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am 30. Juli 2000
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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am 24. Juli 1997
I am fascinated between the connections between my writings (eg Brand Chartering handbook) on branding which I define as the business process of continuously building value added relationships with all core stakeholders and Frederick Reichheld's book "The Loyalty Effect - the hidden force behind growth, profits and lasting value". I interpret this book, as quoted from in Table below,
as providing independent chapter and verse on the lifetime purpose of marketing learning organisations. No matter that the brand itself is not mentioned in the index, no punch is held back in admonishing all who destroy a leader's position through their short-term customs.

Table of quotes from The Loyalty Effect
(pages 3/4)
"Today's accounting systems often mask the fact, but inventories of experienced customer, employees, and investors are a company's most valuable assets. Their combined knowledge and experience comprise a firm's entire intellectual capital. Yet these invaluable assets are vanishing from corporate balance sheets at an alarming rate, decimating growth and earnings potential as they go. In a typical (western) company today, customers are defecting at the rate of 10 to 30 percent per year; employee turnover rates of 15 to 25% are common; and average investor churn now exceeds 50 percent per year. How can any company be expected
to grow a profitable business when 20 to 50% of the company's most valuable inventory vanishes without trace each year? It's a nearly impossible challenge...A few companies - we'll call them loyalty leaders - have decided to forego the challenge by plugging the leaks in their balance sheets. These firms have discovered how to acquire the long-term loyalty of customers, employees, and investors and so have changed the fundamental economics of their businesses. While competitors struggle to generate growth and cash flow, these
companies thrive...(page 6) "It may sound as if loyalty and profits are in conflict. If business were a zero-sum game, that would be true; any given pay increase or price reduction would be a tradeoff against increased profits. Investors could make more money only at the expense of customers and employees, and vice versa. But business is not a zero-sum game, and the putative conflict is a misunderstanding. To resolve it, we have to break out of the snapshot mentality and recognise that there are two kinds of profit. Call the first kind
virtuous; it's the result of creating value, sharing it, and building the assets of the business. The word for the other kind of profit is destructive. Destructive profit does not come from value creation and value sharing; it comes from exploiting assets, from selling off a business's true balance sheet. This is a kind of profit that justifies terms like profiteering, gives business a black eye, and actually shortens the life expectancies of businesses that
seek it."
The blossoming information age heralds an era of both unprecedented wealth production and of extraordinary organisational change. Against which a salient note of caution must be : how many of today's big companies will learn the new marketing-relationship game rules in time? How many will put Reichheld into organisation-wide effect and earn the well balanced loyalty of all their stakeholders? If your spirit is with Reichheld but your organisation isn't yet, we are rehearsing how to make the great changeover in time via free e-mail summits. For further info, please e-mail me .........................................................................................................Chris Macrae, editor of Brand Chartering Handbook & MELNET
[...] E-mail me at
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am 16. Februar 1998
The Loyalty Effect is a book that describes in plain english the forces that seem to be changing the face of modern business. The Loyalty-based system that is described showy why many modern businesses that should be flourishing are actually in decline. In addition, this book lays out much of the groundwork to discover the reason that the international marketplace is passing up goods manufactured in the USA. The Loyalty Effect provides insight into the problems of short term thinking from the financial world (destructive investment) and from within the company itself (management that is only thinking of the short tem profitabliity and employees that have no loyalty to the company or the customers). The examples given are excellent and demonstrate the accuracy of the ideas across a variety of industries. This book is a must read for any individual or group that wants to invest in the future.
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am 9. Juli 1999
Reichheld lays out both why loyalty matters, and why difficulty in measuring the impact of loyalty has made managers undervalue it in the past. He shows how loyal relationships with employees, suppliers, customers and investors all contribute to a company's long term success.
His insights are profound for anyone building a company. We have used his insights to build our business, and have benefited enormously from the viewpoints expressed in this book.
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am 14. Juni 1998
Reichheld's The Loyalty Effect is by far one of the most mediocre books on business loyalty that I have ever read. Instead of having the Tumba Wumbas, as the other leading book on loyalty did, this book simply presented the facts. True, it's interesting to some extent...but when analyzed in detail, there's not much there that I'm sure you didn't already know.
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am 30. März 1999
It is a well known fact, but almost impossible to document in most companies, that it is less expensive to keep customers than to find and acquire new ones. Yet, new marketing efforts, incentives based on growth in customers, new sales or even sales calls are often the stated goals. No wonder we send the wrong message to the field. This is the first book I have seen that analytically demonstrates the cost benefit of building customer loyalty. If you are not frequently and periodically surveying your customers to find out how happy they are, what can be improved and what else you can do for them, you are making an expensive mistake. In THE 2,000 PERCENT SOLUTION, by Mitchell, Coles and Metz, there is a Communications Stall chapter. Using analogies and examples, it describes the problems of not communicating openly and clearly, frequently and in many ways, and how to excel in communicating. There are also chapters on The Disbelief Stall - we can't possibly lose so many customers; The Bureaucracy Stall - you mean our policies make it difficult to work with us?; and The Procrastination Stall - okay, we'll survey our customers next year. Read THE 2,000 PERCENT SOLUTION to learn how to identify your stalls, hurdle over them, and find 2,000 percent solutions. Read THE LOYALTY EFFECT to develop your 2,000 percent solutions to retaining happy customers. (Solving a problem is a 100% solution. Getting 20 times that benefit, the goal of this new process gets you a 2,000 percent solution).
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This is an outstanding book for explaining and exploring the economic value of keeping a customer. In explaining those benefits, it becomes clearer how important and affordable it is to keep customers. Unlike most business books, which seem to be written by people who cannot use numbers, this one quantifies its points. It also shows you how to do the same for your business. As such, it is a very practical and important resource for every company. I strongly urge you to read and apply these lessons to your business. In many companies, getting new customers is seen as the solution to virtually every problem. However, a lot of times companies have to get new customers because they have disappointed the old ones. You are better off to find out why you are losing customers, and do something about it. Otherwise, you will just spend a fortune to add new customers who will soon leave you for the same reasons. This book also explains a well-known investing phenomenon, that companies with high loyalty rates are great stocks to own (like Coca-Cola, Gillette, and so forth). Did Warren Buffett know this all along? I should mention that I am a management consultant, but have no connection to the firm that wrote this book.
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am 25. November 1998
The Loyalty Effect takes a long, detailed look at the economics of loyalty, providing concrete examples to support the conclusion that the goal of a business must be the creation of sustainable value for customers employees and investors.
Reichheld takes that which many of us hold as "intuitively correct" and adds substance to our intuition. By translating loyalty into the language of accounting and finance, for example, he proves over and over again, that loyalty is a pre-requisitie for proitability. He doesn't argue against profitability...he merely clarifies the order of priorities for management.
I'm a former IBMer and I now run my own management consulting firm. Reichheld's firm is in fact a competitor, and yet I strongly recommend this book to any decision-maker who is interested in breaking through the fluff and securing real-world advice regarding specifc ways to sustain the health of any company.
Rather than reading the "visionaries", the turnaround specialists and the various and assorted geniuses read this. Reichheld, offers a straightforward summary of empirical evidence that correlates high retention rates (of customers and employees) with long-term profitability. While many other authors seem to be pushing their own agendas (and egos), Reichheld is summarizing the collective experience of numerous companies around the world.
Read this book. It will guide you to better business performance whether you're in marketing, finance, engineering, operations, HR or window-cleaning. If you're tired of losing customers and employees, this book may help save your butt! (if you're patient and willing to ask some difficult questions).
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This book makes a really compelling case for managing under the paradigm of loyalty underlying the foundation of every business. As a student of business administration I was very fascinated by Reichheld's systemic approach to the topic. Though Reichheld keeps superficial at some times he goes remarkably deep at other times proving his assumptions with real numbers. These examples throughout the book are very interesting and always straight to the point. Adding to the fun of reading this book is the excellent style delivering messages that they are easy to grasp, while Reichheld does not simplify too much. I would definitely recommend the book to any business students and anyone interested in a systemic and common sense approach to management away from the ballyhoo slogans of some management books.
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am 9. August 1996
While many authors of business books seem to be really just selling their consulting services, Mr. Reicheld paints a picture of what businesses need to do to retain customers while adding VALUE to those customer relationships. Reicheld talks about his experience as a consultant, but I never felt he was trying to sell me on his services.
The Loyalty Effect is a must read for anyone who is mystified at why their profits aren't as high as their competitors while everyone seems to have about equal margin.
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