8 Key Drivers Of Company Value (Series) – 7. Customer Satisfaction

This series of articles follows on from an article I published recently, titled “8 Key Drivers Of Company Value That Every Business Owner Should Know”, where I mentioned that I use the Value Builder System?? to help small business owners grow the overall value of their companies, by focusing on 8 Key Drivers that impact company value.

At the heart of this system is the Value Builder Score, which determines how well a business is performing in each of those 8 key areas. This series of articles provides some deeper insight into each driver with tips on how to improve in those areas.

But ultimately, what makes this important? It’s every business owners dream to be rewarded for all the hard work they put in over the years when they finally decide to exit, so they get to enjoy a long and happy retirement without financial worries.

So, knowing about these drivers and how to improve them, puts business owners on a path to maximizing the value of their companies while giving them the peace of mind to know that they are growing an asset of value before they exit.

Today we’ll look at Customer Satisfaction, which looks at the likelihood that existing customers will re-purchase and also refer new people to the business.

This is how John Warrillow, the founder of the Value Builder System, explains it:

“Customer satisfaction is an obvious driver of saleability, right? So obviously how satisfied your customers are, is going to be important to a buyer. Because, again, when a buyer buys a company, they're buying the future. So when you leave and run off into the sunset, they're going to want to know how this business is going to be performing when you're gone, the owner.

To drive up your score on this attribute, you've got to really quantify, empirically, quantitatively measure customer satisfaction. Probably the most well-liked, well-respected way to do that is something called the net promoter score. You can Google it later.

But essentially you're measuring and benchmarking your performance on the likelihood that your customers are going to recommend you. And the more you have that data, the more you'll know for your own peace of mind that your customers are satisfied, but the more acquirers will also be able to see that your customers are satisfied and likely to repurchase from you.”

John also delves a little deeper into this topic on his “Built to Sell Radio” podcast:

“In this episode, CJ Whelan shares how he and his business partner transformed a service they were offering for free into a million-dollar business... and built such incredible brand loyalty their sticky customers were only churning at a rate of 2% a year.”

Listen in and find out why understanding your future growth, is a key factor in building a valuable business. 

So if you're a business owner who's planning ahead and considering ways to exit your business on your terms, I hope the information I provide in these articles will help you reach those goals.

If you would like to chat to me about this in person, feel free to book a slot in my calendar and we can discuss it further.

FREE Assessment:

If you want to see how you score in each of the "8 Key Drivers" right now, take 15-minutes to complete this survey and you'll get a comprehensive 25+ page report benchmarking your business against its peers, plus 49 tips on how to improve those 8 key areas.

Links to the other Key Drivers Of Company Value

1. Financial Performance - Your history of producing revenue and profit, combined with the professionalism of your record keeping.

2. Growth Potential - Your likelihood to grow your business in the future and at what rate.

3. Switzerland Structure (Key dependencies) - How dependent your business is on any one employee, customer or supplier.

4. Valuation Teeter-Totter (Cash flow) - Whether your business is a cash suck or a cash spigot.

5. Recurring Revenue - The proportion and quality of automatic, annuity-based revenue you collect each month.

6. Monopoly Control (Key differentiation) - How well differentiated your business is from competitors in your industry.

8. Hub and Spoke (Company structure, systems and processes) - How your business would perform if you were unexpectedly unable to work for a period of three months.