[Digital products] Do you know the difference between good and bad revenue?
The financial outcome must always be used as one of the metrics that indicate that the company is being successful, that it is reaching its goal. However, it must not be considered in isolation, because there is good revenue and bad revenue.
Bad revenue is all revenue that comes at the expense of the relationship with the costumer. For instance, a company that hinders their clients’ cancellation when they want to cancel or when it sells something overpriced taking advantage of your needs, such as the price of bottle of water in a hotel.
Good revenue is all revenue that comes from deals where we can make our customers happy, where they feel we have solved their problem. It’s revenue we can build on by getting even more business from loyal customers, who typically recommend our product or service to their friends.
The bad revenue may help the company in the short run; however, in the long run clients will get tired of this behavior and will seek for alternatives. That is, bad revenue can eventually kill your company in the long run.
It is not possible to differentiate the good from the bad revenue in a financial report.
It is not possible to differentiate the good from the bad revenue in a financial report, in which all you can see is revenue numbers without any information on the client’ satisfaction grade. Because of this, it is necessary to listen to your customers, measure their satisfaction, and correlate it with the financial results.