Pareto’s principle states that 80 percent of a company’s business comes from 20 percent of its customers. Therefore, businesses invest time and money into building and maintaining customer loyalty. Loyalty Myths says that organizations focused on traditional loyalty programs won’t succeed and explains why the 53 customer loyalty beliefs are myths.
Businesses that work to keep “loyal” customers may be actually losing money from such customers. Furthermore, traditional marketing emphasizes retaining customers instead of seeking new customers, a belief that could wipe out some businesses or prevent them from reaching their highest potential.
Few argue against the premise that today’s environment in which lets customers be choosier and indifferent when it comes to products and brands. Consider the fact that having the most loyal customers doesn’t guarantee a company the highest market share.
Do you believe that customers over the age of 50 stay true blue to products and brands? The authors have successfully proved otherwise. Think about the different loyalty programs to which you belong. Several airlines have loyalty programs in place, but do you cash in? Do the programs influence your decision on which airline to take?
The book contains a great example from The First National Bank of Chicago, a bank that needed to find ways to overcome the low equity that affected many banks in the ’90. The bank took an unpopular approach in charging $3 when customers went inside the bank for transactions instead of relying on the ATM or doing it over the phone. Sound disastrous, but it paid off.
Unsurprisingly, the media posted negative stories about the bank’s method, and competitors jumped in by paying customers to use the teller and other incentives. The result? The bank’s profits went up by 28 percent with over 80 percent of the transactions done electronically.
The book doesn’t stop at loyalty programs we encounter in our daily lives. It also looks at loyalty myths associated with company goals, management practices, market share and profitability, and employees. In addition to breaking the myths, the authors also provide a chapter on how to do loyalty the right way.
The authors do a nice job providing the rationale for every myth backing it up with data and case studies. The only annoyance with the book is the cartoons that appear throughout the book. They’re corny and ugly. Adding cartoons into a business book is fine, just not these.
This type of book can be dry and academic, but not this one. Loyalty Myths is an engaging and valuable read for anyone who wants to get positive results from customer loyalty programs or turn around their broken loyalty programs.
Title: Loyalty Myths: Hyped Strategies That Will Put You Out of Business and Proven Tactics That Really Work
Author: Timothy L. Keiningham, Terry G. Vavra, Lerzan Aksoy, Henri Wallard
Publisher: Wiley
ISBN: 0471743151
Date: September 2005
Format: Hardcover
Pages: 272
Cover Price: USD: $24.95 Amazon: $17.22
