The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value

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Overview

The business world seems to have given up on loyalty: many major corporations now lose-and have to replace-half their customers in five years, half their employees in four, and half their investors in less than one. Fred Reichheld's national bestseller The Loyalty Effect shows why companies that ignore these skyrocketing defections face a dismal future of low growth, weak profits, and shortened life expectancy. Reichheld demonstrates the power of loyalty-based management as a highly profitable alternative to the economics of perpetual churn. He makes a powerful economic case for loyalty-and takes you through the numbers to prove it. His startling conclusion: Even a small improvement in customer retention can double ...
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Overview

The business world seems to have given up on loyalty: many major corporations now lose-and have to replace-half their customers in five years, half their employees in four, and half their investors in less than one. Fred Reichheld's national bestseller The Loyalty Effect shows why companies that ignore these skyrocketing defections face a dismal future of low growth, weak profits, and shortened life expectancy. Reichheld demonstrates the power of loyalty-based management as a highly profitable alternative to the economics of perpetual churn. He makes a powerful economic case for loyalty-and takes you through the numbers to prove it. His startling conclusion: Even a small improvement in customer retention can double profits in your company. The Loyalty Effect will change the way you think about loyalty, profits, and the nature of business.

Author Biography: Fred Reichheld is a Director Emeritus of Bain & Company and a Bain Fellow. He is also the author of Loyalty Rules!. BACK COVER: "Deserves to become a business classic."

-Financial Times

"The Loyalty Effect put loyalty economics on the map."

-The New York Times

"The Loyalty Effect is . . . as close to a religious experience as one can get in the business realm."

-Sun-Sentinel

"[Reichheld's] message is simply this: The best, most profitable employers are those that inspire loyalty among three constituencies: customers, investors, and employees."

-Fortune

Editorial Reviews

Financial Times
Deserves to become a business classic.
Fortune
Reichheld's message is simply this: The best, most profitable employers are those that inspire loyalty among three constituencies: customers, investors, and employees.
More Reviews (3) Fewer Reviews
New York Times
The Loyalty Effect put loyalty economics on the map.
Sun-Sentinel
The Loyalty Effect is as close to a religious experience as one can get in the business realm.
Booknews
In this reprint of a 1996 work, published with a new preface, business strategy consultant Reichheld outlines an approach to doing business that he calls loyalty-based management. Stressing the importance of building a loyal customer base, he argues that even a small improvement in customer retention can double a company's profits. He also shows the connections between customer, employee, and investor loyalty. He goes on to describe in detail the changes in compensation, organization, and strategy necessary for companies to build relationships worthy of loyalty. Annotation c. Book News, Inc., Portland, OR (booknews.com)

Product Details

  • ISBN-13: 9781578516872
  • Publisher: Harvard Business Review Press
  • Publication date: 9/1/2001
  • Edition description: Reprint
  • Pages: 323
  • Sales rank: 222,907
  • Product dimensions: 6.13 (w) x 9.25 (h) x 1.00 (d)

Meet the Author

Fred Reichheld is a Director Emeritus of Bain & Company and a Bain Fellow. He is also the author of Loyalty Rules!.

Table of Contents

Preface to the Paperback Edition: Loyalty in the Twenty-First Century ix
Preface xiii
1. Loyalty and Value 1
2. The Economics of Customer Loyalty 33
3. The Right Customers 63
4. The Right Employees 91
5. Productivity 117
6. The Right Investors 153
7. In Search of Failure 185
8. The Right Measures 217
9. Transforming the Value Proposition 255
10. Partnerships for Change 279
11. Getting Started: The Path Toward Zero Defections 301
Notes 311
Index 315
About the Author 323

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Sort by: Showing 1 Customer Review

  • Anonymous

    Posted July 30, 2000

    Superb demonstration of the relevance of loyalty in business

    Frederick Reichheld masterfully shows the reader the subtle interactions between customer loyalty, employee loyalty and investor loyalty. The vast majority of companies do not know the cash value of loyalty because they rely on traditional accounting tools that do not give them a complete picture of costs and value attached to customers, employees and investors. Loyalty leaders, though they consider profitability important, do not pursue it as a short-term goal to be reached at any cost to please anyone interested in their financial performance. They deliver superior value to their customers, employees and investors by convincing them that loyalty performs at its best when it is mutually beneficial over time. The loyalty web that those firms spin is socially complex and thus likely to be costly to emulate. Competitors of loyalty leaders do not have a chance to achieve superior performance if they adopt a piecemeal approach to loyalty. Frederick Reichheld gives would-be loyalty leaders a framework to build loyalty's leader strategy and tools to measure their progress on the road to success. However, like the builders of Rome, loyalty leaders did not master their craft overnight.

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