Good Profits
Satisfied customers become, in effect, part of the company's marketing department, not only increasing their own purchases but also providing enthusiastic referrals. They become promoters. The right goal for a company that wants to break the addiction to bad profits is to build relationships of such high quality that those relationships create promoters, which generate good profits, and fuel true growth. The following examples of good profits are drawn from Fred Reichheld's book, The Ultimate Question.
Amazon: Amazon.com could easily afford to advertise more than it does; instead it channels its investments into free shipping, lower prices, and service enhancements. Founder and CEO Jeff Bezos has said, "If you do build a great experience, customers tell each other about that."
Southwest Airlines: Southwest Airlines doesn't charge for flight changes, instead offering passengers a credit that can be used anytime over the next twelve months. The carrier has also replaced the industry's elaborate segmented pricing structure with a transparent two-tier pricing policy. Southwest now flies more domestic passengers than any other U.S. airline and boasts a market capitalization greater than the rest of the industry combined.
The Vanguard Group: Vanguard reduced prices by as much as one-third for customers who had recently made large investments or who had maintained healthy balances for an extended period after recognizing it had inadvertently been overcharging its best customers and (in essence) subsidizing new customers. Its core customers were so delighted that they increased their holdings and boosted referrals, pushing the company toward leadership in the mutual funds industry.
