By John Howe
Michael Coles, founder of The Great American Cookie Company, advances this formula when he discusses what he considers critical to establishing customer loyalty.
Here’s the translation: Product plus Experience plus Service equals the Experience Factor.
The experience factor is the way a customer feels about a business, and in part determines whether the customer returns or goes elsewhere. The product offered must be good, to be sure, but the emotions generated are important too.
Coles addressed a group of M&A advisors attending the week-long Certified Merger and Acquisitions Advisor program at Kennesaw State in Georgia, which is jointly presented by The M&A Source and the Coles College of Business. I was fortunate enough to attend, and hear his presentation in mid-March.
Coles co-founded the company in 1977 and grew it into the largest franchisor of cookie stores in the United States with sales reaching over $100 million before he and his partner sold. He went on to apply his energy as CEO and President of Caribou Coffee Company. He now is working on a book which explores ways to capitalize on the “experience factor”.
Coles explained that the company he founded was successful in part by offering good cookies that people didn’t need but very much wanted. Filling mall locations with the wonderful smell of fresh cookies baking in the oven certainly contributes to the experience and attraction.
When it came to the coffee shop business, Coles said he found happy and positive staff people who were passionate about coffee and eager to please their customers helped the Caribou chain distinguish itself to compete effectively against better known rivals.
Coles is not alone in believing strongly in the “customer experience”.
Recently I listened to a podcast interview conducted by “How I Built This” host Guy Raz with Kendra Scott who started a jewelry business in a spare bedroom in her home in Texas. This followed a failed attempt at age 19 to start a store offering nothing but hats. Unlike the hat enterprise, her jewelry caught on.
Her aha moment came when she moved from selling strictly to other retailers to open her own store. Rather than displaying products in locked cases, she put them out for customers to try on. She even provided a design station where customers could pick out gems that were then placed in fittings right in front of them.
Up ‘til then, she had been catering to the tastes of buyers for other stores rather than focusing on the customer and making the experience of buying fun. That pivot changed everything.
Today, her products are featured in such retail powerhouses as Nordstrom and Bloomingdales. The business has over 50 of its own stores. Last year it attracted an investment from Berkshire Partners which values the company north of $1 Billion.
These two examples are exceptional, but there’s a takeaway here for anyone in business.
Consider the formula that has worked for them: P+E+S=EF
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Business Transition Snippets
Here are a few observations we culled from sources we regularly review that relate to business transitions.
What to expect in the LOI exclusivity period
A question that often emerges when reviewing proposals for acquisition with owners is the exclusivity period.
Growth through acquisition isn't just for the big companies
Growth through acquisition Is a valid strategy for businesses in the lower mid-market as well as the mid-market.
The exit decision- timing and issues
When should a business owner start thinking about planning their exit? Early! This is a high-stakes decision and should not be first contemplated when it is imminent.
April PEG investments
It is interesting to watch trends in private equity investments. In general, they reflect confidence in the value of making things. Transactions give insights on the broader acquisition environment, p
M&A among top priorities of CEOs
CEOs in wide range of sectors are optimistic about the current business environment and significant segment listed mergers and acquisitions among their top priorities.
Preparing next gen leadership for transition
Advance preparation can be helpful in creating a smooth transition in ownership, particularly for manufacturers owned by Boomer founders seeking retirement.
Acquisition trend continues with sale of NH company
Evidence continues to mount that companies are buying other companies to grow, and that does not necessarily solely involve mega mergers or equate into a dismantling of founder-run operations.
MarketPulse survey sheds light on buying trends
A theme emerged in the most recent MarketPulse survey of intermediaries in the lower mid-market: companies continue to expand through acquisition, to gain market share and to add qualified personnel.
Good Options for Owners: ESOP versus Third Party Sale
Taking the ESOP route is not an all or nothing approach to business ownership transition.
Precision Machining Company
Initially, liquidation was a serious consideration. It would offer a quick exit but would hurt loyal employees and disrupt the customers who had come to rely on its quality production.
Green Product Company
Our client owners could dig in for the long haul…However, this would take five years or more. Owners simply lacked the horsepower to do it.
Water Purification Company and Young Buyers
Owners decided they wanted to retire. They also wanted to be fair to the staff who had been loyal to them. Could the company be sold, the staff retained and the facility remain in use?
Magnetics Company with High Profile Customers
(T)he manufacturer would need to focus on growing EBITDA to capture interest from major strategic buyers and achieve a higher multiple of earnings.