Fred Reichheld and Geoffrey Moore distinguish good profits from bad ones: good profits come from loyal customers who strengthen your position and reputation, while bad profits come from detractors who drain resources. Evaluate each client by whether they deliver strategic wins like loyalty and market advantage, not just revenue.
Learn to separate good profits from bad profits. And I've seen this discussed in a couple of different contexts. One is Reichold, Fred Reichold over at Bain and Company. He's the guy who invented the Net Promoter Score, talks a lot about bad profits versus good profits. Bad profits are profits you get from people who are your detractors or are on their way to becoming your detractors because of the ways you do business that are, you know, turn people off. Whereas good profits are the ones that like win you more loyalty. And then there's this idea from Geoffrey Moore where he talks about bad profits and good profits, where good profits are the ones that improve your strategic position in a market, right? They're improving your reputation, they're improving your knowledge that is going to allow your business to do more than it used to be. And I think in both of these cases, it's asking like, when you have a client engagement, not just being able to get revenue from it and not just making sure that revenue is directly profitable in terms of your, you know, gross cost or what have you, but asking how does it move your business forward? I sometimes cast this as looking for wins. Which of your clients are bringing you wins?
