An Explanation of Goodwill – Part I – Generating Goodwill
Goodwill is essentially customer retention. It’s the ability of a small business to retain and keep customers coming back. I remember from my boyhood a hardware store my mother would go to and get parts for the house. The owner was well into his 70’s and I was a boy of 7. This was the mid 60’s and he would come up to children and extend his hand. I would shake and when this moment was over, I had in my hand a piece of Bazooka gum. In those days, candy, no less gum, was expensive. For a boy of 7 to have a piece of gum in his hand after a handshake was a gift. The owner of the store achieved two goals in that gesture. First, he taught a boy not to be afraid of an adult and secondly, his act of kindness reaffirmed to the customer the value his hardware store brought to the community. My mother loved going there because she could talk to the owner about her needs and sure enough he provided a solution. She was devoted to that hardware store.
The closest definition of Goodwill is devotion. Customers become devoted due to the way the small business treated them. It was worth paying a little more or going out of your way to go to the business that treated you well. How does a business generate goodwill? What is it worth? How does a buyer of a business monetize goodwill? Finally, how is goodwill treated for business purposes? This is a first in a series about goodwill and covers how goodwill is generated.
How to Generate Goodwill
There is no secret here. Goodwill is generated over time. The customer feels