The Ultimate Measure of a Great Business Isn’t Profit

Many business owners believe growth is the ultimate goal. Don’t get me wrong more customers, more sales, more revenue, and more market share are very important aspects of business today.

While these metrics are important, they often distract us from a deeper question, the question that sets the stage for what the future holds. The question:

What kind of growth are we pursuing?

A company can grow rapidly while simultaneously damaging the very relationships that make long-term success possible. A clear example of such instance is when Revenue increase while trust declines or when Profits rise while customer loyalty erodes.

In my study of his groundbreaking book The Ultimate Question, Fred Reichheld argues that the key to sustainable growth is not simply generating profits. It is generating the right kind of profits. You may be asking how many kinds of profits exist or what do you mean by the right kind of profits?

Let me announce to you today that there are two (2) kinds of profits; good and bad profits. The distinction between good profits and bad profits may be one of the most important business lessons any entrepreneur, executive, manager or leader can learn.

Bad Profits and the Hidden Cost

Reichheld defines bad profits as profits earned at the expense of customer relationships. Whenever customers feel deceived, ignored, manipulated, mistreated, or trapped, the profits generated from those interactions are bad profits.

“Better is a little with righteousness Than great income [gained] with injustice. Proverbs‬ ‭16‬:‭8‬ ‭AMP‬‬

Bad profits often look attractive in the short term. A company may increase fees without delivering additional value. A salesperson may pressure a customer into buying something they don’t need. A business may make it difficult for customers to cancel subscriptions. A contractor may overpromise and underdeliver. For a while, these tactics may increase revenue but every bad profit creates an invisible liability. The customer leaves frustrated, trust is broken, future purchases disappear, referrals stop, negative word-of-mouth begins and the ripple effect is endless. What appears to be profit today often becomes lost opportunity tomorrow.

From my study of most companies, I’ve realized that most businesses who rise and fall rarely fail because they run out of customers. They fail because they lost the trust of customers.

Good Profits and it’s Power

Good profits are profits earned when customers gladly do business with you because they genuinely value what you provide.

“Do not merely look out for your own personal interests, but also for the interests of others.” Philippians‬ ‭2‬:‭4‬ ‭AMP‬‬

A company earns good profits when it creates experiences so valuable that customers willingly return again and again. Not only do they come back, but they tell their friends, colleagues, and family members to do business with the company as well. In effect, satisfied customers become part of the company’s marketing department. They become promoters and promoters are powerful.

No advertisement is more persuasive than a genuine recommendation from someone who has experienced your product or service firsthand. This is why sustainable growth is not purchased. It is earned.

The Ultimate Question

The ultimate question discussed by Fred Reichheld, was developed for the purpose of helping businesses know how customers feel about their products and services.

It provides feedback for businesses, executives, managers to gauge customers satisfaction. For your business, you may need to tweak the question a little bit to fit your service but for this blog we will stick to the question Fred built much of his research around:

“How likely is it that you would recommend our company to a friend or colleague?”

At first glance, it seems too simple. But beneath that question lies something profound. Before someone recommends a business, two things must be true.

First, they must believe the company delivers superior value.

Second, they must feel good about their relationship with the company.

A customer may be satisfied with a product but unwilling to recommend the business if they feel disrespected or unappreciated. Likewise, they may like the people but not believe the product provides enough value. To sieve out the noise from their response and to get a clear idea of how customers feel, utilize a scale of either 1-5 or 0-10 with 0 or 1 meaning they are dissatisfied, 3 or 6 meaning they are neither dissatisfied nor delighted while 5 or 10 means they are delighted with their service.

This scale can also help you see who amongst your customers are promoting your business, it can help you identify passives who will leave you when a better option comes along and detractors who are actively spreading negative feedback about your business.

Recommendations and referrals often occur when both conditions mentioned above are met. And so the core focus is to ensure you create lots of promoters by providing a great experience that makes your customers feel delighted doing business with you.

Why Loyalty Drives Growth

Many organizations obsess over customer acquisition. They spend enormous amounts of money attracting new customers while neglecting existing ones. Yet loyal customers are often a company’s greatest growth asset.

Loyal customers:

Buy more frequently.

Stay longer.

Cost less to serve.

Provide valuable feedback.

Refer others.

Strengthen the company’s reputation.

Growth fueled by loyalty is more profitable, more stable, and more sustainable than growth fueled solely by marketing spend.

As Reichheld explains, the real goal is not merely customer retention. The goal is customer advocacy, retention keeps customers. Advocacy turns customers into promoters and promoters create growth.

Great Businesses Build Relationships

“Treat others the same way you want them to treat you.” Luke‬ ‭6‬:‭31‬ ‭AMP‬‬

One of the most important lessons from The Ultimate Question is that great companies do not merely manage transactions. They build relationships. Customers want more than a product. They want to feel understood, they want to know their concerns matter, and they want to believe the company values them beyond their wallet.

If only businesses would apply the golden rule in all their dealings, we would see exponential growth that put competitors way behind. When customers believe a company listens to them, understands them, and consistently acts in their best interests, trust grows. And trust creates loyalty.

The strongest competitive advantage in business is not technology. It is not pricing. It is not even innovation. It is trusted relationships that competitors cannot easily replicate.

The Role of Employees in Sustainable Growth

Exceptional customer services and experiences rarely happen by accident, it is never a matter of chance or luck. They are usually created by engaged employees who genuinely care about serving customers.

If frontline employees are frustrated, disengaged, or poorly trained, customers eventually feel it. On the other hand, when employees understand the mission, believe in the company’s values, and are empowered to serve customers well, remarkable things happen. For instance, customers notice, loyalty increases, referrals multiply and growth accelerates.

A company cannot consistently create promoters externally if it fails to inspire promoters internally. This is why sustainable growth begins with a company’s culture.

A Better Way to Measure Success

Many businesses measure success through quarterly earnings alone. While financial performance matters, it tells only part of the story. Profits may reveal what happened but customer loyalty reveals what is likely to happen next and the most successful companies monitor both. They understand that today’s customer relationships are tomorrow’s financial results.

When customers repeatedly recommend a company, purchase more, and remain loyal over time, sustainable growth becomes a natural outcome.

Final Thoughts: The Choice Between Good Profits and Bad Profits

Every business eventually answers a fundamental question:

Will we pursue profits at any cost, or will we build a company worthy of loyalty?

Bad profits may boost short-term results, but they slowly erode trust. Good profits on the other hand create enthusiastic customers, stronger relationships, and sustainable long-term growth.

The businesses that endure are not necessarily the ones with the most customers today. They are the ones that create the most promoters for tomorrow. They ensure customers are always delighted and the result is sustainable exceptional growth that keeps competitors out of their reach.

As Fred Reichheld reminds us in The Ultimate Question, sustainable growth begins when companies stop asking, “How can we make more money from customers?” and start asking, “How can we create an experience so valuable that customers eagerly recommend us to others?”

The answer to that question may be the most reliable growth strategy any business can ever find.