and administrative resources can be highly unprofitable. Large customers are typically a company"s most profitable or its most unprofitable. The opportunity for a company to identify its unprofitable customers and then transform them into profitable ones is perhaps the most powerful benefit that a company"s managers can receive from an.
