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The Lowering of Loyalty

Frederick F. Reichheld is a director emeritus and fellow at Boston-based strategy consultancy Bain & Co. He’s also one of the preeminent thinkers about customer loyalty. Now, just like Thomas Davenport reconsidered the wisdom of reengineering, Reichheld is having a crisis of confidence about loyalty.

The early work I did on loyalty was powerful but useless. We’ve taken loyalty from its grave and put it back on the radar of most CEOs. But I am frustrated in that retention rates have not progressed over the last decade. Customers are not demonstrating loyalty.

Chicken meets egg. The interview in Direct magazine suggests that, “While his theories were valid, industries were not applying them.” Is it that customers are disloyal? Or that companies don’t engender loyalty? Reichheld isn’t sure that matters — and has turned his attention to something else entirely: turning people into promoters rather than steady customers. Companies can calculate profitable customers but not happy customers — and Reichheld hopes promoters can cross that chasm.

Is this another take on idea viruses and word-of-mouth marketing? Or is it a step toward measuring brand affiliation even if the “affiliate” isn’t a customer?

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