(and a real life example with one of our clients @ Welch)Many of you are likely familiar with the concept of Net Promoter Score (NPS) – it’s recognized by many experts as the very best way to measure the loyalty of a firm’s customers and further as an indicator of the likelihood of your firm to grow your share of the market you serve. Customers are asked on a scale of 1 – 10 how likely they are to refer a business/product/service to others. Customers who answer with a 9 or a 10 are promoters of your business.
So not only is it a great gauge of loyalty of your customers, but more importantly it has been shown by many studies that a firm’s NPS score is correlated with revenue growth*. In some industries like professional services where word of mouth and reputation are very important, this high NPS leads to growth as customers are more loyal (so not as much churn) and word of mouth spreads which leads to new customers. The higher the NPS, the faster this happens. It’s such an important indicator that two thirds of Fortune 1000 companies use this metric (Source below)
This isn’t so much about delivering good service, or meeting expectations. It’s about providing such a great client experience that your customers can’t wait to help you out and will scream about you from their rooftops (figuratively of course)!
So here is an example of NPS in action at Welch, and why doing great work for your clients can lead to lots of new business opportunities:
One of our firm’s clients is www.snowlinecapital.ca. Snowline runs a Fund that helps family offices and institutional investors with $20-500M of investable assets acquire private equity investment exposure. Welch is the auditor of the Management Company and of the Fund itself.
We had hired a woman in Toronto, Amanda Favot, to lead our M&A and Advisory practice’s growth in the Toronto market. I was planning a trip to Toronto to meet a number of private equity firms, and to introduce Amanda to these firms as we can assist them with services directly (Quality of Earnings reports, valuations, virtual CFO etc) and also they each are buyers of large private businesses – so they are great prospects to sell businesses to.
Anyway, before the trip I was speaking to Warren Plunkett who runs Snowline. Warren has great relationships with PE firms in Toronto, not only from his time running Snowline, but also from his previous role at EDC where he helped source, execute and manage private equity fund investments globally for a multi-billion-dollar portfolio. Warren offered to make some introductions, he loves working with us and was happy to help out. So we discussed which PE firms would be most suitable to meet given the kind of work our firm is looking for and businesses we are looking to sell. We came up with a list of 10 firms, firms with great reputations for acquiring and working with businesses very successfully.
Warren drafted an email to introduce us (I’ve bolded the key part):
Welch is the auditor of both my fund and management company. They are a 100 year old firm headquartered in Ottawa. To be honest, they “own” the Ottawa market and have been more recently expanding their presence in Toronto. Specifically, they have been aggressively expanding their M&A practice. For reference, one of their deals last summer was selling GAL Power to Trivest out of Miami.
I’d encourage you or one of your colleagues to meet with them when Bruce is in Toronto either April 25-26 or May 9-10. If they come to understand what you are looking for, they’d be your eyes and ears on the entire Ottawa market. Besides auditing and M&A work, they also do a lot around quality of earnings and virtual CFO services.
I’ll let you connect directly with Amanda or Bruce to explore.
So the result?
Out of the 10 introductions Warren made, to some of the very best, most storied Canadian PE firms, 8 of them we ended up meeting on my two day trip to Toronto last week. One other firm we are meeting on next trip, and the 10th firm we are going to do a conference call with as one of the key partners is in the US for an extended period of time.
As amazing as that result is (essentially meeting every single introduction), that’s just part of the story. In almost every single case we met with founding partner and/or most senior partner, who also had included other people in the meeting. We could tell from the attention and time they gave us that they really trust and appreciate Warren Plunkett, took his warm introduction very seriously, and automatically have a high level of respect and trust for Welch and WelchGroup. I can now say we have pretty warm relationships with these very significant players, in a matter of weeks we have relationships at levels that might have taken months or a year to cultivate.
This is a great example of how clients who love what you are doing for them will help you win business, and in the end help you grow your business faster than you ever could by delivering mediocre service or just “meeting expectations”. Establishing an authentic relationship with your clients, knowing what they want and how they like to be served, and going above and beyond for them is key. This will improve your NPS, the share your firm has of the market, and give your company brand even more weight and credibility.