point. The central theme of much of the work to date has been
around aspects of relationship marketing, specifically customer
retention and loyalty.
Reichheld’s best-known work was, initially, explicitly service
industry based and focused on the economics of customer reten-
tion.^26 Subsequent writings by Reichheld have taken customer
loyalty as the central theme, advocating a strategic systems
approach to its creation. Early iterations described a strategic busi-
ness system based on loyal employees delivering superior value to
increasingly loyal customers.^27 Loyal investors were soon added as
a third necessary component of this symbiotic system, bringing
Reichheld’s thinking into line (in some respects) with ideas
expressed by Bill Marriott Jnr, chairman of Marriott Hotels, who
believes that customers, employees and stockholders are the three
groups that the business system should aim to satisfy. The chairman
of the Marriott chain is just one of several service industry special-
ists, working in high customer contact service industries – such as
hotels, restaurants, banks and airlines – who believe that employee
satisfaction should be ranked first among these, because employee
satisfaction drives satisfaction for the other two.^43 Reichheld, who
increasingly applies his ideas to consumer goods marketing (loyalty
as repeat purchases) as well as loyalty in on-going service situations,
takes the more conventional line. He applies a hierarchy of loyalty
in which loyalty to the customer, through the goal of creating cus-
tomer value, takes ultimate precedence, followed by loyalty to
employees and investors.^44
Importantly, the scope of Reichheld’s loyalty system was broad-
ened further in his book The Loyalty Effect: The Hidden Force Behind
Growth, Profits, and Lasting Value.^44 Here he does acknowledge that
other obvious stakeholders – such as local communities, distribu-
tors and vendors (goods and services suppliers) – are absent from
the model, but maintains that this is a deliberate omission and a jus-
tifiable stance, even in the face of emerging network organizations.
Reichheld concedes that other stakeholders do have a part to play in
the dynamics of a loyalty system, but draws a nominal line beneath
the trinity, stressing that the focus of the organization should remain
on the essential three because they are ‘the forces of loyalty’ which
create stability within the system (see Figure 1.7).
Applying the analogy of business systems as a series of linked
molecules, Reichheld suggests that the trinity, of customer,
employee and investor, makes up the essential ‘subatomic particles’.
20 Relationship Marketing