Vacuum Cleaners vs. Tax Returns
by James Nakashima, CPA, CA, CBV
Our built-in vacuum broke the other day. The extending tube that connects the hose to the various attachments was stuck on the longest setting. I went to a local vacuum store to buy a new one, and since I neglected to bring the broken part with me, the man at the store guessed at which one I would need. It wasn’t the right one, so I brought it back to exchange it. The correct one was nearly twice the cost of the first one he gave me.
“Wow,” I said, “that’s expensive! I’ll have to tell my wife to stop hitting me with it.”
I was joking, of course. (I’ve been married long enough that I wouldn’t dare tell my wife what she can and can’t do.) But the salesman didn’t play along at all. Now, this isn’t a knock against the store or its employee. I was perfectly satisfied with the service I received. But it wasn’t a particularly noteworthy experience either. There was no effort made to establish a connection beyond a vacuum cleaner part.
Right now, during our tax season, we have a popcorn machine set up in the lobby. The smell of fresh popcorn greets our clients as they come in to discuss everyone’s favourite topics: accounting and taxes. Many clients comment on the machine, even in the rest of the year when we don’t have it set up. Clearly, this small gesture has helped make the Avail experience a bit more memorable.
These two examples highlight something key in making your business more valuable. In a business, the only asset you can really control the value of is your goodwill. You can’t do a whole lot to increase the value of your cash, inventory, equipment, or buildings, at least, not without spending money. However, you can take steps to increase the value of your goodwill, often without spending a dime.
Goodwill is the ability of a business to generate a rate of return in excess of what a reasonable investor would expect. In other words, how do you get your business to generate profits over and above what your competitors do? How do you grow your business?
Our Business Consulting group uses a fantastic tool called “Four ways to grow your business”, which states that the only ways to grow your business are:
- Increase the number of customers of the type you want
- Increase the number of transactions per customer
- Increase the value of each transaction from each customer
- Improve your systems and processes
Three out of the four of the above are all directly driven by customer experience. Why would customers choose you, buy more from you, or pay more for what you do? Companies that have strong goodwill have something – a product, a service, or an experience – that customers can’t get anywhere else. What are your customers getting from you that they can’t get somewhere else?
Ultimately, simply meeting customer needs is no longer enough. That’s just the bare minimum. If your customer leaves your place of business with their problem solved, and nothing more, they “might” come back, and they “might” tell their friends and colleagues. How do you design your customer experience so that they will come back? Can you connect with your customers so they remember you, and better yet, tell their friends?
The reality is, neither vacuums nor taxes are all that exciting. But we still have to make our business memorable. Nobody picks an accounting firm because of a popcorn machine, but people remember the accounting firm with the popcorn machine.