Growth, Bankruptcy, and Customer Satisfaction
Unfortunately, even some of the building and real estate companies that rely on GuildQuality have not been able to carry forward in this challenging market. We know of 12 members that have filed for bankruptcy in 2008.
Of course, when I hear that kind of sad news from one of our members, the first thing I do is check out their account. I noticed enough unhappiness among customers of businesses that are shutting their doors, that I did a little number crunching. I quickly learned that, as a group, they earned the recommendation of their customers 83.3% of the time.
83% is considerably below average for our Guildmembers, so it got me thinking a good bit more. I asked David on our engineering team to pull me all data for all of our members who 1) have been with us for at least two years, and 2) have surveyed at least 15 customers in each of those two years (to get some meaningful data). Here’s what I found:
If you had more customers in the most recent 12 months than you did in the prior 12 months (I called that “Positive Growth” in the chart above), you were among our top performers with a 94% recommendation rate. If you had fewer customers in the most recent 12 months relative to the prior 12 months (”Negative Growth”), your recommendation rate was 4 points lower.
Some other observations:
90% of “positive growth” members have a recommendation rate above 85%
82% of “negative growth” members have a recommendation rate above 85%
42% of members that filed for bankruptcy had a recommendation rate above 85%
If you have a recommendation rate below 85%, you are 6.2x more likely to close your doors than if your recommendation rate is above 85%.
One of the points I try to reiterate in my presentations is that your reputation is your greatest asset. It earns you premium pricing when the market is strong, and it’s your warm blanket when times are tough. Our data clearly supports that assertion.