THE LOYALTY EFFECT, THE HIDDEN FORCE BEHIND GROWTH, PROFITS, AND LASTING VALUE

Reichheld lays out a new "economics of loyalty" that provides a framework where the "soft" elements of business -- loyalty and learning -- can be effectively linked to the hard science of cash flows and cost/benefit analysis. Because of this connection, Reichheld argues, there is enormous potential for improving a company's performance by increasing customer, investor, and employee loyalty. Reichheld's research demonstrates that loyalty drives profits in direct and quantifiable ways through its impact on growth, learning, and productivity. In addition, loyalty generates a spiritual energy that powers the value creation process that is at the heart of sustained business success. In many industries, loyalty explains the differences in profitability among competitors more effectively than scale, market share, unit costs, or most other factors usually associated with competitive advantage.