Wednesday, May 18, 2011

Tuesday, May 17, 2011

When you sell your business, how will you measure Goodwill?

It's hard being a business owner. You work incredible hours, put your heart and soul into each customer, your business' reputation, your staff, everything - and you never switch off (not even sleeping).

But there's an end in sight - one day you hope to sell your business, reap the rewards, and lie on a deck chair somewhere drinking margaritas by the pool.

Hopefully your plan comes true but depending on what type of business you're in, it can be tricky to sell-out at a price that rewards you for all the work you've put in.

The biggest place where value is contested is the "Goodwill" line item. Technically, "goodwill" is the value of an entity over and above the value of its assets**. If you're lucky enough to have several buyers creating demand and bidding for your business, then this might not be an issue. But most of the time, the price paid for the business is highly influenced by the way the business is presented to potential buyers.

Of course, you know that your business has built a name for itself, that customers travel from all over town just to deal with you, that your staff are highly trained in customer service, and that you deliver a much better result than your competitors... but proving it can be another matter.

Would your business command a higher price with 5 glowing customer reviews?

What about 50 glowing customer reviews?

Would a shiny business award attract the attention of more buyers?

Would a celebrity customer or two tip a buyer over the line?

Or some encouraging press about your business or industry?

A resoundingly positive reputation is likely to pay huge dividends when the time comes to value the Goodwill in your business.

Just some food for thought if you're thinking of selling up in the next few years...

*This post was inspired by a business recently spotted using their customer reviews on WOMOW and their Best Business Award as a key part of the marketing for selling their business.

**We're not accountants or financial advisors so please get your own advice.

You're Dumped: Why Customers Leave

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>> Please click here to read this article <<

Monday, May 2, 2011

The Word-Of-Mouth Revolution is hitting Australia

The secret is out: customer reviews are revolutionising the way consumers make decisions.

Thousands of people are reporting that they've found amazing businesses - often right under their noses - using word-of-mouth on the web. In some senses, it's word-of-mouth as it's always been - but being online, it's more powerful than ever.

According to Rachael, a WOMOW member, customer reviews are giving "the power back to the people", putting more information in their hands and allowing them to make a more informed decision.

It's a revolution that's changing the way customers connect with businesses. In the words of some WOMOW members;

  • "I use WOMOW to find new businesses to use, as hearing first hand from somebody who has used the business helps me find a reliable, friendly service to use. I often use WOMOW at work, as I organise everything from printing to transport. I found a great printing supply company to get my ink for our office printer, and I am still using them to this day!" Cassie
  • "Before I go to any business, I usually take a look to see if anyone's given it a rating. This is often for restaurants, but I also use it for service industries too. Not only has it saved me the hassle of finding businesses around my area quickly, it also gives me obviously their reviews so I know whether they will do a good job or not. I'm not one that likes being disappointed, and by using WOMOW, I can easily avoid this." Edward
  • "Our family has learned to 'WOMOW' any prospective business prior to use, as this seemingly minor action has the potential to have major consequences. After all, avoiding an incompetent and uncaring business will save us all a considerable amount of time, effort and money in the long run. We learn from other people’s mistakes and avoid problematic businesses by 'WOMOWing' them prior to doing business with them." Jayne
While traditional directories are suffering a severe decline, Word Of Mouth On the Web is growing at an alarming rate. In the last 12 months, we've seen searches for reviews on businesses double and many businesses report that online reviews account for a significant proportion of their new customers. In fact, it's estimated that 1 in 4 Australian decision-makers have used reviews on WOMOW to help them find great businesses during the last 12 months.

Consumers are becoming more informed and don't put much trust in traditional advertising;

  • "While we, as a family seldom trust advertising gimmicks/sources these days, we do however place a great deal of importance on 'personal' reviews." Jayne
  • "Normal advertising is there to convince us to use their service or product, I love reviews from other people just like me who just want to get good service without having to deal with bad experiences along the way. Reviews are more honest!" Cassie
  • "Any business can espouse and exaggerate their own virtues, and we would be none the wiser until we actually try them out. Thankfully, through sites like WOMOW, we can get a real description of what the business is like to interact with. Nothing truer spreads like word of mouth." Krystle

Word-of-mouth is becoming a revolution that's changing the ways that customers find out information about businesses, and also changing the ways that businesses market themselves and manage their reputations. Customers are loving being able to establish more of a voice within the business world, and as Edward Wong, a WOMOW member states, "businesses should sit up and take note as it's now all about customer service and if we're not happy, we now have another means to voice our opinion".

It may not be too long before WOMOW is having a similar impact to which is now the 15th most popular site in the United States and has an enormous impact on both consumers and businesses.

Customer Satisfaction at a TWO YEAR High

April 2011 has been a great month for consumers with customer satisfaction reaching a 2-year high. Reviews website WOMOW (Word Of Mouth On the Web), reports that customer satisfaction has been climbing for the last 4 months straight. The graph below shows the trend in customer ratings by month over the last 2 years (May 2009-April 2011). Since a low in December, businesses have picked up their game and are doing a great job. And customers are noticing!

This data shows that customers are least happy around the months of November/December, which could be attributed to pre-Christmas pressure and it's impact on both service levels and customer anxiety. However January sees a slight increase when Christmas stress is removed and demands on service providers are reduced.

The period from February-April is when customer satisfaction is highest, with an increase also occurring around September. This is possibly influenced by school holidays and the associated reduced pressure during these times.

But despite Australian consumers having high expectations of the businesses they use, reviews on WOMOW are overwhelmingly positive with over 93% of reviews scoring a rating of 3 or more out of 5. More than ever, businesses that provide good service are being rewarded with positive feedback and the enormous rewards of word-of-mouth.

This result is both a big tick for businesses, and also a great sign for future performance. With more and more people using reviews to choose their service providers, businesses with great feedback report that customers reviews are a significant source of new enquiries - so the more positive reviews businesses have, the more customers they're likely to attract. is the number one site in Australia for customer reviews on businesses, with approximately 167,000 reviews posted by its 70,000 members - everyday consumers.