|So much has changed since The
Loyalty Effect was originally published in March of 1996.
Dot-com mania cycled from birth, to boom, to bust. News headlines
also made the complete cycle - from layoffs, to the escalating
war for scarce talent, and all the way back to layoffs.
The Internet exploded onto the scene, revolutionizing communications
and dramatically expanding the potential for deeper relationships
with customers and suppliers. At the same time, alternative
applications of the Internet have challenged the very relevance
of lasting relationships. So what’s the chance that Reichheld's
framework of loyalty economics, conceived in the early to mid-nineties,
is still valid for competing in today’s world?
As it turns out, the framework detailed in
The Loyalty Effect
has not only withstood these challenges, its relevance has been magnified. The Internet has enabled analysts to uncover the powerful loyalty economics at work in more and more industries as new databases and software illuminate the patterns of customer lifecycle value. The economic framework developed for this book has become the basic standard, not only for Bain & Company case teams around the world, but for an army of business analysts and investors engaged in the evaluation of new business models which utilize the Internet.
The Loyalty Effect serves as the primer for Loyalty
Rules! because in this age of empowered shareholders, any
leader of a public company who invests in building loyalty without
fully understanding the economic case for loyalty is flirting with
career suicide. The Loyalty Effect
explains that basic
economic framework in clear and rigorous detail in a language that
appeals as much to financial analysts as to philosophers. Beyond the
intuitive appeal of treating people in a manner worthy of
their loyalty, this book demonstrates the bottom-line benefits of such
a leadership philosophy. It provides the bridge between the world of
corporate ethics and the world of hard-core economics. Most of the
apparent conflicts between these two worlds are reconciled when the
economics of loyalty are revealed. The fact is that a 5% improvement
in customer retention rates will yield between a 25 to 100%
increase in profits across a wide range of industries. Readers of
The Loyalty Effect
will learn the underlying microeconomics which make this so, and how to evaluate and prioritize the various investments necessary to create superior loyalty.