And so there is just (IMHO) 3 things to think about and concentrate on from a marketing POV (rather than a protracted analysis of actuarial Goodwill valuations):

1. Make sure you sell excellent products
2. Make sure you look after your customers
3. Make sure your advertising demonstrates how you are different from and better than the competition

…and if you do these things really well your goodwill on the balance sheet magically goes up. I mention this as I have evaluated sufficient evidence to suggest that advertising can add substantial value to a business (Stella being the most obvious one) and it would be good to add that to your excellent piece.

Cheers

M

Could be we’ve allowed the bean counters too much freedom in devaluing the word “value”. In a business context, it usually does, as our good friend Milton suggests, mean lining the pockets of the shareholders. And increasingly that means short-term.

But companies have more stakeholders than just their shareholders: employees, customers, partners, neighbours, etc. All of them need to feel they’re getting some sort of “value” from their interaction with the company. And this is about more than just money. An employee’s sense of empowerment and worth can be much more motivating than a token raise. Strong customer loyalty increases a company’s “forgiveness factor” (the number of mistakes they’re willing to overlook).

I *think* goodwill will become increasingly important in the not-to-distant future. Maybe even a hygiene factor. And developing a more sophisticated understanding of “value”.

Before long, it might not be enough just to not be evil.

Cheers
Darryl

I agree with pretty much everything you said: Goodwill is very difficult to define and the basic components of a valuable business are certainly not new or redefined by Gen Y, it’s just we have some new tools to use and things are happening quicker.

I do think the Goodwill eventually realized by a company is linked to their customer service though: Lord Eldon defined goodwill as “nothing more than the probability, that the old customers will resort to the old place.” Surely good customer service is one of the things that will most cause that “resorting”?

There are other things of course (price, product quality, ease of availability etc), so you are right to say it is not that simple.

And as you say: treating customers great has always been a good strategy. Now that these customers can tell more people about their experience more quickly, it is more important than ever – not just to solve problems, but to make people genuinely enthusiastic too.

Anyway, cheers!

Dan