Wednesday, October 10, 2007

Loyalty Management

Description Loyalty Management Tools grow a business's revenues and profits by improving retention among its customers, employees and investors. Loyalty programs measure and track the loyalty of those groups, diagnose the root causes of defection among them, and develop ways not only to boost their allegiance but turn them into advocates for the company. Loyalty Management quantifiably links financial results to changes in retention rates, maintaining that even small shifts in retention can yield significant changes in company profit performance and growth.Methodology A comprehensive Loyalty Management program requires companies to:
Regularly assess current loyalty levels through surveys and behavioral data. The most effective approaches distinguish mere satisfaction from true loyalty; they ask current customers how likely they would be to recommend the company to a friend or a colleague, and frontline employees whether they believe the organization deserves their loyalty;
Benchmark current loyalty levels against those of competitors;
Identify the few dimensions of performance that matter most to customers and employees, and track them rigorously;
Systematically communicate survey feedback throughout the organization;
Build loyalty and retention targets into the company's incentive, planning and budgeting systems;
Develop new programs to reduce customer and employee churn rates;
Revise policies that drive short-term results at the expense of long-term loyalty, such as high service fees and discounts given only to new customers;
Reach out to investors and suppliers to learn what drives their loyalty. Net Promoter® is a registered trademark of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.
Common uses Well-executed Loyalty Management programs enable companies to:
Build lasting relationships with customers who contribute the most to profitability, and capture a larger share of their business;
Generate sales growth by increasing referrals from customers and employees;
Attract and retain employees whose skills, knowledge and relationships are essential to superior performance;
Improve productivity, and decrease recruitment and training costs;
Strategically align the interests and energies of employees, customers, suppliers and investors, in a self-reinforcing cycle;
Improve long-term financial performance and shareholder value.

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