How many times have you heard that it costs several times more to attract a new customer than keep an existing one? Or that satisfied, loyal customers become more and more profitable over their lifetime as they purchase new products, updates on old ones, supplies, and services, all the while recruiting others to do the same? In fact, that customer loyalty is the single most important driver of growth and profitability? When several of us first began researching these relationships, findings such as these were news. Today we take them for granted.
Fred Reichheld, among others, has fashioned a career as a consultant around his work on loyalty, which then led to a best-selling book, The Loyalty Effect. He concludes that even though many customer loyalty initiatives are poorly thought out or implemented: 1) "Some customers are inherently predictable and loyal, no matter what company they're doing business with. They simply prefer stable, long-term relationships," and 2) "Consistently high [customer] retention can create a tremendous competitive advantage, boost employee morale, produce unexpected bonuses in productivity and growth, even reduce the cost of capital."
Now comes Michael Treacy, writing in his book, Double-Digit Growth, that we should "forget loyalty... The quest for loyal customers is largely wasted effort ... Companies that have committed to complicated schemes for customer loyalty management (such as Lexus, Staples, and American Airlines) don't have much to show for it... Consultants peddling customer lifetime value (LTV) analysis and loyalty segmentation schemes haven't fared much better." Instead, Treacy advises us to keep our eye on the goal of delivering product or service value as a means to retain our customer base rather than emphasizing loyalty schemes that utilize special incentives for existing customers to purchase again. To do this, we should make our services "sticky," tailor offerings to the needs of desired customers, detect and preempt customer defections through special deals, and "bond" with customers through an understanding of their needs for products, services, and brand affiliations.
Who or what should we believe? Have we, as managers, been led down the garden path of the efficacy of customer loyalty management efforts? Would we, in fact, be better off concentrating our efforts on other initiatives? Is Treacy exaggerating for the sake of impact when he concludes that we should forget loyalty because the customer who "never" switches products or brands is impossible to find? In fact, does he contradict himself when he talks, in the same book, about ways to detect and preempt customer defections with deals? What do your experiences tell you? What do you think? 
If you want to read more:
Michael Treacy, Double-Digit Growth: How Great Companies Achieve It—No Matter What (New York: Penguin Portfolio, 2003).
Frederick F. Reichheld, The Loyalty Effect: The Hidden Force Behind Growth, Profits, and Lasting Value (Boston: HBS Press, 1996) and Loyalty Rules!: How Today's Leaders Build Lasting Relationships (Boston: HBS Press, 2001).