Working on loyalty

“There’s no loyalty today.”

This is such a common statement in business today, especially from older workers.

And maybe because it has been heard so often, some organisations are reacting as though it is just a fact of life and nothing can be done about it. In company after company, managers are sitting back and watching profits walk out the door by not doing enough to hang onto good staff.

There is good evidence for suggesting that the pendulum has swung too far away from a contract of loyalty between employer and employee. It seems that many companies are suffering.

Apart from customer loyalty, which is front of mind in virtually all companies. Smart managers are especially concerned about staff loyalty, commitment and productivity.

In countless organisations, staff turnover is at all-time highs. In one US survey, only 24% of employees indicated that they consider themselves truly loyal, committed to their organisation and its goals, and planning to stay at least two years.

One startling finding, is regarding ‘ethical’ and ‘non ethical’ employers. Around six times as many employees say that they feel ‘loyalty’ towards their employer where the employer is considered ‘ethical,’ compared with the number saying they feel loyal where the employing organisation is not considered ‘ethical.’

It should not be surprising, of course, but the fact is that firms with high levels of customer loyalty almost always have high levels of staff loyalty. Some commentators would say that it is impossible to build strong customer loyalty with a staff that is in constant turnover – so the two must go together.

And why is this so? Essentially, because customers buy relationships and familiarity. They want to buy from people who know them and their preferences. From this we can conclude that it is a fundamental pillar of all loyalty to serve your employees first so that they, in turn, can serve your customer.

Another reality to be aware of, is that in building customer loyalty, the 80/20 rule is alive and well. Roughly speaking, 80% of your revenue is being generated by 20% of your customers.

All customers are not created equal. Some represent more long-term value to your firm than others. Before going too far down the loyalty track, a smart company segments customers by value and monitors activities closely to ensure high-value customers get more than their fair share of special offers and promotions.

To understand what drives customer loyalty generally, it is good to look at a specific sector as an example: management consulting.

Even in a very competitive market, there are some corporates who continue to be loyal to their consultants. Why is it that some consultants have their clients stick with them, through thick and thin?

A careful examination indicates that client loyalty between clients and management consultants revolves around three key elements:

• Clients are likely to be loyal to people who continue to add tangible value;
• Secondly, clients are loyal to the people with whom they have built trust; and,
• Thirdly, clients are loyal to the consultants who go the extra mile for them and who really care about them as clients.

It is all terribly simple. And maybe this example illustrates that loyalty among staff and customers does not need to be complex. Attention to the little things is what really counts.