To see the featured
companies in The Loyalty Effect, click here.
- Harley-Davidson, Milwaukee,
- recovered from near bankruptcy in the 1980s by building
mutually beneficial relationships with all stakeholders based on
simple core values. Returns to investors have averaged 24% (among
the best public company records over the past decade), and
despite Milwaukee’s tight employment market, a long line of
applicants await job openings at Harley.
- Enterprise Rent-A-Car, St. Louis,
raced past Hertz and Avis to become the largest car rental firm in
North America. It continues to grow at more than 20% per year in
an otherwise sluggish industry. With over 45,000 employees, the
company manages to hire more college graduates than any other firm
in America by putting the interests of customers and employees
ahead of owners.
- The Vanguard Group, Malvern,
PA - the
mutual fund industry’s growth leader, whose $550 billion in assets
under management was built by putting long-term investment returns
to their customers first. With more than 40% of transactions now
on the Web, Vanguard maintains the lowest costs and the highest
customer retention rates in its industry.
- Southwest Airlines, Dallas,
TX - the only consistently
profitable major airline in the U.S. for every one of the
past 27 years (since 1973), it has employee turnover rates of 4
to 5%, in an industry where double those rates are typical. In the
notoriously cyclical airline business, Southwest has never had a
layoff. With the lowest ticket prices, the company still ranks at
the top in customer service and safety.
- Dell Computer, Round Rock,
TX - which so
effectively utilized the Internet to revolutionize the sales and
production of personal computers that it has become the U.S.
market share leader. By focusing on building the most valuable
customer experience, Dell has made itself the profit leader.
- Cisco Systems, San Jose,
CA - whose
employee turnover runs less than 10% although it is headquartered
in Silicon Valley where turnover averages 25% to 30%. Not only
does every employee carry the company values embossed on an ID
badge, but all bonuses are dependent on meeting customer
- Northwestern Mutual, Milwaukee,
WI - the
company which has consistently focused on creating superior value
for its policyholders. The “Quiet Company” has so successfully
parlayed its superior customer retention into lower costs and
faster growth that it can no longer be categorized as a high-end
niche player; it is the industry leader in individual life
- MBNA, Newark, DE - the only credit card
company that believes customer retention is so important that it
reports the statistic in its annual report. The company retains 97%
of its profitable customers.
- Chick-fil-A, Atlanta, GA - whose store
operator turnover runs 5% versus the competition’s 35 to 40%.
Founder Truett Cathy has so effectively marshaled loyalty effect
economics that he can afford to let his operators earn
compensation double or triple industry averages, while still
generating sufficient cash to grow the chain and to contribute
approximately 10% of profits to charity.
- SAS, Cary, NC - the leading statistical
analysis (e-intelligence) software firm whose 5% turnover rate
among software engineers compares with 20%+ for the industry. By
hiring the right kind of people and providing them with a career
and lifestyle that reinforce work-family balance (employees enjoy
free healthcare and child care), SAS is building an institution in
a notoriously fickle market space.
- USAA, San Antonio, TX - whose customer
turnover is so low that the primary root cause of defection is
death. USAA’s top management believes so strongly in the
importance of customer retention that they base their own bonuses
on this metric. USAA demonstrates how customer loyalty and
employee loyalty go hand in hand; the firm’s telephone staff
turnover runs 9% versus more than 20% for the industry.
- The New York Times, New York,
NY - where
customer retention is tracked as carefully as profits, and where
retention performance (above 90%) stands head and shoulders above
the rest of the newspaper competition which churns readers at
rates of 25 to 50%.
- U.S. Marine Corps - the only branch of the U.S. military that has managed to
meet its staffing targets - primarily because of superior
recruiting and retention success. Rather than dropping standards
to meet staffing demand, the Marines constantly raise them. The
Corps’ motto, Semper Fideles
, helps convey to outsiders the central role that loyalty
plays for the Marines.
- Intuit, Mountain View,
CA - the leader in personal financial software, whose employee turnover runs half the Silicon Valley average. Intuit has weathered several storms including a blocked merger with Microsoft and a fundamental shift in its business model from shrink-wrapped software to the Internet by remaining loyal to its founder’s values.