Posted by Sandy Hutchens

Too many companies can’t tell the difference between good profits and bad. The consequences are disastrous. Bad profits choke off a company’s best opportunities for true, lasting growth. They blacken its reputation and make it vulnerable to competitors.

By “bad profits” we mean profits earned at the expense of customer relationships. Whenever a customer feels mistreated, those profits are bad. Bad profits come from unfair or misleading pricing, saving money by delivering a poor customer experience, or extracting value from customers rather than creating value. At many firms, more than 30% of customers fall under the category of bad profits.

Good profits are dramatically different. A company earns good profits when it so delights its customers that they not only willingly come back for more, but they also tell others to do business with the company. Satisfied customers become, in effect, part of the company’s marketing department. They become promoters.

A simple technique can help you distinguish good profits from bad. Ask your customers to answer what we call “the ultimate question”: On a scale from zero to 10, how likely is it that you would recommend this company to a friend or a colleague? The responses will help you tally a metric known as Net Promoter® Score (NPSSM). NPS has been shown to correlate well not only with customer referrals and repurchases, but also with companies’ growth rates.

Customer responses cluster into three groups. The first group-customers who give the company a nine or 10-we call promoters. Customers in the second group, which rates the company at seven or eight, are “passively satisfied.” Detractors, with ratings from zero to six, make up the third group. A company’s NPS is simply the percentage of promoters minus the percentage of detractors.

Bain has found that companies with the leading NPS in an industry usually enjoy superior growth-typically, more than 2.5 times the average growth rate of the competition.

How can a company raise its NPS? First, by designing the right propositions for the right customers. A vital step toward clarifying your priorities is to quantify the average lifetime value of your company’s promoters and detractors, factoring in margins, annual spend, cost efficiency, and referrals. Another step that will help is to map your customers onto the grid illustrated in Figure 1.

High-profit promoters, in the upper right, love doing business with you. These customers should be your top long-term priority for strategic investment and innovation. Your entire organization should focus on delivering flawlessly to them. Too often, however, customers in this sector are taken for granted (no squeaky wheels here). Inadvertently, companies may be milking profitable promoters to fund solutions for less-profitable customers.

In the 1980s, American Express took the healthy profits from its core travel-card business and financed an expansion into financial services. Within the card division, margins from high-volume customers subsidized the acquisition of new customers outside the core business. Predictably, American Express’s growth and profits tailed off…until it revitalized compelling propositions for core customers. For example, the company transformed its Membership Miles program into Membership Rewards, one of the industry’s most generous rewards programs, and created the Rewards Plus Gold card, now one of its most popular products.

High-profit detractors, in the upper left corner, should be the second priority. They don’t like doing business with you and are telling others. They will likely defect at the first opportunity.

A mobile-phone provider found that many accounts in this sector were locked into long-term contracts at fixed prices. When these prices became uncompetitive, the customers were furious. The fix was easy: Offer more favorable terms in advance of renewal. That cost money, but holding angry customers hostage would’ve cost even more.

Moving more customers into the upper right sector should be your third priority. Begin by looking for ways to

encourage low-profit promoters to do more business with you. Amazon.com, for example, began to use personal
recommendations and incentives such as premium shipping to do this. You’ll also have to figure out what would win over the passives, and then calculate whether such investments make sense or would merely “steal” resources away from your core.

Leading companies like GE, Intuit, and American Express are now deploying NPS and discovering how versatile it is. Like any good metric, NPS allows experimentation and accelerates learning. It helps you understand your core customers and design propositions that captivate them-and discover opportunities to deliver a great customer experience at every touchpoint. By producing NPS data regularly, you’ll institutionalize a cultural shift, making customer metrics every bit as auditable and practical as financial metrics such as profit and return on equity. You’ll develop your capability to keep turning customers into advocates that lead your company to lasting growth. And it all starts by asking just one question.

Jackie Mason is no stranger to controversy. The Jewish-American comedian is known for his stand-up act, which he started in the 1960s in his fast paced, thick Brooklyn, New York Jewish accent. He has acted in several movies and TV shows. His most recent work is a video blog and CD called The Ultimate Jew in which he comments on current events.

I’ll tell you the truth. Barack Obama isn’t only fooling the Jews. He’s fooling all the people of America. Right now, people are determined to prove they can vote for a Black person because they were told they’re racists all their lives. White men are walking around feeling guilty thinking if they don’t vote for Barack Obama, they’re racists.

But as far as the Jews are concerned, they are still wedded to the Democratic party, when the Democratic party is not interested in Israel. The Democratic party has voted very often against Israel on major issues. The Republican party is determined to help Israel almost more than the Jews are. Even the Hassidic Jews. I don’t care how religious you are. They’re not as willing to fight for Israel as the Evangelical Goyim. But since the days of Franklin D. Roosevelt, the Jews have been told that the Republicans are for big business and not for the underdog. The Jews feel the Democrats are helping the struggling people. And they still believe it. The Jews are more willing to feel guilty for not helping a poor person than anybody else is. Because a Jew has to feel that he’s always compassionate and always helping the underdog.

Frank Palestro, the latest cop to call the NYPD out on corruption, has gotten serious reactions from his fellow police and the union, though he maintains he was performing his duties. The union delegate and nine-year police veteran was outed after secretly reporting Lt. Susana Seda for behavior such as telling cops to write summonses for traffic violations they didn’t actually see, not taking complaints and tampering with evidence at a crime scene. Since then, he’s been transferred so he won’t have to deal with the ire of his precinct peers “I was the [Patrolmen's Benevolent Association] delegate, and now I’m labeled a rat for doing what I was supposed to do,” said Palestro. “This will stay with me for the rest of my career.”

According to Palestro, union reps do not commonly report the infractions of their fellow officers. “I wrestled with it for a while because I’m a delegate and we don’t do things like this,” he told the Daily News. In the end he made three anonymous phone calls reporting corruption within his precinct, but the log of his calls somehow made its way into the vents of his locker at the stationhouse! “[Seda] told everybody I was a ‘f—— rat,’” he said, adding that the union has also reprimanded him. So far no action has been taken against the accused lieutenant.

Palestro’s allegations follow a study that revealed widespread and deeply ingrained corruption regarding how the NYPD’s crime statistics are obtained, as well as whistleblowing by several other members of the force.