Bain Bets on Bad Profits

"'Bad profits' are generated when a company fails to deliver on a promise. They shortchange customers and lead to defections in the long term while currently reaping rewards at the expense of customers and creating detractors in the process."

--Bain

Bain & Company issued a press release Thursday saying that new research finds that companies earn bad profits from one-third of their customers. The research was done by Fred Reichheld, whose forthcoming book, The Ultimate Question: Driving Good Profits and True Growth, was also announced in the press release.

The research isn't actually new. Bain began publishing results of the research well over a year ago (as I said back in July). That's ironic, given that the thesis this time is about companies not doing what they say they do -- and the resulting profits therefore being "bad," or harmful to companies' long-term prospects.

Calling something new when it isn't is an old device and not the most sophisticated. However, the press release does display some very sophisticated thinking marketers would do well to study in their own thought leadership campaigns.

The term, "bad profits," for one, is brilliant. It's the juxtaposition of two opposing ideas -- and immediately provokes the response, "How can profits be bad?" Explaining how (i.e., responding to the reader's need to know) offers the opportunity to present the whole case the firm wants to make. It reminds me of when Regis McKenna, the master high tech public relations strategist, announced that PR is dead. Of course, what he really meant was . . . . And therein lay hundreds of pages of editorial copy about Regis McKenna.

But bad profits also illustrates another powerful marketing tool. That is to present multiple facets of the same insight as if each were an insight all its own. That's clearly at work here. Earlier, the facet Bain developed was that customers may say they like you (and even believe it) even if they really don't and therefore would actually be a detractor if asked to provide a reference for you. Bain said that this promoter versus detractor index was the most important number companies can manage. Even though the content of the basic idea is the same, the idea's branding has now changed. It's gone from "most important number to manage" to "bad profits." Which do you think is more powerful?

Thought leadership is very expensive -- so companies need to get as much mileage as possible. Most efffectively, that is not done by using different words to say the same thing. "Bad profits" is more than just relabeling. It is saying something new. More importantly, it is also thinking something new.

There are other ways marketers can grow the return they receive on thought leadership investments -- and I review some of them in the winter edition of my new newsletter (pdf), Writing & Strategy.