The Firm is a Marketing Entity

In a marketing class many years ago the professor said we must consider the firm as a marketing entity. Not just the marketing department, but the entire firm. His message was that everything the firm does touches its customers in some way or another. He said it over and over, stamping it into our minds.

Now, some 40 years later that imprinted message is loud and clear. We talk more and more about the value of customer retention and strategies for enhancing customer retention. Financial studies have been made to attach equity value to retained customers. Other studies clearly show the cost of total cost incurred in selling to repeat customers is far lower than the total cost of acquiring new customers. Customer retention is becoming a greater part of long term strategies, receiving ever greater attention from corporate chiefs.

Why is it then than most firms spend vast sums on marketing and sales to attract new customers but spend very little to retain them for many repeat sales? If they adopt the concept “the firm is an marketing entity;” consider the customer impact of every facet of operations; and revise those that don’t meet internal or external expectations to better satisfy customers, they will be most of the way to increasing retention.

For example, I know of an auto repair chain that spends huge amounts on print and television advertising to attract new customers to their low price stores, but spends only the minimum on mechanic wages, careful diagnostic services, quality replacement parts and serious quality control. Doing those things would make the entire firm a marketing entity, allow them to charge higher prices, and no doubt spend far less attracting new customers while spending only a fraction of the advertising budget on improved internal operations. Based on what I see of large high-quality shops, more profit is made that way than through huge advertising budgets.

There are many, many more examples of firms that are marketing entities – and have high rates of customer retention. Your comments about them are invited.

Charles R. Schaul, Partner of SixPillars Research Group, focuses on increasing business profits by resolving the problem of customer attrition. Aligning companies with their customers; generating and implementing strategic initiatives; and promoting employees’ customer focus through commitment, responsibility and accountability combine to achieve the result.

Copyright 2008 by Charles R. Schaul, Boulder, Colorado. All rights reserved.