Let My People Go Surfing: The Education of a Reluctant Businessman

Patagonia believes that profits come naturally from making high-quality products; Chouinard claims its express goal is not to turn a profit. However, Chouinard still believes profits are important because they indicate customer approval. That the company turns a profit also lends a credibility to its environmentally conscious model of business that would be lacking otherwise. Being privately owned allows the company to focus on a quality product line rather than its stock, which often becomes a publicly owned company’s product. A report by the Strategic Planning Institute found that an emphasis on quality makes for a profitable company:

[Q]uality, not price, has the highest correlation with business success. In fact, the institute has found that, overall, companies with high product- and service-quality reputations have on average return-on-investment rates twelve times higher than their lower-quality and lower-priced competitors (390).

One reason for the focus on quality is that high-quality products are returned less. Returns cost money to process and cost companies in terms of lost customers. In the United States, Europe, and Japan, only 14%, 8%, and 4% of customers, respectively, will tell a company they’re unhappy with their product. Of those customers, 33% to 50% will never buy from that company again.