The Ultimate Question: Valuing Your Profit ProfileSometimes, if you're lucky, you get a chance to meet one of your heroes. I recall as a kid going to Firestone Country Club in Akron, Ohio and almost colliding with Jack Nicklaus as he moved between holes at the World Series of Golf. Just the memory of Jack and his caddy, Angelo Argea, walking past me is something I'll never forget.

I recently had another opportunity that was just as exciting. Fred Reichheld is a Fellow of the management consultancy Bain and Company, and considered the world's foremost authority on customer loyalty and loyalty marketing. I had been exposed to him early on with his groundbreaking book, The Loyalty Effect, in 1996, and it made so much sense to me that I wondered why no one had come across his notion of the "value of the retained customer vs. the acquired customer" before. Such is the role of great thinkers – to identify simple yet elegant and powerful solutions to problems.

The Ultimate Question focuses on the issue of "good profits vs. bad profits" based upon a customer's willingness to recommend a product or service to a "friend, family member, or colleague". This willingness is translated into a "Net Promoter Score", or percentage of the customer base willing to recommend the product or service. In the era of social networks and word-of-mouth advertising, the NPS is an essential component to business success. So it's no surprise that companies with a high NPS are the ones growing at a faster rate and achieving greater success.

I'll be posting three blog entries based on my 90 minute interview with Fred, and each will focus on a critical insight learned during our discussion.

The first insight of the interview came from an economic angle. Reichheld caught my attention when he stated that general accounting principles do not establish the health of the customer base. More specifically, the way in which Wall Street valuates companies is merely a snapshot in time and provides little insight into what he refers to as "good vs. bad profits".

I was especially happy to hear Fred echo something we've been saying in the contact center for years – that "service level does not equal wallet share". Many companies still evaluate the effectiveness of their contact centers on operational metrics that are only snapshots in time, and they don't really indicate whether they're generating "good or bad customer relationships" during the moment of truth in each contact.

Making this existential leap from Reichheld's NPS to what could be considered the "Ultimate Question in the Contact Center" made me feel like I was meeting a long lost relative for the first time. Maybe it's because later I found out that we both grew up in Ohio!

So where does The Ultimate Question rank on your company's list of priorities?