Harvard's Heskett: the 'loyal' treatment

Nation's Restaurant News, Oct 30, 1995 by Carolyn Walkup

ATLANTA -- communication from the 20 percent of restaurant customers who are the most loyal is the most significant, according to James Heskett, Harvard Business School professor of business administration and co-author of "Service Breakthroughs: Changing the Rules of the Game."

In his keynote address to MUFSO `95 attendees, Heskett said that about 20 percent of customers deliver nearly all of the profits. "Customer loyalty is the single-most-important thing to profitability," he explained.

"Don't listen to every customer. Some of your customers are worth much more than others, so don't listen to all of them equally. The problem is we have to identify who those loyal customers are," he added.

The most loyal customers are the most likely to complain because they want to remain regular patrons. Heskett suggested that operators make it easier for customers to complain other than by talking to front-line employees. He commended the Fairfield Inn hotel chain for using computer touch-screen technology at the check-out desk to solicit guest feedback.

"I would bet you see less than 10 percent of complaints," he said. Heskett illustrated his point by saying that he stopped patronizing a well-known Boston-area restaurant where he had been a weekly customer after some longtime employees who knew him left and the new ones failed to recognize him as a loyal customer.

Noting that loyal customers tell many other potential customers about the restaurants they like, Heskett emphasized that die value of such word-of-mouth recognition amounts to much more than just the dollar value of what those customers spend.

"Do what needs to be done to interest the customer in coming back and becoming a loyal customer," he said.

He also advised doing whatever is necessary to keep the best employees, beginning with listening to them. Loyal employees gain the most satisfaction from being able to deliver results to customers and getting recognition for it.

Employers would do well to hire people referred to them by their most loyal employees. "Likes attract likes," he said.