Selling Your Business
At some point in the future, as a business owner, you might consider the sale of your company. You hire an investment banker and they do a deep dive on your business. He/she looks at the historical financials, new customer acquisition, retention and your ability to increase customer share. All of these things are yesterday’s news and while interesting, do very little to predict future revenue and EBITDA.
Consider this for a moment: you have a key account that makes up 8% of your business and 11% of your EBITDA and you did slightly over $2 million in revenue last year. What do the financials say about predicted future revenue? Maybe your contract is expiring in three months. Can we count on this revenue moving forward?
Now consider a company that leverages a Net Promoter Score Survey in the same scenario. The company’s key decision maker rates you a "10" and the day-to day contacts rate you 9’s and 10’s. Doesn’t that say a whole lot more about predicted future revenue? It sure does. It says that this customer is large, it is profitable and it is incredibly loyal. A great predictor of future revenue and EBITDA. And most investment bankers will tell you, should result in a higher multiple and enterprise value for your company.
Here are four key takeways a prospective acquirer walks away with about your company when you religiously leverage Net Promoter Score Surveys:
1. You are disciplined about measuring, evaluating and building customer loyalty
NPS is a better way to measure customer loyalty. The system recognizes that measuring customer satisfaction isn’t enough, companies must understand how loyal their customers are in order to better gauge how happy they are. No other system lets you link improvements in customer loyalty to actual business outcomes.
2. You concentrate on and create more customer advocates
The NPS score gives a good indication of how many of your customers are advocates. A NPS score of 50% is considered pretty good, with half of your customers to be considered ‘promoters’, actively telling others about your product or service.
Using NPS regularly means you can see if you’re creating more customer advocates or losing them. Successful businesses leverage customer advocates to spread positive word of mouth and send referral leads.
3. You focus on reducing customer churn
Research by Bain and Company found that promoters generally defect at lower rates than other customers. This means that they have longer, more profitable relationships with a company.
With customer acquisition costs increasing, reducing customer churn is a sustainable way to grow your business.
Detractors are your biggest headaches. Work on reducing the percentage of defectors to improve your NPS and grow your business.
4. You are all about driving profitable growth and customer lifetime value
NPS lets you focus on creating more promoters inside your business. Promoters are powerful as they have less churn and a higher customer lifetime value.
- Promoters increase spend more than detractors, they are interested in new offerings and consolidating to less suppliers.
- Promoters are less price sensitive; they’re not always looking for 'the best deal.'
- Promoters typically cost less when it comes to selling, marketing and advertising.
- Promoters account for 80-90% of referrals. More promoters equal more referrals.
Since the valuation of the company is based on current and predicted future EBITDA, isn’t it critical to get the data to support a higher multiple and higher enterprise value? Start by signing up for a Net Promoter Score Survey today. Just visit www.aremyclientsloyal.com and let us help you grow your business and your wallet!
Butler Street, a leading management consulting, training and research firm focused on client and talent development, has formed an alliance with Printing Impressions, America's most influential and widely read resource for the printing industry, to provide the de facto industry standard for measuring customer loyalty through its Best of Print & Digital Customer Survey.
If you are interested in understanding how Net Promoter Score and the Best of Print and Digital can help you grow your business, go to www.bestofprintanddigital.com
To take part in the 2017 Best of Print and Digital go to www.bestofprintanddigital.com.
Click here to watch the Printing Impressions interview with Mike Jacoutot, founder of Butler Street, and Mark Subers, president of Printing, Packaging and Publishing at NAPCO Media, as they discuss the new partnership program.
With 194 percent year over year growth and a 90 Net Promoter Score, Butler Street has established itself as one of the leading consulting, training and research firms to the middle market. Before founding Butler Street, Mike Jacoutot spent the previous nine years as CEO of a national health care staffing company and most recently, a revenue cycle company. Jacoutot brings a strong combination of Lean Six Sigma process skills together with 34 years of sales and marketing experience.
Jacoutot is also the author of "Become the Only Choice." Now in its third printing, the book emphasizes a combination of consultative selling and process management techniques to enable salespeople to sell the way clients buy.
A four-time All-American collegiate wrestler, Jacoutot led The College of New Jersey wrestling team to two national championships. He culminated his senior year by winning the NCAA Division III Championship after three consecutive second place finishes. In March 2015, Jacoutot was inducted into the National Wrestling Coaches Hall of Fame. In October 2013, he was also inducted into The College of New Jersey Athletic Hall of Fame along with his 1981 NCAA Division III Championship Team. He holds a B.A. in Management.