No one is certain why business valuations keep climbing above assets, but there is a good hypothesis. The theory is that businesses are realizing an increasing level of value from intangibles—things that help a company create value, but that don’t show up on the balance sheet. Identifying those intangibles so they can be modeled, measured and optimized is a powerful market driver that is sending managers scrambling into every corner of business operations. – Christopher Kenton – What’s Really Behind The Drive Towards Metrics

Thanks to the Internet and social networking, customers have more input than ever before into a company’s intangible valuation.  Marketing and brand management are no longer done in a vacuum with a company broadcasting how it thinks customers should feel about its products.  Customers are talking directly to each other about companies and products.  Word of mouth marketing is trusted much more than anything a company says about itself.  Therefore, how customers feel about a company (customer satisfaction) is an important measure of a company’s intangible valuation.

Luckily, increasing customer satisfaction usually has a direct effect of increasing sales and profitability. When customers have a good experience, they will share that experience with others who trust their judgement.  They are also more likely to purchase from the company again.  And vice-versa for poor experiences.  Successful marketing strategies take into account the customer experience and satisfaction to create long-term gains for the company.

(photo by Andre Charland @ Flickr CC)

Technorati tags: customer experience, customer-centric, experience centric, business, strategy, marketing

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