How Does Your Company’s Customer Satisfaction Measure Up?

In our Value Builder series we explore the eight key factors potential buyers review when looking to acquire a business – maybe yours!

How Does Your Company’s Customer Satisfaction Measure Up?

“The goal as a company is to have customer service that is not just the best but legendary” – Sam Walton, Founder of Wal-Mart

In our previous blog we discussed how Reichheld’s Net Promoter Score could help you determine customer satisfaction. That same model could also be used to measure your customer satisfaction based on a score from 0 to 10.

To see how well your company is doing, The Osborne Group could survey a group of your customers before going to market by asking Reichheld’s question: “On a scale of 0 to 10, how likely are you to refer our company to a friend or colleague?” Those who reward you with a 9 or a 10 are your ‘Promoters” in Reichheld’s lingo. Your “Passives” are the customers who give you a 7 or 8 – they are satisfied, but not likely to repurchase from you or refer your company anytime soon. Your “Detractors” are the angry customers who score you between 0 and 6.

With this information, your Net Promoter Score can be calculated by taking the percentage of customers who are “Promoters” and subtract the percentage of Detractors. For example, if 45 percent of customers are Promoters, 20 percent are Passives and 35 percent are Detractors, your Net Promoter Score would be 10 percent (45-35=10).

Reichheld found the average Net Promoter Score among the companies he surveyed was 10 to 15 percent, so by definition, if your score is north of 15 percent, you’re above average and can expect your company to grow at a rate faster than the economy. A small handful of companies have achieved a Net Promoter Score of at least 50 percent, which Reichheld defines as “World Class.”

As popular as the Net Promoter Score methodology is among the Fortune 500, it is even better suited for use among smaller companies for a number of reasons:

1. It’s easy.  The questionnaire can be deployed quickly using a survey tool like Survey Monkey and enjoy a very high response rate because answering it is not a burden on respondents.
2. It gives you a common language with investors.  If you’re planning to sell all or part of your company in the future, tracking your customer satisfaction using a well-established, recognized tool allows potential acquirers and investors to quickly gauge how satisfied your customers are relative to those of other companies they have invested in. Many private equity firms and venture capitalists will insist on performing a Net Promoter Score survey with your customers before they invest in your business.
3. It’s predictive. Unlike most surveys, which ask respondents a variety of time-consuming questions that render interesting, but often irrelevant data, the Net Promoter Score methodology asks the only question that has been proven to predict the likelihood a customer will repurchase or refer you – the two things that fuel growth of any business.

The Net Promoter Score is a good way to confirm how you’re doing on the customer service front. An Osborne Group Value Builder consultant can help you determine how to make any adjustments that may be required to increase your NPS and the overall value of your business.

A complimentary Value Builder questionnaire available from The Osborne Group will provide an assessment of the current potential sales value of your company. The questionnaire is part of a system developed by internationally recognized small business expert John Warrillow with results based on findings from over 17,000 companies. Your answers will help determine what drives up, or undermines, your company’s value and steps you could take to increase its value.

In our upcoming blogs, we’ll examine other Value Builder factors and their impact on your company’s worth. Follow us here for the series:

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To find out how your company is performing, click here to take the Value Builder questionnaire: http://www.thevaluebuildersystem.com/osborne-group

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