Help Your Partners Win…
the high road, it is not enough that your competitors lose, your
partners must win. So, pare away distractions, focus exclusively in
businesses where you can be the best, and align partners around the
overarching objective of upgrading the customer experience. Only the
most unrelenting focus on customer value can sustain the economic
and the ethical superiority of high-road strategies. Only the
highest standards of excellence will create the conditions for
trust, commitment, and mutual success."
"You would be wise to track
actual customer retention. The fact is that typical firms lose half
their customers in fewer than five years - and customers don’t
defect when they are really receiving superior value. With the
advent of the Internet, customers’ shopping bots will compare real
value with increasingly sophisticated algorithms, and price and
service comparisons posted in real time on the Web will unmask value
frauds. Word of mouse will spread the truth at lightning speed. The
result will be skyrocketing defection rates for all firms but those
offering truly superior value."
Know Where to Play…
"CEOs of top loyalty companies
know precisely where they have the wherewithal to win and where they
don’t. They don’t compete for every new business that seems
profitable for the moment; they invest only where they see the
potential for building sustainable assets and relationships. There
is no room for me-too products and services; loyalty leadership is
based on the kind of structural economic advantage that results only
from focusing on positions of strategic superiority, positions that
enable a firm to be the best and to drive toward market
Target the Right Customers…
"Loyalty leaders are extremely picky
about targeting only the right customers -those for whom their firms have been engineered to deliver truly special value. While a few high-profile businesses are better off soliciting as many customers as possible - Microsoft’s Window’s operating system, for example - these are the exceptions, not the rule.
Attract Butterflies, not
"Unless you’re managing customer acquisition carefully, you’re probably letting the wrong ones in the door. Marketing and sales departments too often invest in lures to attract butterflies when they should be searching for barnacles. Barnacles are the customers who are likely to stick around for a lifetime if they are treated right. Butterflies, in contrast, are customers who tend to flit around to today’s sweetest deal, or to the company that happens to have the most dazzling new fad or the latest technology.
Since barnacles are hard to pry away from their
current affiliations, the marketing job is much easier if the focus
is on netting butterflies. If incentives for marketing and sales
executives are based on volume of new customers, as is common, there
will inevitably be a high yield of butterflies in the count."
Simplify Your Business…
"Great leaders know that the best business, like the
best machine, is the one that is so reliable and so adaptable that
it does the best possible job in the fastest and simplest way. So to
be an effective leader you must resist the world’s inevitable drift
toward complexity by simplifying your organization’s structure,
systems for measuring progress, and rules for decision-making. You
must pare away the distractions and focus on the relatively few
principles and practices that make a vital difference in creating
superior value. These are the loyalty principles and practices that
define high road leadership."
Utilize Small Teams…
"Loyalty also comes naturally
within a small team - or within a large organization that is
composed of small teams. Thus many loyalty leaders utilize small
teams as the molecular structure of their organizational
Measure the Right Thing…
"What you decide to measure clearly reflects your
values and your priorities. To show your customers and partners that
loyalty is at the top of your leadership agenda, make sure that your
central metrics gauge the amount of value you are creating for all
your customers and partners by measuring the health of key
relationships and the level of loyalty you are earning."
"Paying on profits alone is not wise because some
employees will take shortcuts that boost current earnings but
diminish assets needed to boost future year profits. Pure profit
incentives need to be balanced with incentives to build long-term
assets such as customer and employee loyalty."
Loyalty is Impossible without
"Encourage state-of-the-art communication and improve
listening, learning and explaining skills enabling partners to reach
the deeper levels of understanding that yield clearer priorities,
coordinated actions, and superior results. Utilize the Internet to
raise the quality of communication, not merely to crank up the
volume. Nothing magnifies the loyalty effect like the trust
engendered by open, honest, and direct exchange of information and
Educate Your Partners…
"Loyalty leaders want all their partners to understand
the organization’s strategy, its core principles, its priorities,
and even its problems. They want partners to know performance
expectations and their individual standing so they can make wise
decisions and trade-offs in their daily work."
Educate Your Employees…
Without a clear view of company goals, full understanding of his or her own role, and reliable information about all that’s going on, no one can confidently gauge priorities or make the myriad daily decisions required to generate the loyalty effect.
Unless your employees understand your strategy
and its economic rationale, they can’t be very effective in making
it work. They won’t know how to respond to changes in the
competitive environment, or in technology, or in customer needs. And
they are unlikely to be as committed to its success."
Articulate Your Principles…
"You can neither practice nor preach effectively until
you articulate your principles clearly. Write down your guiding
principles and then preach them with passion. Only then can you and
your network of partners truly understand what it means to be loyal.
Only then can those principles become the gravitational center for
organizational loyalty and provide a trustworthy guide for building
Harvard Business School Press