Loyalty: An Engine For Healthy Growth
We’re quick to overly complicate what’s involved in building a healthy company.
Overwhelmed by a continuing barrage of ‘helpful’ input from authors and consultants, we continually seek the latest ‘breakthrough’ ideas and techniques to catapult us past competitors and ‘beat the odds’ in becoming a long-term success story. Sadly, in spite of all the expert advice, just 22% of the world’s major firms enjoyed real annual growth of 5% or more during 1994-2004 while achieving a financial return above their cost-of-capital. Why? Scott Cook’s simple logic – that they lack happy and profitable customers – is tough to debate!
Let’s begin our implementation focus by looking at the leadership practices which Reichheld’s research determined to be common among companies enjoying the greatest loyalty from customers and employees. Loyalty Rules highlights business practices that read like a C12 playbook, including the Golden Rule, pursuing excellence, simplicity, honesty, fairness, respect, personal accountability, and performance pay. These traits were distilled into six ‘loyalty principles’ to help to shape metrics, compensation systems, organizational development, strategy, and operations. As we review each element, make a mental note as to how your company fares.
Six Pillars of Loyalty
Play to win/win: Profiting at the expense of partners is a shortcut to a ‘dead end’! Focus solely on opportunities/niches where you can become the best. Align partners around overarching objectives to upgrade the customer experience, and insist on win/win solutions. Shed distractions, sharpen plans and processes, and teach win/win behavior. Paul also taught this, saying, “Let each of you ‘look not only to his own interests, but also to the interests of others.’” (Php 2:4).
Be picky: Membership is a privilege! Loyalty requires making choices. Cultivate business relationships only when both sides can provide special value or you’ll soon dilute your value and be special to no one. Choose employees, customers, and suppliers carefully, through a win/win lens. Invest in their success and stick with them for the long-term… if they earn the privilege through performance. Loyalty is a two-way street!
Keep it simple: Complexity is the enemy of speed and flexibility! Clarify the values and rules that govern all decisions. Use small teams to maximize responsiveness, flexibility and accountability. Maintain simple, stable, visual scorekeeping. Reduce overhead ‘interference’ by growing your business without growing HQ staff. Focus on continuous improvement and ‘the future.’ Remember, whatever doesn’t add customer value is waste!
Reward the right results: Worthy partners deserve worthy goals! Align performance targets so that all partners stretch, together, for worthy goals. Share the benefits while strengthening the company. Don’t confuse long-term value with short-term profits, or loyalty with tenure. Measure the right things and fix ‘misalignments.’ Reward loyalty among employees, suppliers and customers with win/win growth and development opportunities.
Listen hard, talk straight: Long-term relationships require honest, two-way communication and learning! Loyalty is based on trust, and trust requires reliable and accurate information. Deepen working relationships using feedback tools and joint forums to drive improvement. Listen to input, prioritize issues, and act on what you hear. Shared learning and understanding yields clearer priorities, coordinated actions, and superior results. Nothing magnifies the ‘loyalty effect’ like trust rooted in an open exchange of information and ideas. Confront ‘brutal facts’ in a way that exemplifies the truth being spoken in love (e.g., regular report cards, real-time metrics)!
Preach what you practice: Actions often speak louder than words, but together they’re unbeatable! Clarify your principles and communicate them with passion. They’re the gravitational center for organization focus and loyalty, enabling your partners to understand, buy in, and become truly loyal. Put it in writing, talk the walk, continually teach and reinforce these practices. Celebrate internal heroes, share edifying stories and illustrative case studies. Continually cast the vision of where we’re going and how we’ll get there, based on mutually earned loyalty.
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