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Loyalty Rules: How Today’s Leaders Build Lasting Relationships
DIAMOND
RATING
RATING
Frederick F. Reichheld, Harvard Business School Press, 2001
Senteo’s Review 
This is a follow-up to the author’s classic work (The Loyalty Effect. 1996), in which Reichheld (former director of Bain & Co.) argued that loyalty is the primary driver of profitability. Loyaly Rules builds on his previous work and the Six Principles of Loyalty: play to win/win; be picky; keep it simple; reward the right results; listen hard, talk straight; and preach what you practice.
The author walks through examples such as Vanguard, Enterprise, Harley Davidson, Dell, Cisco and others. The examples are backed-up by “action checklists” at the end of each chapter. The book ends with a “Loyalty Acid Test,” or sample questionnaires for customers and employees that can diagnose the health of relationships. He argues that there will be no loyal customers if the culture of the company does not lead to the creation of loyal employees and vendors/partners.
A good read of inspirational stories/case studies, backing up the Principles of Loyalty. The author provides a survey in the back of the book , or the Loyalty Acid Test, which lets readers fill out on the web site and receive scores with comparisons with other companies in order to measure your current state of loyalty.
There is little in the way of implementation tactics or a methodology, aside from the 6 Principles. The book is devoid of diagrams or charts to illustrate, as was the case with the previous book, However, this book seems to have been intended as a more inspirational version with real-world examples.
“Reichheld outlines a strong argument for companies to develop policies that foster loyalty among customers and employers.” – “Financial Times”. In this provocative yet practical book, Fred Reichheld argues that loyalty provides the acid test for leadership in today’s volatile business environment, and that most leaders deserve failing grades. Reichheld’s 1996 international bestseller, “The Loyalty Effect”, set out his theory and convincingly established the link between loyalty and bottom-line profits. In “Loyalty Rules”, he moves from theory to practice, using vivid stories from many of today’s most successful companies to illustrate how superior leaders create networks of mutually beneficial, trust-inspiring partnerships between customers, employees, suppliers, and investors.
This book provides an easy read on what principles are required to build loyalty, both among your employees and your customers. Aside from spelling out the importance of strong leadership to put these principles into work, the author gives little guidance in the way of tactics. The Loyalty Acid Test is a useful tool to understand your company’s loyalty postion.
Senteo Subject Category
This book is focused on research and opportunities for development and/or improvement, rather than providing tactical applications or means of measurement (Reichheld’s The Ultimate Question, 2006, addresses this through the NPS, or Net Promoter Score).
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PLUS magazine talked about many topics with Michael Ruckman, Founder and President of Senteo, a boutique consultancy with an impressive track record in business transformation.
What is the difference between retention and loyalty, and between customer-centric and relationship-centric business models? How exactly can one monetize customer experience? Michael Ruckman answers these questions and more…
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