Executive Interviews: Interview with Timothy Keiningham on Organizational Loyalty
November 2009 - By Dr. Nagendra V Chowdary

Timothy Keiningham
Global Chief Strategy Officer, Ipsos Loyalty and Lerzan Aksoy, Associate Professor, Fordham University

• Firstly, congratulations for being co-authors of a wonderful book on loyalty – Why Loyalty Matters. What is the premise and purpose of this book, and what can the audience expect from this book? Who would benefit the most from this book?
  The underlying premise of this book is that loyalty in all areas of our personal and professional lives has been declining. This has serious implications for us as individuals, and as managers, employees, and customers. In particular, it negatively impacts our success and happiness.
  This is because our relationships equal our success. As managers, our success is contingent upon getting the most out of the people in our organizations, and on building relationships with our customers. And as individuals, every dream we hope to accomplish rests upon our relationships with others. The glue that binds these relationships together is our loyalty. And that is why loyalty matters.

• Earlier, you have written an award-winning book – Loyalty Myths – that focused on loyalty in relationship to business performance. What are the loyalty myths?
  Actually, there are too many myths to list here. In the book, we found 53 of them. Three of the most common myths are:

1. customers grow more profitable over time,
2. loyal customers pay higher prices, and
3. increasing retention equals increased profits. This isn’t to suggest that a loyalty strategy is not the right strategy. In fact, loyalty is the right strategy in all aspects of our economic lives: as employees, as customers, as managers, and business owners. And by right, wemean that it tangibly maximizes value – emotional and economic. But the myths of loyalty contaminate this reality, so they must be recognized for what they are. As a result, we can focus on ways to create profitable loyalty in all aspects of our lives.

• Is Why Loyalty Matters a sequel to Loyalty Myths? What are the distinguishing purposes of these two books? Can you highlight the differences between these two books?
  Why Loyalty Matters is the natural followup to Loyalty Myths. Loyalty Myths sought to disentangle fact from fiction, so that we could identify the realities of loyalty. Why Loyalty Matters takes a broader perspective, examining the role loyalty plays in our lives as businesspeople and employees, husbands and wives, friends and citizens.

  In our economic lives (as managers, employees, and customers) we tend to set boundaries in our minds as to the impact of these loyalties in our lives. But the reality is quite different. Our economic loyalties permeate our lives, impacting our success and happiness in all parts of lives.

• What were the triggering points/ motivations for you to embark on the journey of Loyalty?
  Why LoyaltyMatters (or some formof this idea) has actually been something we have wanted to write for at least a decade. We have known for some time that our loyalties impact our success in ways that we frequently fail to recognize.

  But really understanding loyalty – not just some sliver of it – is a daunting task. There are very few “true” loyalty books. There are lots of books on customer loyalty, employee loyalty, friendship and loyalty, etc., but integrating these constructs into an accurate and holistic discussion of loyalty requires an in-depth investigation across philosophy, psychology, sociology, economics, and faith.

• What is loyalty, in generic terms? Why is loyalty important? You have observed that, “Loyalty is the cornerstone of stability in all our relationships.” What is the connection between loyalty and stability in relationships?
  Loyalty is the acceptance of bonds that our relationships with others entail, and acting in a way that defends and reinforces the attachment inherent in these relationships. A simpler way to think about loyalty is this: Loyalty is the counterpart to the word “my.”We can be loyal to many things – friend, lover, family, church, community, country, employer, store, and restaurant (just to name a few). And some loyalties can be more important to us than others. Yet in all cases, loyalty implies a specialness of the relationship. What makes it special is our identification with the object of our loyalty – at some level, we think of it as belonging to us.

• Why is loyalty out of fashion and is frequently spoken of as a character flaw? Why do many declare that loyalty is either dead or on life support?
  It is not difficult to find articles declaring that loyalty is dead. And the statistics bear this out. On average, companies lose half of their customers within five years. And employees leave at an even faster rate; on average, a company loses half of its employees within four years. Jobhopping has become the norm. Younger baby boomers (those born between 1957 and 1964) held 9.6 jobs on average – without question, far more jobs than those of their parents and grandparents. The idea of spending a lifetime with a company is as old-fashioned as families sitting around the radio.

  And companies have shown equal disdain for the idea. Downsizing has become the prevalent means of reengineering the corporation. Onceloyal employees are told en masse that the company’s loyalty to them is no longer economically viable.

• Is there any relationship between national cultures and loyalty levels?
  There is no question that countries with more “individualistic” as opposed to “collective” cultures tend to have lower loyalty levels in general. But the reality is that the economic engine necessary for successful development of a country naturally pulls at the fabric of our loyalties. We naturally have difficulty balancing our lives (i.e., living our loyalties) in a more fast-paced economic environment.

  We are not suggesting, however, that we revert fromcapitalismto socialism (or some other “ism”). Rather, to keep ourselves successful and happy, we have to recognize that balance is the key. To quote Professor Stewart Friedman of The Wharton School, “Traditional thinking pits work and the rest of our lives against each other. But taking smart steps to integrate work, home, community and self will make you a more productive leader and a more fulfilled person.”