Investment advice we can really support

How do you choose which stocks to buy? You and your broker probably have lots of issues and numbers you check before deciding where to invest your money, like performance, company health and return. That’s fine,  of course, but we think there is one issue that you should check when deciding where to invest: how well does the company do in customer service.

We just came across a post on the financial advice website Motley Fool, The Divine Comedy of Customer Service by Rich Duprey, where the author, suggests investors consider investing in companies known for their responsive customer service.  We at ARMA think this makes good sense. After all, as we have discussed on this blog, companies who are responsive to their customers are the companies that customers want to do business with. Conversely, companies who treat thier customers badly are those from which customers run away from and that are plagued by bad word of mouth to boot. Duprey talks about companies that have been in the news recently for looking to squeeze their customers of every last penny. That may help the companies’ bottom line in the short run, but it ends up hurting their reputation in the long run.

Case in point: this viewpoint column by Nursery Management & Production editor Kelli Rodda, who writes why she chose to stop giving business to a big box store because of its poor customer service performance.

Rodda writes:

By now you’ve surmised I’m big on customer service. I’m loyal to companies that provide the best service and I penalize those who treat me poorly.

She goes on to explain how she began shopping at a store that was more expensive because it gave her better service. She tells us that she is not alone:

The Strativity Group released its 2009 Customer Experience Consumer Study. The group surveyed 1,994 consumers this spring. More than 70 percent of consumers surveyed said they are willing to spend 10 percent or more with businesses if those companies “exceed their expectations.” More than one-third of consumers surveyed said they are willing to spend 25 percent or more if their expectations are exceeded.

A handful of those surveyed said they’d continue to do business with a company despite bad customer service, but only if products or services were discounted.

If you’re still trimming costs to help turn a profit, make sure you’re not making cuts that would result in an inferior customer experience.

Clearly, customers are impacted by the quality of customer service. That impacts the present and future bottom line of the company they do business with. It is wise to consider this when investing.