Customer Reviews

Loyalty Myths: Hyped Strategies That Will Put You Out of Business -- and Proven Tactics That Really Work

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If you are going to create a book that so directly trashes thousands of its predecessors and the work of many people that have devoted their careers to this subject (including many well-regarded contributions to the Harvard Business Review), you had better come up with something special. This book is not it. It is replete with dreadful generalizations and - contrary to the jacket - is not loaded with solid case studies. In fact, it is challenging to relate the few case studies that are quoted in here to the point that they are trying to make. For example, the authors use a lengthy disposition on France Telecom's capital over-expansion and its subsequent near-bankruptcy as an example of failed customer loyalty. This is like suggesting that the sinking of the titanic was as a result of having engines that were too powerful: Broadly related but absolutely fails to support the assertion. This is true of much of this book. When you feel the authors are finally about to bring something of actionable value they leave you wanting, making broad hypotheses and utterly failing to support them. This book really has one premise: "not all customers are the same"; and anyone for whom that's a revelation should not be in marketing anyway. This book read like many consultant's reports - it is big on conjecture, assumptions and assertions, and very light on any supporting evidence or actionable insights. Overall this was an extraordinarily disappointing and frustrating read.

This book delivers breakthrough thinking with an incredible amount of new understanding on how to make your customers more satisfied and have it truly pay off in profit growth. I already see three messages in Loyalty Myths that are particularly relevant for my company and that we can act on now. First, we need to spend more time identifying which customers we should focus most of our attention on, instead of throwing resources at the entire customer base. Second, we need to measure not just our customer retention but how much share of wallet our customers spend with us. And third, customers want good service and they also want to feel smart about using us, so we need our service operations and brand management teams to work together instead of independently and possibly at odds with each other. This book delivers a wake up call to any business that still approaches customer satisfaction in conventional ways that don't produce real benefits. Then, it lays out a new approach of smart customer management to grow loyalty and profits. I recommend this to every business person who knows they can get better results.

This book is a welcome addition to an area of business where there are many misconceptions, highly touted anecdotal evidence tends to swamp more grounded empirical findings, and writing tends to be somewhat evangelical, if not apocryphal. Loyalty Myths is a very accessible book written in plain language that should be useful to anyone involved in loyalty initiatives, but especially those charged with leading such activities. The authors are loyalty consultants with strong connections to academe, making them well-positioned observers of the state-of-the-art in both theory and practice in this important area. The book identifies the most widely held beliefs about loyalty and outs them to the test using what they know from their own practice, as well as what they have garnered from their own research and that of other experts in the area. It also does a very nice job of laying out what the authors have learned about what really does work. I recommend it very highly.

You know you're premise is in trouble when an example you use proves exactly the opposite to what you are arguing. The authors argue against Apple's approach which favoured a highly loyal set of customers, calling it a "strategic blunder" as compared to Microsoft, who the authors call the "dominant player in this market". Apple's "blunder" has now turned it into a company that makes more money, is worth more in market capitalization, is worth more in brand value, is constantly more innovative, and spans completely different markets - all built on the idea that you build on a core base of loyal customers, rather than trying to get every customer you can find.

Loyalty Myths does an outstanding job of dispelling commonly held beliefs - some almost sacrosanct - about customer loyalty through an effective mixture of anecdotes, research, and theory. It reads much more easily than most business books while not being completely quantitative. The authors, customer loyalty consultants themselves, disprove some of the most fervently held beliefs about loyalty such as an increase in customer retention of 5% leading to an increase in profits of up to 100%, how it costs 5x as much to acquire a new customer as it does to retain one, long-term customers being more valuable than short-term ones, etc. The authors show how and where these beliefs go wrong and how to correct where possible. At the end of the book, they present 7 loyalty truths that organizations can use to implement better loyalty initiatives. This is a highly valuable book both for those looking to implement loyalty efforts as well as those evaluating existing efforts. I highly recommend it.

Interesting reading. I enjoyed the content but this is not what you want to base a campaign or business plan on. I get the impression it was written by people who have never had a real day-in-day-out job. For example, the myth about the cost of obtaining new customers--way over simplified and wrong in many places.
In short, a lot of fluff no substance.

I should preface this by saying that I have no experience in customer loyalty and read the book on the recommendation of a friend as a "fun read". It is indeed that, and provides many interesting anecdotes from the industry. The book is well written and is primarily an enumeration of errors in statistical inference common to the industry. The author cogently discusses these, elucidating his points with historical cases and numerical examples. The book has a light-hearted style, but maintains focus on the underlying thesis. The author supplements the cautionary aspect of the work with positive suggestions to guide his reader in future analyses.

Pareto's principle states that 80 percent of a company's business comes from 20 percent of its customers. Therefore, businesses invest time and money into building and maintaining customer loyalty. Loyalty Myths says that organizations focused on traditional loyalty programs won't succeed and explains why the 53 customer loyalty beliefs are myths.

Businesses that work to keep "loyal" customers may be actually losing money from such customers. Furthermore, traditional marketing emphasizes retaining customers instead of seeking new customers, a belief that could wipe out some businesses or prevent them from reaching their highest potential.

Few argue against the premise that today's environment in which lets customers be choosier and indifferent when it comes to products and brands. Consider the fact that having the most loyal customers doesn't guarantee a company the highest market share.

Do you believe that customers over the age of 50 stay true blue to products and brands? The authors have successfully proved otherwise. Think about the different loyalty programs to which you belong. Several airlines have loyalty programs in place, but do you cash in? Do the programs influence your decision on which airline to take?

The book contains a great example from The First National Bank of Chicago, a bank that needed to find ways to overcome the low equity that affected many banks in the '90. The bank took an unpopular approach in charging $3 when customers went inside the bank for transactions instead of relying on the ATM or doing it over the phone. Sound disastrous, but it paid off.

Unsurprisingly, the media posted negative stories about the bank's method, and competitors jumped in by paying customers to use the teller and other incentives. The result? The bank's profits went up by 28 percent with over 80 percent of the transactions done electronically.

The book doesn't stop at loyalty programs we encounter in our daily lives. It also looks at loyalty myths associated with company goals, management practices, market share and profitability, and employees. In addition to breaking the myths, the authors also provide a chapter on how to do loyalty the right way.

The authors do a nice job providing the rationale for every myth backing it up with data and case studies. The only annoyance with the book is the cartoons that appear throughout the book. They're corny and ugly. Adding cartoons into a business book is fine, just not these.

This type of book can be dry and academic, but not this one. Loyalty Myths is an engaging and valuable read for anyone who wants to get positive results from customer loyalty programs or turn around their broken loyalty programs.

This book distills in a logical format that common misperception that selling the same customs over and over is always good business and that all customs are loyal. Through case study after case study, it validates the book's title and then gives strategic and tactical steps to mange profitable customers and recapture lost ones. A good business read in today's hyper competitive world.

Paul DiModica
Author of Value Forward Selling - How to Sell Management
http://www.howtosellmanagement.com/

The book's title overstates its case to a degree. But, it still is a book one should read before undertaking a customer loyalty initiative. It's suicidal unless you've done some rigorous customer profitability analysis first. If you don't have the data to do it, shame on you and figure out how to get the data you need first. The last chapter in the book has a wonderful project plan to follow to get things done. The basic premise of the book is that since usually more than 80% of your customers lose money for the firm when their activity is analyzed, you must be careful in enhancing loyalty. Otherwise, you're not following the old axiom, "When you find yourself in a hold, quit digging." The book also harpoons the logical and factual fallacies in many bromides that underly the customer loyalty industry.