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No. 460, August 12, 2002

Profitable relationships in business

Is the purpose of business to maximize profits? Or is the purpose of business to do good for customers, employees, partners and suppliers? No matter what personal opinion we might have it is the latter point of view which generates the big profits according to Frederick Reichheld in his new book Loyalty Rules!

Create the highest long-term profits by making everyone involved in a business a winner. This is Reichheld’s thesis which he supports with research and examples from internationally well known companies such as Harley-Davidson, Cisco Systems and Dell Computer but also lesser known American companies like Southwest Airlines, Chick-fil-A (fast food restaurant), Enterprise Rent-A-Car, software company Intuit etc. By building long-term loyal relationships with everyone involved it is possible to find the perfect niche, reduce costs and increase both quality and service.

Loyalty is the best measure for the quality in your business relationships, according to Reichheld. Only openness, trust and honesty can create loyal relationships sustained through thick and thin.

Many economists hold the view that loyalty is an old-fashioned concept. Nothing could be further from the truth, according to Reichheld. Loyalty is more important than ever. Profitability within e-commerce is impossible without loyal customers and employees. The elusive nature of e-commerce requires even higher trust.

Here are some key points from Reichheld’s work:

If you want more depth on this, Loyalty Rules! has a lot to offer. To a CEO, entrepreneur or stock broker the book should give a great return on the investment in both its price and the time to read it.

Best of luck! Jonas Himmelstrand

Part one of this article with book information can be found at

© 2002 Strategies to Learn & Grow Newsletter • Printable version

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