But five short years ago, it was a different story. Massive debt from zealous over-building, declining sales, sliding food quality, tired cooking and dining facilities and an aging customer base were just a few of the problems that had derailed the stock to a share price as low as 99 cents.
What drove Luby’s turnaround? A talented crew led by Houston restaurant legends, brothers Chris and Harris Pappas, who have a brilliant eye for ‘first-things-first’. From the addition of healthy-eating menu items and a new menu board system to better communicate with guests, to short-batch cooking for improved food quality, to aggressive team-building and family-friendly marketing — the stores’ people, product and processes were aggressively over-hauled to serve today’s casual dining customer.
Amidst our four year turnaround, I learned plenty of loyalty lessons. The biggest? Patience pays.
As a Board Director, I experienced first-hand the torment of knowing “all the rights things were in place” but seeing no major shifts in customer counts, same-store-sales and bottom line revenue improvement.
Here’s what I learned: There’s a tipping point to a turnaround and waiting for it requires faith and patience. And when our tipping point arrived, it didn’t disappoint. Week-after-week, quarter-after-quarter, revenue numbers got stronger and stronger. Luby’s was back!
Loyalty Lesson: “Rome wasn’t built in a day” and the best executed loyalty plans don’t always produce immediate results. Keep the faith. Be patient. Do the right things. Your rewards will come.
( www.lubys.com)

At the American Cemetery at Colleville, I walked along the perfect rows of marble crosses (9,387 in all) which marked the graves of young, brave Americans who paid the ultimate price for my liberty. I then wandered out to the edge of the cemetery overlooking the Channel, and found myself drawn to Kansas native Jim Gablemann, as he aptly taught some war history to the small group of eager listeners who encircled him.
“Keeping troop morale high was a top concern,” Jim explained. “What lifted a weary soldier’s spirits? For starters, hot coffee and fresh bread. That’s why the U.S. Army shipped make-shift bakeries into the Normandy area as soon as possible,” he shared.

As I stood listening, Jim’s words immediately ignited this mental picture: a dog-tired, war-weary soldier, covered with grime, devouring some thick slices of fresh bread chased down by hot coffee. A soldier’s short, simple pleasure in an anything-but-simple time.
Loyalty lesson: Delivering an exceptional customer experience, day in and day out, requires staff fortitude. What simple pleasures help keep your frontline morale high? What’s something new you can do to show staff you care? The U.S. military shipped bakeries! What’s your plan?

Here we see the idea in all its glory. It seems someone has come up with the idea to make this tattling behavior be part of the loyalty program for Regal Cinemas. Along with extra points for being a loyal patron, it seems that someone has figured out that pushing the equivalent of a movie ejector seat is good for business.
The way it works is that Regal Cinema loyalists are given a hand-held device with four buttons they can push to send a signal to the staff of ushers and managers. These are the buttons: there’s one each for sound, picture, piracy or other disturbance.
Sound and picture I get. This is an early warning device.
Other disturbances I think will be the funniest one to be enacted — because now not only do we have two talkative teenage girls (for example), but also an usher coming in, finding the tattler and then “shushing” the disturbance. Not sure how this will work, but I’d give five bucks to see it.
The button for piracy is interesting. I’ve never seen anyone in a theatre trying to make copies, but this obviously is prevalent otherwise there wouldn’t be a button for it.
Now, personally, I think this will run its course in a few months. I give Regal Cinema props for trying something new…but beyond the novelty period of carrying one of these things in and the few people who will push the buttons to see what happens, I just have a hard time figuring the “loyalty” pay off in this. And I’m just not sure that turning your best customers into cops is exactly a move to improve the movie-going experience for them.
Guess we’ll all have to go to the movies to see. Race you to the popcorn stand!

This is the headline from a just-released report by DoubleClick and the e-tailing group, Inc. What I find most interesting is how this will undoubtedly make headlines among various media outlets without any serious thought into what is going on here.

First and foremost is the question of price and consumer loyalty. The impression given by such a headline is not that most people are price sensitive (we don’t need research to tell us this), but that price is the MOST IMPORTANT factor when deciding which online store to buy from.
Personally, I find this nonsense. It is true that for some people price is the most important factor, but not ALL people. This is simply a matter of segmentation.
I’m always confronted by this question when I work with technology companies, and especially engineers, who tend to think that people are completely rational and thereby purchase based on the lowest price. To confront this mistaken thinking, I ask the company who in their market has the lowest price (which they readily tell me) and then I ask why doesn’t that competitor have 100% market share.
The point is this: You can’t have price be the most important factor in consumer purchase (and loyalty) and at the same time not have the competitor with the lowest price have 100% market share.
Anyway, if the lowest price is the most important factor in consumer loyalty, than you have another problem. All a competitor has to do is come up with an even lower price and consumer loyalty should vaporate (you see, you can’t make someone loyal totally on the basis of something, like price, that can be instantly changed).
Finally, since the study was conducted using an online survey methodology, you run into an additional problem. Consumers are well known to use implicit theories to explain their behavior. So even if they are loyal to a retailer for service, breadth of products and other factors, many will attribute their loyalty to something more easily identifiable and logical, like price. Most academic research shows that the implicit theories that consumers use can be quite misleading.
So, consumer behavior is far more complicated than this headline suggests, and indeed the specifics of the DoubleClick study suggest this. Here is the essence of their findings:
* Seventy-one percent of shoppers “browse multiple online stores prior to completing a purchase.”
* Four out of ten (42 percent) shoppers “price shop a product via comparison engines.”
* Nearly half (48 percent) of the online shoppers surveyed described their loyalty to merchants across channels (store, Web, catalog) as “somewhat loyal to certain merchants based on a combination of good value, superior service and the right mix of product.”
* Seventy percent of respondents surveyed belong to a frequent buyer/loyalty program.
* More than half of the respondents (53 percent) ranked “discounts or exclusive offers for members” as the most important feature of Frequent Buyer/Loyalty Programs.
* When deciding to go back to a Web site, “online order tracking” was rated as very important by 56 percent of those surveyed.
* Shopping patterns vary by gender, with men less loyal and women more apt to register or be influenced by promotional mail.
* “Poor service” ranked most likely to deter shoppers from becoming loyal to a Web site by 41 percent of respondents.
* Rewards’ customers (those belonging to 2+ programs) are less apt to be focused on price, utilizing more features and tools to enhance their multi-channel shopping experiences.
* At least half of the shoppers surveyed indicated purchasing clothing, books, music, computerware and toys online.
* Free shipping continues to be the most important enticement to drive customers back to sites.
Read the full press release.
So, reading the above findings, would you conclude that “price is the most important factor in consumer loyalty”?

Before spending a dime on anything, managers, executives and owners must ensure they spend money wisely; that investments in business development and growth offer potential return based on established margins and a targeted bottom line; and that the money works to achieve measurable goals.
Analysis of why some leaders fail to execute on the plan suggests they may not always be held entirely responsible. As long as shareholders and board members insist upon short-term results, only the most powerful and fearless executives will reap the long-term rewards and margins that strategic planning can deliver. Meanwhile, short-term thinking prevents American businesses, small and large alike, from becoming the best they can be, and in the long-term this short-term thinking short-changes everyone, including shareholders.
Need proof? In December 2005, Consumer Reports identified the 31 most reliable cars–29 of them were Japanese models. I do not believe for a moment that American engineers and workers are any less competent than their Japanese counterparts. That leaves leadership, innovation and planning as the culprits behind the failure of the American automotive industry.
I believe that if Ford and GM continue to miscalculate their customers’ needs, wants and desires and continue to fail to look toward society’s future needs, generations to come will look at these companies as examples of an automobile industry that once existed in the US, but no longer does.
Fortunately, America is still blessed with brave and bold business leaders attempting to pilot American businesses toward greatness. As James C. Collins and Jerry I. Porras put it in Built to Last, “Maximizing shareholder wealth or profit maximization has not been the dominant driving force or primary objective through the history of the visionary companies.” Ironically, they add, the result is that “visionary companies attain extraordinary long-term performance–.” and that “visionary companies have done more than just generate long-term financial returns, they have woven themselves into the very fabric of society.”
Unfortunately, too often the attitude engendered by the Sales reward system and the job description leaves a sour taste in the customer’s mouth. It seldom does anything to build Brand, to build solid business relationships based on trust and credibility, or to share the company’s values, which lead to long-term relationships and customer loyalty and in turn greater revenues and margins. The system of grabbing money quickly translates into the best deal wins, lower revenues, lower margins, and little to no relationship-building or customer loyalty.
As mentioned earlier, you must never throw money at advertising, public relations or direct marketing without first understanding who specifically you are targeting; what those customers think and feel and need; what your value is to them; and what their value is to you. This requires analysis, intelligence and research before you invest money in any aspect of marketing.
Far too frequently, businesses think they need to advertise because everyone else does. And there are lots of advertising and marketing firms willing to spend a business’s dollars. The metaphor for that is a doctor who diagnoses himself based on his own experience rather than the science, and a surgeon happy to accept that diagnosis and perform the surgery, despite the fact no deep study of the symptoms was conducted.
I argue that advertising should be carefully and infrequently used. It is expensive and seldom returns profit equal to margins possible when money is invested elsewhere. But you won’t know where to invest your money if you don’t you have a thorough understanding of the “who,” if you don’t perform a deep analysis of your objectives, and if you don’t run your numbers before committing to tactics
In his new book, customer loyalty expert Fred Reichheld says turning loyal customers into word-of-mouth promoters is critical to your business growth. As examples, he cites Costco, which has grown to 45 million members despite spending little on advertising and marketing. Reichheld sees quality customer service, which results in high-quality relationships, as the primary mover. Starbucks employs the same philosophy to use as a foundation for growth.
Of course, Reichheld says, most companies would focus on building excellent customer relations if it did not cost anything–but building relationships is not free. Reichheld argues, failing to build excellent customer relations may result in short-term profits but in the long run those customers will spend far less with your business than a loyal customer. Furthermore, short-term relationships mean customers who are “shopping the deal” and who often are unwilling to pay for value, reducing your margins.
Furthermore, every employee, especially sales reps and the marketing staff, must thoroughly understand where the business is going, how it is going to get there, and what they must do to support the process. Compensation should be based on the results they achieve in making the business’s goals.
And, just as a reminder: Compensation packages for sales reps should not be based on their individual sales revenues, which encourages and rewards discounting. Instead, their goals should be based on margins and their compensation measured on how well they achieve their overall goals.