Conducting due diligence on an enterprise software company is a crucial process for investors and stakeholders to assess the company’s potential and risks. One of the most effective ways to gather objective and comprehensive information during this process is through surveys. This article outlines the key reasons why surveys are indispensable in the due diligence process for enterprise software companies.
Customer Satisfaction as a Predictor of Success: Customer satisfaction is a pivotal predictor of a company’s success. It reflects the company’s ability to meet or exceed customer expectations, which in turn influences customer retention, loyalty, and advocacy. Surveys can be designed to gauge customer satisfaction by asking customers about their experiences, challenges, and preferences while using the software. Analyzing the survey responses helps in assessing the company’s current performance and its potential for future success.
Building a Market Model: Building a market model involves assessing the market size, competition, customer needs, and opportunities. Surveys can provide key inputs for this exercise by collecting data on the market landscape, customer preferences, and competitor strengths and weaknesses. This information is essential to assess whitespace opportunities, replacement opportunities with legacy vendors, and the potential growth and profitability of the company.
Insights into Buying Behavior: Understanding the buying behavior of customers is crucial for assessing the company’s sales strategy and its alignment with customer needs. Surveys can provide insights into the decision-making process of customers, including the key decision-makers, their purchasing criteria, and the factors influencing their decisions. This information helps in evaluating the company’s sales and marketing strategies and their effectiveness.
Objective Comparison of Companies: Surveys can provide an objective comparison of companies based on various metrics such as Net Promoter Score (NPS), Key Performance Criteria (KPCs), and others. This helps in evaluating the company’s performance against competitors and industry benchmarks. It also provides insights into the company’s strengths and areas for improvement.
Addressing the Gap Left by Analysts: Niche software often falls under the radar of mainstream analysts such as Gartner or G2. Surveys can fill this gap by providing valuable insights into niche markets, customer needs, and competitive landscape. This information is crucial for assessing the company’s potential in niche markets.
Overcoming Skewed Results: Results from platforms like Gartner Peer Insights and G2 are often skewed as company owners incentivize customers to rate them well. Conducting independent surveys provides more objective and unbiased insights. This is crucial for making informed investment decisions.
Speed and Quantitative Data: Surveys are much faster than expert interviews over the phone and allow for the capture of quantitative data. This enables a more structured analysis and faster decision-making. It also allows for a larger sample size, increasing the reliability of the results.
Surveys are a crucial and effective tool in the due diligence process for enterprise software companies. They provide valuable insights into customer satisfaction, market opportunities, buying behavior, and objective company comparisons. Additionally, surveys address the gap left by mainstream analysts, provide unbiased insights, and are a cost-effective and efficient way to gather large amounts of data. Therefore, incorporating surveys into the due diligence process is highly recommended for making informed investment decisions.
