BU247 Study Guide - Final Guide: Cash Flow, Independent Business, Income Statement
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. 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. Service companies must focus on customer costs and profitability because the variation in demand for organizational resources is much more customer driven than in manufacturing organizations. A manufacturing company producing standard products can calculate the cost of producing the products without regard to how their customer can use them; the manufacturing costs are customer independent.
