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In an era when the share price is king and quarterly reports dominate the dreams (or nightmares) of chief executives, it is refreshing to listen to Frederick F. Reichheld talk about the importance of loyalty.
As a director emeritus of Bain & Company and the author of two books on the subject, he is well placed to talk about the power of loyalty to drive a company to the top.
The power of loyalty
He argues that long-term, sustainable success is only possible when companies "create enduring, mutually beneficial relationships built on trust with employees, customers and suppliers".
If all this sounds like indulgent waffle at a time when the US economy is struggling and companies are laying thousands of people off, that may be because company leaders have become overly-dependent on short-term financial results at the expense of long-term growth strategies.
Reichheld acknowledges that persuading top managers of the importance of loyalty can be an uphill task. Some executives see loyalty as a marketing strategy or an HR strategy, but not as a comprehensive corporate strategy. And then there are those chief executives who see their main task as increasing their own personal wealth. They are not likely to commit themselves to a strategy built on loyalty.
The loyalty acid test
For a company interested in Reichheld's ideas, the first step is to undertake loyalty acid test surveys of employees and customers. The key statement in such a survey is, "I believe that [company name] deserves my loyalty". Of 2,000 employees asked this question, only 45 percent answered "yes". Some 72 percent of employees from 14 "loyalty...