What it means
To build quintiles, you rank the data from lowest to highest and split it into five equal parts. The first quintile holds the lowest 20%, and the fifth quintile holds the highest 20%.
The cut-off values between the groups are the quintile boundaries. Compared with quartiles, quintiles give a finer view of the spread.
Four groups can hide meaningful differences, whereas five groups let a manager see the very top and very bottom more clearly. Economists often use quintiles to describe how income is distributed across households.
In business, quintiles are common in customer analysis. A company may rank customers by spending and look at what share of revenue comes from the top quintile.
Marketers use the same idea to target campaigns, and credit teams use it to group borrowers by risk score. Investors use quintiles to rank stocks or funds, for example by dividing a universe of shares into five groups by value or momentum.
A study might compare the return of the top quintile with the bottom quintile to test whether a signal works. The results help build portfolios, though past rankings do not guarantee future returns.
Two nuances matter. First, the groups must be equal in size, so the data set needs enough observations to split sensibly.
Second, ties and the calculation method can move individual items between groups, so the method should be stated whenever the results are published. Quintiles also help in budgeting and planning.
A finance team can set different service levels for each customer group, or estimate how much revenue would be at risk if the top quintile left. Seeing the numbers by group turns a vague worry about concentration into a measurable figure.
In practice
Real-world examples.
Example
An online retailer ranks its customers by annual spending and splits them into five groups. The top quintile accounts for most of the revenue, so the marketing team creates a loyalty programme aimed at them. The lowest quintile receives only automated emails, because the cost of personal attention would exceed the revenue it could bring.
Example
A government agency reports household income by quintile to show how earnings are distributed. A policy analyst compares the top and bottom groups over several years. The finance ministry uses the results to model the impact of a tax change on each group.
Example
A fund selector divides 200 funds in a category into quintiles by three-year return. She notices that funds in the top quintile often fall to a lower quintile the next period. She uses this to avoid chasing last year's winners.
Formula
Calculation
Number of items in each quintile = total number of items / 5
Suppose a company has 500 customers ranked by annual spend, and total revenue is $3,000,000.
Step 1: items per quintile = 500 / 5 = 100 customers.
Step 2: suppose the top 100 customers together spent $2,100,000.
Step 3: share of revenue from the top quintile = $2,100,000 / $3,000,000 = 0.70, or 70%.
The top 20% of customers therefore generate 70% of revenue, which shows how concentrated sales are.Case study
Seen in the real world.
Silverline Telecom is a fictional mobile operator used for illustration. Its finance team ranked 500,000 subscribers by monthly revenue and created five equal groups. The top quintile, containing 100,000 customers, generated about 55% of total revenue, which surprised the management team.
In this illustrative story, the operator then looked at churn within each group and found the top quintile was leaving at a higher rate than expected. It introduced a dedicated support line and early renewal offers for those customers. Over the next year the churn rate in the top quintile fell, and the finance team began reporting revenue and churn by quintile every quarter.
Finance also tested a what-if: if one-tenth of the top quintile left, annual revenue would fall by roughly 5.5%. That figure, shown in the board pack, justified the retention budget without long argument. Management now tracks the share of revenue from the top quintile as a standing risk indicator.
Watch out
Common mistakes.
- Confusing a quintile with a percentage. A quintile is a group or a cut-off point, with each group holding 20% of the data.
- Using unequal group sizes. Quintiles only make sense when the five groups are the same size.
- Assuming a top-quintile result will continue. Rankings change from period to period.
Questions
People also ask.
How many quintiles are there?
There are four cut-off points that create five groups, and people often use "quintile" for the groups themselves.
What is the difference between a quintile and a quartile?
A quintile splits data into five groups, while a quartile splits it into four.
What does the top quintile mean?
It means the best 20% of the ranked data, such as the highest-spending customers or the best-performing funds.
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