Marketing and the Future of Capitalism

Why are you in business?  If your initial response is something like “to make a profit and become wealthy” then you have probably been influenced by the theory of the firm introduced by Jensen and Meckling back in 1976. For almost 40 years, business owners, executives, managers, and bright-eyed business students have been taught repeatedly that the purpose of a business enterprise is to maximize shareholder wealth. Unfortunately, this theory has had disastrous consequences that threaten the very survival of American capitalism. Even Jack Welch, the former CEO of GE has called it the “dumbest idea in the world”.

So, what is a better purpose for your business? Marketing can help you find the answer. Profits-Ahead-1

 

The purpose of a business enterprise is to get and keep customers. If you don’t have enough customers, you will soon find yourself without a business. The father of modern management puts it this way,

Because its purpose is to create a customer, the business enterprise has two—and only these two—basic functions: marketing and innovation. Marketing and innovation produce results all the rest are “costs.”

         – Peter F. Drucker

Marketing answers a fundamental question for your business: How do you get and keep more customers? Your answers to this question will determine your future success. As a result, marketing should not be viewed as just another functional role or department within your organizational hierarchy. Instead, marketing is best understood as the central responsibility of every person in your business. Viewed in this way, your staff will constantly direct their efforts towards meeting the needs and wants of your customers better than your competition. This will result in getting and keeping more customers.

 

Getting Customers Is Hard Work!

Technology has dramatically increased access to information and this has shifted the power and control of the sales process from the seller (business) to the buyer (customer). Buyers today have nearly unlimited and instant access to reliable information through the internet on multiple devices including their smart phones, tablets, and laptop computers. As a result, buyers don’t rely on sales people like they used to. Recent research reveals buyers complete 57% of their purchase process before engaging with a sales person. That means most of a traditional sales process has been eliminated and deemed unnecessary by customers. How are you responding to this?

Since your customers have changed how they buy, where they buy, what they buy and how often they buy it, the way you facilitate the exchange of your products and services for your customer’s money needs to change too. You can’t continue with the selling processes, methods and tactics you enjoyed in the past when they are at odds with your ideal customer’s preferred buying patterns today.

 

Aligning Sales and Marketing is the Holy Grail of Revenue Growth.

Selling has traditionally focused on meeting the internal need of an organization to generate revenues. To do this, selling directs its efforts at exchanging the products and services the business provides, for the money that buyers have. In contrast, marketing is focused on meeting the external needs of customers to generate revenues. Marketing directs the efforts of the business to offer products and services that buyers are eager to exchange their money for. When this happens, buyers aren’t sold anything; instead they happily make a purchase that provides them with more value.

Marketing keeps you focused outward on the needs, wants, preferences, and desires of your customers, rather than focused inward on selling your products, improving your profits, and accumulating wealth. Improving your marketing and becoming a customer focused enterprise ought to be a top priority for your business because it focuses on getting and keeping more customers. Having more customers buying your products is what drives improvements to the first line of your operating statement: Revenue. Profit finally appears on the last line of your operating statement. Profit is the result of effectively and efficiently managing a business. Profit and the maximization of wealth are not the primary purpose of a business within society then, but the results of running a business well.

Has your company made the shift from maximizing shareholder wealth to focusing on how to get and keep more customers? Have you transitioned from focusing on sales and the sales process to aligning sales and marketing to better meet the needs of your customers? In today’s dynamic marketplace, where the buyer has control, the sooner you make these changes the better off your top line and bottom line will be.

 

Category: Revenue Growth Blog

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