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The whale curve, also known as the cumulative profit curve, is a graphical representation of customer profitability in a business. It helps visualize the distribution of profits across different customer segments and allows for better decision-making regarding customer prioritization and resource allocation.

The whale curve is a cumulative profit curve that shows the percentage of total profits contributed by each customer segment, starting from the most profitable customers to the least profitable customers. In the graph, the customers are sorted along the x-axis based on the cumulative percentage of total profits they contribute, whereas the y-axis shows the actual cumulative profit percentage. The shape of the curve resembles a whale, hence the name "whale curve."

The purpose of the whale curve is to help businesses better understand the distribution of customer profitability and identify potential opportunities for improvement. By using the whale curve, a company can: 1. Easily identify the most profitable and least profitable customers 2. Allocate resources and investment optimally to different customer segments 3. Improve profitability by better targeting and servicing the most profitable customers 4. Identify untapped potential within the customer base and strategize ways to nurture and improve less profitable customer relationships

Interpretation of the whale curve requires analyzing the shape and position of the curve. The curve can be divided into three sections: 1. High-profit segment (the "head" of the whale): This section represents the most profitable customers, contributing a significant portion of the total profits. This segment typically contains a small percentage of the total customer base but has the highest prioritization when it comes to resource allocation and customer service. 2. Break-even segment (the "body" of the whale): These customers cover the entirety of their costs but do not contribute significantly to the company's overall profitability. This segment may still be valuable to maintain overall customer volume and offer opportunities for growth if relationships can be improved and nurtured. 3. Low-profit or loss-making segment (the "tail" of the whale): This section represents the least profitable customers, often costing the company more than they contribute. Companies should evaluate these customers in order to decide whether to invest in improving these relationships, restructure the pricing or service levels, or potentially discontinue relationships altogether. By analyzing the whale curve, businesses can make informed decisions on how to best allocate resources, prioritize customer segments, and ultimately improve overall profitability.