Most of today's corporate rewards systems are designed to be reasonable and, therefore, easy to justify to the board of directors or to an outside auditor. But the problem is that loyalty is not generated by reasonable performance; it is generated by over-achievement - and this level of performance requires outstanding teamwork

Track what's important
Your partners are smart enough to know that anything you truly care about, you measure. To show them that loyalty is at the top of your leadership agenda, measure the health of key relationships and the level of loyalty you are earning.

Many loyalty leaders have developed a clear metric for customer value. The trick is to home in on the relatively few dimensions of performance that really matter to your target customers, and then to track performance with the same rigor that most companies apply to their profit statements.

Reward the right results
Most executives want to be considered responsible and cost-conscious managers, so they feel obliged to keep a lid on compensation. Many loyalty-based firms show enormous cost advantages even while they compensate their people well in excess of market rates. Both productivity and loyalty grow whenever there is opportunity for greater rewards. And whenever your employees create exceptional value for your customers and for your other partners, they deserve exceptional rewards.

Align incentives
Retaining and motivating your stars means offering them the opportunity to earn outstanding compensation. But in the long run, it is not the money alone that keeps most of them motivated. The real incentive is the gratification that comes from using their gifts to their fullest potential and from creating truly extraordinary value for their customers and partners.


Reward the right results to retain the right people - long-term employees create value.



Examples of Bain's work

Companies with high-performance values and behaviors inspire loyalty from employees, who want to stay and be part of a team. They create advocates, who are positive about the business to customers, colleagues and recruits. They generate commitment to go the extra mile, and to do the right thing, rather than necessarily just the easy thing.

Client success: A major European retail bank wanted to improve the loyalty of its highest-value retail customers and increase its share of wallet among those customers. To encourage customers to join the bank and remain loyal, a holistic awards system aimed to develop and deepen customer relationships.