By Timothy L. Keiningham, Terry G. Vavra, Lerzan Aksoy, Henri Wallard, 2005
Does it really cost five times more to acquire a new customer than to retain an old customer? Do loyal customers really promote the businesses they like? Are long-term customers more desirable than short-term customers? Do companies need happy employees to create satisfied customers? According to the authors of Loyalty Myths, the answer to all of these questions is a resounding “no”.
“Virtually everything we have been told about the relationship between customer loyalty and financial outcomes is bunk,” write the authors. “The difficult truth regarding customer loyalty is that how it links to growth and profitability is far more complex than we have been led to believe. An improperly directed program can result in keeping the wrong customers and ironically deflating an organization's profitability. A blind pursuit of customer loyalty is at best a case of misallocated resources.But at worst it is a recipe for financial disaster.”
In their new book, Loyalty Myths: Hyped Strategies That Will Put You Out of Business and Proven Tactics That Really Work, Timothy Keiningham, Terry Vavra and their co-authors examine the most popular maxims of customer retention, revealing why these strategies fail, while showing how they poison management practices and affect the bottom line.