It seems counterintuitive. Bad profits? But Fred Reichheld, a director emeritus and fellow at Bain & Co., has a strong message for businesses that are shoring up the bottom line at the expense of customer relationships: Profits that stem from lousy customer service aren’t worth the cost.

In his book The Ultimate Question: Driving Good Profits and True Growth, Reichheld contends that while strategies like pushing inappropriate or overpriced products on customers might yield gains, they can strangle growth, demoralize employees, and turn customers into detractors. Asking the “ultimate question” — How likely is it that you would recommend this company to a friend or colleague? — will determine what kind of profits your customer interactions are generating, the author says.

The key to customer retention and driving growth, according to Reichheld, is going beyond “delighting” customers to turning them into active promoters. Subtracting the percentage of detractors from the percentage of promoters yields a score that gauges the efficiency of an organization’s “growth engine,” he says.

But developing an accurate promoter score, he cautions, requires direct conversations — not more customer satisfaction research. In fact, Reichheld devotes an entire chapter to explaining why customer surveys are the wrong tool for assessing how customers really feel about a company. Among the reasons:

• Customer satisfaction survey scores don’t link to customer behavior — “satisfaction” is too low a hurdle.
• Survey designers ask too many questions, turning off respondents and yielding extraneous, unwieldy data.
• The wrong customers respond. Valuable customers are already talking to you.
• There’s no way to follow up when surveys uncover a problem. Employees who can fix things aren’t in the loop.
• There are no generally accepted customer satisfaction metrics, and results are too easily manipulated.

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