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During the next few weeks, MNB will present a series of previews looking at some of the cutting edge topics and speakers who are on the agenda for the 2007 Food Marketing Institute (FMI) Show, scheduled for May 6-8 in Chicago, Illinois.

It long has been a truism in the retailing business that a store’s ultimate goal isn’t just to sell as much merchandise as possible, but to create a store experience compelling enough that the shopper becomes an active ambassador for the retailer, recommending it to other consumers.

How to transform a store into an experience that meets this challenge is the subject of the Super Session scheduled for the annual FMI Show in Chicago on Monday, May 7, from 3:45-5:00 pm. Fred Reichheld, author of “The Ultimate Question: Driving Good Profits and True Growth” and co-author with Thomas Teal of “The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value,” will look to provide what he calls “the missing link” to achieving real and sustainable loyalty – elevating customer metrics to the same level of importance as financial and operation metrics.

To get an exclusive preview of what he’ll offer FMI audiences, MNB engaged Reichheld in this exclusive e-interview:

MNB: Are people who are loyal to a store necessarily the same people who will recommend a store to friends and colleagues?

Fred Reichheld: On average, 80% to 90% of referrals come from your loyal promoters. One of the most reliable indicators of whether a customer is truly loyal is the extent to which they invest in a relationship with your store--and making recommendations to friends and neighbors is an investment of personal reputation (one that few people take lightly).

MNB: Is being recommendation-worthy a matter of creating big ideas, or having lots of little ideas that work?

Fred Reichheld: Earning customer loyalty results from consistently delivering an outstanding experience--which is composed of big and small ideas. The most important component of the customer experience, and the one most difficult for competitors to copy, is to ensure superior service through front line employees who listen, learn, and respond in a caring manner.

MNB: Isn’t part of the reason that customers don’t deem stores to be recommendation-worthy that retailers are more focused on their own operational needs than on both tangible and intangible shopper desires?

Fred Reichheld: Many retailers seem to believe that the job of store personnel is to deliver operational excellence. That is necessary, but not sufficient for earning loyalty. Real loyalty is based on relationships that are based on the Golden Rule (treat others the way you would want to be treated if you were in their shoes) and that rule requires thoughtful, honest service--from trustworthy employees. Costco's success stems from not only its operational efficiency, but from the trust it earns from customers who know they will be treated fairly (no manipulative or predatory pricing for example).

MNB: We’ve read where you’ve said that one of the ways a store generates consumer fealty is to not extract maximum value at the expense of the customer...which would seem to be contrary to the normal policy, which is to get the customer to spend as much as possible all the time. How do we get retailers to change their mindset in this regard?

Fred Reichheld: Retailers who grow profitably are the ones who generate the highest Net Promoter Scores (NPS)--in other words, they turn more customers into promoters and fewer into detractors. Creating promoters (customers who come back for more and bring their friends) is the primary driver of growth.

Retailers will change their mindset when they measure NPS and examine the economic behaviors of promoters and detractors. These facts will convince them to revise their priorities. It will also identify which departments and which stores are doing the best job in driving growth (those with the highest NPS).

MNB: We’ve long maintained that one of the reasons that retailers are unable to generate customer enthusiasm is that they’ve misinterpreted the essence of what a good loyalty marketing program should be – rather than trying to make the consumer loyal to the store, the store should be working to prove its loyalty to the consumer. Do you think this is a valid construct?

Fred Reichheld: Absolutely, yes--loyalty is a two-way street. Stores will earn customer loyalty when they are loyal to their customers (that is, they treat them according to the Golden Rule and act in the customers' best interests).

MNB: Can you give an example of a store/chain that is recommendation-worthy and why? And one that is not?

Fred Reichheld: Some of the highest Net Promoter Scores in retailing are being earned by Apple retail stores, Costco, and Target. They are all growing faster than their competitors because they are dedicated to turning customers into promoters.
KC's View:
Once again, this reminder about the annual MNB Wine Party scheduled for FMI…

On Sunday, May 6, from 6-7:30 pm, we will once again be hanging out at the Bin 36 bar…and if any members of the MNB community would like to stop by, say hello, and chat for a bit…well, the first couple of bottles of wine will be on us. It’ll be a great opportunity for all of us to put faces and voices with the names and words that appear on MNB plus an excuse to drink good wine. (Not that we need an excuse…)

And there will be a special guest appearance this year – for the first time, Mrs. Content Guy will be joining us!

Bin 36 is located at 339 N Dearborn on the west side of Marina City, between the river and Kinzie.

See you in Chicago.