A company’s value is enhanced by evidence of customer satisfaction − the customer list and the level of loyalty, repeat business and customer contracts that provide a steady cash flow.
Even if you don’t intend to sell your business right away, your ability to slow down, relax and let others run the business for you is improved by the consistent revenue that high customer satisfaction contributes to your bottom line.
How much difference does customer satisfaction make? It’s hard to find quantifiable statistics because every business is unique and measuring customer satisfaction in a consistent manner is difficult. But to illustrate the difference, listen in as an owner and prospective owner conduct a survey to find out how the company is treating customers.
“Hello, Mr. Smith? My name is Mary and I’m calling to do a quick customer survey regarding your experience with ABC Company. May I ask you five quick questions?”
“Sure. Go ahead.”
“I understand you recently purchased an appliance from ABC. I’m going to ask you to rate your level of satisfaction on a scale of one to five with five being over the top and one being horrible.”
“First, getting the product you paid for and getting exactly what you expected.”
“Five. It was what I expected and I’m very pleased with it.” “Second, getting delivery on the date you were promised.”
“Five. They came when they said, and I was pleased that they could give me a relatively narrow window so I didn’t have to take the whole day off work.”
“Thank you. Third, the value of the product relative to your expectations and what you paid for it.”
“Five again. It works great!”
“Fourth, your overall experience with ABC Company from the time you walked into the store to the time you said goodbye to the installer.”
“I would have to say five. Everyone was professional, friendly, and helpful. Frankly, I couldn’t have asked for anything better.”
“Finally, would you recommend ABC to your friends?”
“Absolutely. There are so many horror stories out there that this was like a breath of fresh air.”
Now contrast that scenario with this conversation:
“Hello, Mr. Jones? My name is Les and I’m calling to do a quick customer survey regarding your experience with XYZ Company. May I ask you five quick questions?”
“Sure. Go ahead.”
“I understand you recently purchased an appliance from XYZ. I’m going to ask you to rate your level of satisfaction on a scale of one to five with five being over the top and one being horrible.”
“Oh I can tell you right now that company sucks!”
“Okay, thanks for that. May I ask you some specific questions that may help the company to better understand your concerns?”
“First, getting the product you paid for and getting exactly what you expected?”
“One. They sent the wrong model. It wouldn’t fit and it was the wrong colour.”
“Oh, I’m sorry to hear that. Second, getting delivery on the date you were promised.”
“One again. They totally missed the delivery date and didn’t bother calling to let me know they weren’t coming. I took a whole day off work and then had to do it all over again because they screwed up.”
“Hmm, sorry again. I am making notes about this. Third, the value of the product relative to your expectations and what you paid for it.”
“I don’t know. I still don’t have the right one.”
“Fourth, your overall experience with XYZ from the time you walked in the store to the time you said goodbye to the installer.”
“You’ve got to be kidding. Have you been listening?”
“I take that to mean a one. Finally, would you recommend XYZ to your friends?”
“I’ve already posted a complaint online to the hundreds of people in my Linked-In and Facebook accounts. I’ve told them to avoid that business at all cost.”
If a prospective buyer, or you as the current owner considering whether to keep the company, were making those calls, how would those responses affect your decision-making regarding the short and long term sustainability and value of the company?
Customer satisfaction matters. You may not be able to fully quantify the number, but you know it plays a key role in your ability to transition your business. Review the other articles in this newsletter to get ideas on how to work on customer satisfaction before it’s too late.