Visualizing customer profitability with the whale curve

As the coronavirus pandemic continues, many businesses are struggling to grow, or even sustain their current value. Engaging in a robust profit analysis of your business can lead down a road of answering tough questions, such as: how well do you know your customers or do you know which customers are increasing your profit margins and which are not?  In the world of business, time is money – and leveraging data visualization (data viz) to efficiently and effectively perform profit analysis can greatly speed up your time-to-insight, giving you a fighting chance at making adjustments to keep your business relevant in this current economic landscape.

One such data visualization to leverage for profit analysis is the age-old but powerful “whale curve” – earning its name for appearing to be in the shape of a whale’s back. The whale curve effectively visualizes which customers are profitable for your business, which are breaking even, and which are unprofitable. A whale curve is a brilliantly simple, but effective line chart, plotting the percentage of cumulative profit on the y-axis and the percentage of customers ranked by profitability (most to least) on the x-axis.

The ensuing whale curve visual provides an easy-and-quick-to-understand picture of customer profitability. The whale curve picture helps business leaders streamline their reporting as they can visually see which customers are profitable versus spending hours analyzing thousands of rows in a spreadsheet.

The following examples of whale curves will outline some differences to provide a better understanding of data visualization.

Profitable customers

In this example, 20% of your most profitable customers are generating 180% of your overall profitability, as shown on the left side of the whale curve. These customers are providing the highest profit margin within your company; any future business decisions should not marginalize this client basis as it may result in a loss of income – ultimately reducing the health of your organization. Drilling down into these customer metrics and insights, business leaders should ask themselves these further questions about the customers that make up this 20%: