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The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value Paperback – September 15, 2001
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From Publishers Weekly
Reichheld, a director of Bain & Co., a strategy consulting firm in Boston, takes an old-fashioned concept?loyalty?and shows its relevance to customer retention and long-term profit growth. His position seems obvious, but its import has been lost amid the rapid turnover in the current business climate. He notes that major companies replace half their customers in five years, half their employees in four and a half and their investors in less than one. To counteract this trend, he recommends loyalty-based management, in which businesses not only make a conscious effort to retain customers but also develop strategies for attracting the kind who are likely to remain loyal. Reichheld also posits a "cause-and-effect relationship" between employee and customer loyalty. Writing with Teal, a senior editor at Bain & Co., he makes his point with examples from State Farm, Toyota/Lexus and others that have improved their bottom lines and insured long-term growth by developing loyalty. Illustrations. 50,000 first printing; $80,000 ad/promo; author tour.
Copyright 1996 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.
Much has been written recently lamenting the loss of loyalty in all aspects of society. This loss seems magnified in the corporate world, where job change is often the only ticket for getting ahead and where companies regularly abandon communities and downsize longtime workers out of jobs. In White-Collar Blues, Charles Heckscher last year surveyed the state of middle-management loyalty and offered solutions for rebuilding loyalties. Now Reichheld, director at a strategy consulting firm with its own "loyalty practice," analyzes not only employee but also customer and investor loyalty and demonstrates the measurable results that strong loyalties have on corporate profits. Reichheld notes that traditional accounting systems do not show the "loyalty effect" and offers gauges that do. To make his case, he uses such companies as Lexus, John Deere, and Leo Burnett--the "loyalty royalty" --as examples. David Rouse --This text refers to an out of print or unavailable edition of this title.
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With that said, the section on compensation plans and Chick-Fil-A is worth buying the book in and of itself. I have seen that in practice, and it works way better than traditional compensation plans. I would not believe what a huge difference that makes if I had not seen it myself.
Also, just because the author can't prove that loyalty causes better performance, he does make good points about employee longevity and how long it takes a company to earn its investment back on a new employee. So I still think the book is worth reading, regardless of the logical fallacy of the overriding premise.
As far as the condition of the book, I bought this book used. The condition was very good, so I was pleased with that. I saved about 70% off of the new price and I would definitely buy from this seller again.
As a bonus, Reichheld succinctly described the value - and rarity - of admitting and examining failure, in order to learn how to do better.
I was no stranger to marketing when I read this in 1999 (ex-P&G brand person), but it made scales fall from my eyes. I have made money based on what this book taught me.
FYI, the other two books in my top three are The Marketing Edge and Moneyball. Drucker's best is right after that.
This is not a quick read per se, but it is well worth the time you invest. If you have ever thought of the happiness of your customers, employees, and investors as "fluff", this may change your thinking. Instead, think DCF of your customer, employee, and investor relationships...put a number to them. Maximize that number. You may find that it requires taking your eye off the bottom line for a minute, but you can trust Mr. Reichheld that the bottom line will be better for it.
A customer will always be more productive proportional to the degree of good customers retention , which will increase the profitability.The loyalty in this sense is a reward to the company that promotes it , and brings long terms benefits on the base of the customer value.
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You could cut down half the book or even reduce it to 1/3.Read more