The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value Book

I skimmed this because much of the content wasn't relevant to my business. It's a mix of practical guidance (about how to measure and increase loyalty) and examples of companies that have increased loyalty. It's not only about increasing the loyalty of customers; much of the book is about increasing the loyalty of employees and partners (vendors, investors, etc.). I didn't get as much out of this book as Reichheld's Loyalty Rules!, and that book wasn't especially helpful either.

It's written for large companies, but many of the lessons are applicable to small and mid-size companies too. There are many specific examples from Lexus, State Farm, USAA, and other recognizable companies.

I read this because I'm working on increasing client loyalty at
"Loyalty leaders tend to ignore modern management theory in favor of a code of behavior that is close to the Golden Rule, or … the Golden Rule itself."

The Right Customers
"The easiest prospects to sell are the ones whose loyalty is low. By definition, customers with a high loyalty coefficient are hard to switch away from their current suppliers."

Don't try to woo prospects with discounts. "Why would you want customers who will renounce their loyalties to save a dime, or even a dollar?"

In Search of Failure
"Every defection is the result of inadequate value. And since value is the ratio of quality to price, price is always a factor in a deflection. But so is quality."

The Right Measures
"Customer retention and share of wallet are excellent summary statistics not only because they are reliable indicators of whether customer value is insufficient, but because they are key ingredients in the calculation of customer net present value."

"A healthy gain rate [ratio of new customers to current customer base] is evidence of a superior value proposition, especially if it is accompanied by good retention."

Yield rate (percentage of solicited customers who sign up) is an excellent measure. A high yield rate shows you're attracting the right kind of customer.

"Satisfaction surveys are a far less accurate test of satisfaction than behavior. … research has shown that 60 to 80 percent of customers who defected had said on a survey just prior to defecting that they were satisfied or very satisfied."

By tracking lifetime purchases, you can put energy into customers with highest potential value.

Repeat purchase loyalty is the goal, so make that the measuring standard.