Last week Launa and I stayed at a hotel where the experience fell short of expectations. When we brought it to the attention of the manager the response was a weak apology but no offer to make matters right. I then wrote a letter to corporate headquarters who responded with excuses, but no solution or real concern. It was clear I was only one small customer that didn’t mean much to them.
In analyzing companies for investment purposes, in addition to reading the financial data I also like to take a common sense approach. In this area one thing that carries a lot of weight is how a company treats its customers. If customer service is weak, a company will struggle regardless of the quality of its product.
Every business makes mistakes, but what matters is how they respond to those mistakes. Do they pass blame? Do they make excuses? Do they do what needs to be done to keep even the smallest customer happy? I have found that a company that disrespects an individual customer, will disrespect other customers as well, and that is bad for business. So in my opinion, no matter how big a company may be, how they treat the smallest of their customers tells me a great deal about their potential for long term success.
I met one day with the Senior V.P. of one of the world’s most successful entertainment companies. I asked his secret of success and he responded that despite having millions of customers, they treat every single one as a VIP. He said they have a 100% satisfaction guarantee for every customer. He told me the average family of four spends $32,000 in a lifetime with them, so they were not going to lose that business over an argument about a $30 toy or $20 meal, regardless of who was at fault. That policy gave me high confidence as a potential investor.
Consumers today have many choices. If a company does not treat someone well, they will likely take their business elsewhere and will also share the bad experience with all their friends. In our digital age, customer service has never been more important. As an investor I would not hold an investment in my portfolio with a company that had not treated me well. I would know that company will struggle to compete in a world where bad news spreads rapidly.
As I drive around town I see parking lots full at businesses that are well known for their customer satisfaction policies. You don’t need to know how to read a financial report to know that these companies will have a competitive edge over those who feel some customers are too small to be bothered with.
Take a moment and review your investment holdings and ask how your personal experience has been with those businesses versus their competitors. Remember, how they treat you is how they are treating others, so invest accordingly.
Hi, I'm Dan. I'm a CFP® Professional.
Securities and advisory services offered through Commonwealth Financial Network®.
Member www.finra.org / www.sipc.org , a Registered Investment Advisor. Wyson Financial, 375 E Riverside Dr, St. George, UT 84790
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