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Title: Loyalty Rules: How Today's Leaders Build Lasting Relationships by Frederick F. Reichheld ISBN: 1-59139-324-8 Publisher: Harvard Business School Press Pub. Date: 03 July, 2003 Format: Paperback Volumes: 1 List Price(USD): $16.95 |
Average Customer Rating: 4 (2 reviews)
Rating: 5
Summary: Timeless Principles: More Relevant Today Than Ever Before
Comment: A recent re-reading confirms my initial reactions to this book. In a brilliant essay which appeared in the Harvard Business Review, Reichheld shares research which suggests that companies with faithful employees, customers, and investors (i.e. capital sources which include banks) share one key attribute: leaders who stick with six "bedrock principles": preach what you practice, play to win-win, be picky, keep it simple, reward the right results, and finally, listen hard...talk straight. In The Loyalty Effect, Reichheld organizes his material within 11 chapters which range from "Loyalty and Value" to "Getting Started: The Path Toward Zero Defections." With meticulous care, he explains how to devise and them implement programs which will help any organization to earn the loyalty of everyone involved in the enterprise. Reichheld draws upon a wealth of real-world experience which he and his associates have accumulated at Bain & Company, a worldwide strategy consulting firm. Reichheld heads up its Loyalty Practice.
In his most recently published book, Practice What You Preach, David Maister explains why there must be no discrepancy whatsoever between the "talk" we talk and the "walk" we walk. Reichheld agrees, noting that the "key" to the success of his own organization "has been its loyalty to two principles: first, that our primary mission is to create value for our clients, and second, that our most precious asset is the employees dedicated to making productive contributions to client value creation. Whenever we've been perfectly centered on these two principles, our business has prospered." It is no coincidence that the world's most highly admired companies are also the most profitable within their respective industries. I wholly agree with Reichheld that loyalty is critically important as a measure of value creation and as a source of profit but that it is by no means "a cure-all or a magic bullet." Loyalty is based on trust and respect. It must be earned, usually over an extended period of time and yet can be lost or compromised at any time with a single betrayal.
In Loyalty Rules!, Reichheld develops these and other ideas (the foundation of what he calls an "economic framework") in much greater depth as he explains how today's leaders build lasting relationships beyond as well as within their organizations. "Loyalty cannot begin with tools; it must begin with leaders who recognize the enormous value of building and maintaining mutually beneficial relationships....Accordingly, this book spends at least as much time on the underlying objectives for building loyalty as it does on the how-to's." He organizes his material within eight chapters which range from "Timeless Principles" (previously introduced in The Loyalty Effect) to "Preach What You Practice" in which he asserts that actions speak louder than words and together, they are "unbeatable." One of this book's greatest benefits is provided in a series of "Action Checklists" which reiterate key ideas while suggesting specific initiatives to implement them effectively. The book concludes with an appendix, "The Loyalty Acid Test," which consists of separate surveys of consumers and employees. Obviously, each reader must modify either survey to ensure that it is appropriate to her or his own organization's specific needs and objectives. However, all modifications should be consistent with the 'timeless principles" which Reichheld examines in the first chapter. I highly recommend this book, presuming to suggest that, if possible, The Loyalty Effect be read first.
Rating: 3
Summary: Put the ¿loyalty effect¿ into practice with 6 principles
Comment: In Frederick Reichheld's 1996 book, The Loyalty Effect, he argued that a 5 percent increase in customer and employee retention can increase profits between 25 percent and 100 percent. Taking that as the foundation for his new book, Reichheld reinforces and updates his message that loyalty in the form of mutually beneficial relationships between customers, employees, suppliers, and investors (the first two being primary) is the key to sustained success. He finds that most companies fail the "acid test" of loyalty, with less than half of today's employees believing that their company deserves their loyalty. His current book draws extensively on examples to show how executives can put the loyalty effect to work.
You will find some of the usual suspects throughout the book: Harley-Davidson, Southwest Airlines, Dell Computer, Cisco Systems, Intuit, but also some examples probably less familiar: The Vanguard Group, Northwestern Mutual, MBNA, The New York Times Company, and the U.S. Marine Corps. All the cases make for vivid reading, though abstraction-centric readers can greatly reduce their reading time by going straight the end-of-chapter summaries and application tips. However, the case studies and stories show that the loyalty effect can be put into practice in diverse ways and Reichheld keeps his book below 200 pages.
Underlying the diverse aspects and implementations of loyalty, Reichheld has identified six principles: Play to win/win: profiting at the expense of partners is a short cut to a dead end; Be picky: membership is a privilege; Keep it simple: complexity is the enemy of speed and flexibility; Reward the right results: worthy partners deserve worthy goals; Listen hard and talk straight: long-term relationships require honest, two-way communication and learning; and Preach what you practice.
Stated in summary form, these will probably seem obvious. The detailed vision that the author presents of the principles, however, is not always obvious and certainly is rarely observed with any thoroughness. He analyzes each principle into component ideas. For example, "play to win/win involves "high road strategies" which themselves are further analyzed, along with more thoughts about strategic focus, partnerships, and growing from the core. You should find some rewarding insights with little effort in this book.
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