Welcome and Introduction: Bad Profits, Good Profits, and the Ultimate Question

I want to personally welcome you to the Net Promoter website and hope that together, we can build a productive community that helps your organization measure and manage the quality of relationships just as thoughtfully and thoroughly as it now measures profits.  The ultimate goal, of course, is to treat people in a way that encourages them to invest their time, energy, money, and creativity in building better and deeper relationships.  The practical benefits of such loyalty are growth and economic prosperity.  When customers, employees, suppliers and investors invest in creating better, more valuable relationships, the "loyalty effect" will fuel profitable growth (listen to the audio profile on this topic or read the text transcript).

The potential benefits of loyal relationships are far-reaching.  Loyalty profoundly influences trust, motivation, team-spirit, innovation, communication, and productivity (to say nothing of personal fulfillment).  Loyalty is indeed the key to profitable growth. Yet because loyalty is rarely measured--or even carefully defined--in organizations today, this fundamental human value gets pushed back into the shadows and accounting profit becomes the predominant measure of success.

The problem is that  accountants can't distinguish between good profits and bad. (I define bad profits as earnings at the expense of customer relationships--whenever a customer feels misled, mistreated, coerced or abused; profits from that customer are bad).  The average firm today is booking bad profits from more than 30% of its customers.  Some large firms so consistently abuse their customers that more than 50% of their customers would not recommend them to a friend or colleague. 

And here the free market begins to work its magic.  Without good relationships, firms cannot grow. This explains why almost 80% of the world's top-2500 firms couldn't even achieve true growth rates of 5% over the past decade. Over time, bad profits cause firms to shrink as they are displaced by competitors, but not before they inflict enormous damage on customers, employees, suppliers, investors, our economy and our society.  Meanwhile, the reputation of business as an institution is besmirched.  We really must help companies break their addiction to bad profits.

How?  In my case, I decided to dedicate my career to helping organizations recognize the value and the virtue of loyal relationships.  I have written a series of articles and books that help to clarify the economic power of good relationships (good relationships are mutually valuable and mutually accountable for honoring the Golden Rule--treating others the way you would want to be treated).  I lecture regularly on this subject and have cataloged a suite of tools and tactics to help managers achieve profitable growth by building better relationships.

My latest book (and in my mind, by far the best) is THE ULTIMATE QUESTION: Driving Good Profits and True Growth, which will be published in 2006 by Harvard Business School Press (while the official publication date is March 2nd, books will be printed in late January; the review by Tom Peters, author of In Search of Excellence, is available now).  This book provides a practical way to measure and assign accountability for building good relationships and good profits. My long-standing supporters in this quest have been my partners at Bain & Company, the firm where I have worked since 1977--now in a half-time role as a Bain Fellow. More recently, I have been joined by Satmetrix, the sponsor of this website.  To both firms, I am most grateful.

But the real purpose of this blog is to recruit you to become part of our movement.  I hope you will start by reading THE ULTIMATE QUESTION , and that you will contribute suggestions and exchange ideas with other members of the Net Promoter community.  Your active participation and suggestions will guide the direction of our work. 

Business loyalty, corporate ethics, and good profits have become laughable, oxymoronic ideas for too long.  The goal of our movement is to reverse this situation.  We intend to clarify the role of good relationships in driving good profits.  By developing and disseminating the tools to measure and manage relationship quality as carefully as profits, we hope to illuminate the path to true growth.  I hope you will join us.

When you register to join NetPromoter.com, you can receive a free electronic copy of the first chapter from my new book,  THE ULTIMATE QUESTION.