The hidden force behind growth, profits and lasting value
By Frederick F. Reichheld

Read any book or article on customer relationship marketing and the author will inevitably cite The Loyalty Effect by Frederick Reichheld

Frederick Reichheld first captured widespread attention in 1989 with an article in the Harvard Business Review citing a study "that raising customer retention rates" by five percentage points could increase the value of an average customer by 25 to 100 percent!

The Loyalty Effect published in 1996 builds on that work and has subsequently become a classic.

The chapter on the economics of customer loyalty should be read with highlighter in hand. A ten percent increase in retention means you double your customer base every seven years, other things being equal.

Reichheld shows how value creation, loyalty, growth and profits feed on each other.

Reichheld shows you to:

• Grow Your Business
  Grow your business by attracting and retaining the right customers-and avoiding the wrong ones.
  
  
• Improve Productivity
  Improve Productivity by hiring the right employees and structuring loyalty-based compensation and career paths.
  
  
• Measure Value
  Measure Value by tracking the behavior of customers, employees and investors and quantifying its economic consequences.
  
  
• Create Intellectual Capital
  Create Intellectual Capital by building a stable base of human assets-people who study and learn from their failures.
  
  
• Maximize Shareholder Value
  Maximize Shareholder Value by attracting and keeping the right shareholders.
  
  
• Build Strategic Advantage
  Build Strategic Advantage by designing business systems on the principles of value, loyalty and partnership.

Reichheld's subsequent research shows the loyalty principles apply to the Dot.com world as well. Acquiring customers on the web is very costly, so loyalty remains an economic necessity.

In a July/August 2000 Harvard Business Review Reichheld and Phil Schefter show if online businesses don't quickly win the loyalty of their most profitable customers, they'll end up scavenging over the low returns that come from serving price sensitive, transaction driven customers.

The key to business success on the web as it is offline is to promote repeat purchases among your profitable customers.

If you need a reminder that the old traditional fashioned principles of service, loyal staff and offering superior value remain the keys to business success read The Loyalty Effect.

Available for purchase from Amazon.com