Profit Whale in Other Industries

The Profit Whale Curve is common to all companies, even across industries and business models. The details vary, but the overall shape and the double hidden multipliers of head and tail are always there:

• Robert Kaplan analyzed an insurance company where “the most profitable 40% of customers generate 130% of annual profits, the middle 55% break even, and the least-profitable 5% of customers incur losses equal to 30% of annual profits.”  [1]
• Accenture analyzed a $5B consumer-goods company where “20% of its customers generated 80% of its profits, 15% generated 30% of the profits, 50% produced 0% profit, and 15% caused losses of 10%.”  [2]
• Booz Allen Hamilton analyzed a client where 30% of customers produced 200% of the profits, while the bottom 20% destroyed half of those profits.
• Reinaldo Guerreiro analyzed a major Brazilian food business, finding that “80% of [profit margin] came from only 6% of customers” and that 50% of the customers were a net loss.
• Erik van Raaij analyzed a company that produces professional cleaning products, finding that the top 20% of customers accounted for 95% of gross profit.

[1] Robert Kaplan, “A Balanced Scorecard Approach to Measure Customer Profitability,” HBS Working Knowledge, 2005.

[2] “Measuring the True Profitability of Products, Services and Customers,” Accenture, 2014.