Bad Profits Hurt Business


“The purpose of a business is to create and keep a customer.” – Peter Drucker

Not all profits are good profits. A bad profit is earned at the expense of customer relationships. It is one that leaves customers feeling misled, mistreated, railroaded or coerced and as a result resentful of the organisation that levelled it at them. It is one that contravenes Peter Drucker’s purpose of a business – to keep customers.

Organisations that want to improve their customer experience should take a vigorous look at what fees, charges and penalties they’re levelling at their customers that might be causing them to reconsider their relationship with the company. Those profits will end up costing the company much more in terms of the negative impact on staff who have to justify them to angry customers, the negative word-of-mouth they generate, the loss of customers in the long run and the effect upon the company’s reputation.

Here are some examples of bad profits that are being made in Australia today:

  • – Ticketing agencies charging customers to print their own tickets.
  • – Rental car companies charging exhorbitant fuel prices.
  • – Credit card interest rates which have not mirrored the decreasing cash rate.
  • – Cinemas charging higher booking fees for their premium cinemas.
  • – Airline fees to change flights.
  • – Phone company paper bill fees.
  • – Phone company global roaming charges.

If your company charges customers in this way consider all the negative consequences of doing it and then decide if the short term monetary gain is worth the long term customer relationship pain. If not, change your pricing policy to make it more reflective of the true cost (if indeed there is one).

If you don’t know if your company makes bad profits, try typing “[your company name] sucks” into Google (make sure you’re in a happy place mentally before you do it). Whatever it is that ticks off your customers should come through loud and clear in any results. You can also check customer service complaint websites like Not Good Enough, Complaints Board and Pissed Consumer for your company name.

If you’ve got one, a Voice of the Customer program should identify root causes of customer dissatisfaction. Believe me, sources of bad profits will usually stick out like a sore thumb.

If you haven’t got a VoC program in place, or if you need help tweaking an existing one, contact us today.


view all posts

Subscribe to Cxpert

* indicates required

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>