As agents they are responsible for all aspects of running their agency and do so with little interference from headquarters. Their loyalty is 80 percent far above the 20 to 40 percent typical in the industry. It's no coincidence that, relative to peer companies, State Farm sets the standard for profit. Consider investor loyalty. Reichheld notes that since 1960 investor turnover in the United States increased from about once in seven years to once in two years.
Corporate owners are even more transient than employees and customers.
The major reason is investors who pressure managers to boost earnings in the short term. These are mostly institutional investors, most of whom are not loyal to any company, only to the economics of buying and selling for immediate gains. This destructive practice makes companies hard to manage, and systematically erodes the effort to create lasting value. Educate current investors, shift toward institutional buyers who avoid churning, attract more loyal core owners, and if those methods fail, go private. As companies provide more value to their constituencies, those constituencies become more loyal, and that loyalty enables the companies to provide even more value.