“whale curves.”5 In Kaplan’s experience, the whale curve usually reveals that the most profitable 20% of customers can sometimes generate between 150% and 300% of total profits so that the resulting curve resembles a sperm whale rising above the water’s surface.

central difference between CP and customer lifetime value (CLV) is that CP measures the past and CLV looks forward.

no single metric is likely to be perfect. For this reason, we recommend that marketers use a portfolio or “dashboard” of metrics.

helpful to draw a diagram showing the stages of the selling process

mastery of data-based marketing will become a means for many of our readers to differentiate and position themselves for career advancement

After you have the sorted list of customer profits (or customer-group profits), the custom is to plot cumulative percentage of total profits versus cumulative percentage of total customers. Given that the customers are sorted from highest to lowest profit, the resulting graph usually looks something like the head of a whale.

sales potential in a territory can be determined as follows: Sales Potential ($) = Number of Possible Accounts (#) * Buying Power ($)

In some industries and companies it is typical to calculate four- or five-year customer values instead of using the infinite time horizon inherent in the previous formulas.

The firm’s average acquisition cost is the ratio of acquisition spending to the number of customers acquired. The average retention cost is the ratio of retention spending directed toward a group of customers to the number of those customers successfully retained.