The Ultimate Question: Driving Good Profits and True Growth.

• Author: Marshall, Jeffrey
• Position: Book review

The Ultimate Question: Driving Good Profits and True Growth. By Fred Reichheld. Harvard Business School Press, 211 pages. $24.95.

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Not all profits are created equal, and "bad" profits risk alienating customers, writes Fred Reichheld, author of two popular books on loyalty, The Loyalty Effect and Loyalty Rules. Moreover, these bad profits can create legions of detractors who bad-mouth the company and switch their allegiance to competitors.

Reichheld, who is a director emeritus of Bain & Co., contends that "good" profits have the opposite effect: They turn customers into promoters who can help the company on its journey to sustainable growth. He posits a central question that companies should ask their customers: "Would you recommend us to a friend?" From this, he creates a "net promoter score" (NPS), which he claims represents the most reliable indicator of a company's growth.

The author has picked up some key endorsements for the concept. General Electric Co. CEO Jeffrey Immelt has called the NPS "the best customer relationship metric I've seen," and has said that NPS will be established across all of GE's more than 500 business lines--and will help set executive bonuses.

One of Reichheld's central tenets is that traditional customer surveys are too long to ensure they will be filled out, ask extraneous or marginally useful questions and are often little more than marketing campaigns in disguise. Far better, he argues, to concentrate on the vital question of whether or not...