The father of business consulting, Peter Drucker, is credited with debunking decades of mistaken ideas while unearthing the true purpose of business. Although that was half a century ago, many flooring retailers have yet to understand and apply it. Drucker concluded: “The purpose of business is to create and keep a customer.” To further explain this, he presents a basic economic situation: a consumer wants or needs a product or service. He has no source for it, or only a source that is too expensive in terms of labor, time, or money. When a consumer locates a business that can fill the demand at a reasonable cost,  that business has “created” a customer.  The consumer doesn’t need to be sold. He will demand the product (or service) from the business.  Bottom-line: By satisfying the consumer’s need, the business has “created a customer” even if the consumer was simply looking for an economic source.

Peter Drucker continued his argument: “Because the purpose of business is to create a customer, the business enterprise has two-and only two-basic functions: marketing and innovation. Marketing and innovation produce income; all the rest are costs.” Let me explain.

For Drucker, “marketing” is not pushing goods onto consumers, and it’s not selling by persuading or cajoling. Rather, marketing is a process that answers the question “What does the consumer want to buy?” instead of  “What do we want to sell?” Drucker’s marketing is the process of finding the products and services that consumers demand, and providing them at the right time, place, and price. As such Drucker’s marketing example is ideal: obviously, consumers do not hesitate to buy when they find what they want and don’t need to be persuaded that they want it. In our real world, however, marketing is harder because many businesses offer basically the same products/services at similar prices. How, then, do you differentiate your business?

That’s Drucker’s second function of business: innovation.  It’s a business necessity because our economy continuously evolves. If the economy were stagnant, he argues, businesses would need only to market. But in a dynamic economy, business must keep up with the evolution of consumers’ needs. Businesses innovate with new products even if the products satisfy a need the consumers had not yet identified. (Case in point: No one knew they needed a Xerox machine until it became available.) Innovation allows you to keep up with shifting demands and invent new needs. 

As Drucker put it: “Innovation endows resources with a new capacity to create wealth.” When done right, innovation is a remarkable marketing tool. It is the art of building things into your product or service worth noticing. “If your product or service isn’t remarkable, it is invisible,” says marketing guru Seth Godin, author of the Purple Cow. 

The goal of marketing is to draw consumer traffic to your business. The goal of innovation is to distinguish yourself (and your product and service) from the competition, thus drawing even more traffic. 

How does this apply to you? I recommend that you review your marketing strategy. How might you enrich it? Next, design a concise message uniquely tailored to your operation. You want to create a perception that you have what the consumer wants and that they can get it nowhere else. Notice an effective marketing message is two-fold. To carry your message to consumers, select a corresponding corporate logo and design and use them everywhere: display ads, brochures, Web sites, and sales presentations.

An informal survey of flooring storeowners reveals that few list marketing and innovation as priorities. I advise you to do both. And I also advise you to advertise. Even if your service is the “best thing since sliced bread” your service may fail without advertising. (Keep in mind that the original bread-slicing machine introduced in 1912 by Otto Fredrick Rohwedder was a flop. Not until 20 years later did Wonder Bread make the bread slicer famous.)

This has been a year of sluggish sales for many in the flooring business. When a retailer recently asked for ideas about increasing his store traffic, I asked what he had tried.  “Well, I’m doing what I’ve always done,” he said. “I open the store and wait for the customers to come in.” He added that this tried and true strategy doesn’t seem to be working these days. I suggested some innovation and advertising would help.

If you are doing better than this retailer and continue to get many referral customers, you must be doing many things right. However, I caution you not to expect word-of-mouth alone to sustain sales growth.  It’s foolish to expect your satisfied customers to do the marketing for you. They have more important things to talk about than just you. Keep broadcasting your message in the public media.

I was inspired to write about marketing and innovation after recently attending a gathering in Michigan to honor Rocky Ball, a notable industry leader. During the evening, I talked with Hans and Alicia Stark of Michigan Tile & Carpet Co., a family owned business that has served the Battle Creek area for over 30 years. They had a brilliant, innovative idea that is bringing a new set of potential customers to their store while also serving their community: They moved into a new 10,000 sq. ft. showroom.

New showrooms are a sure way to attract customers and I recommend them. The space opened by Hans and Alicia for their new Mohawk store is attractive, but it’s not what inspired me; it was the structure attached to the showroom. It differentiates their business and  communicates the message: We offer top notch products and services aimed at high-end retail customers.

Adjacent to the showroom they have built a studio and conference room.  They plan to host events that are likely to attract people looking for the kind of flooring, design, installation, and maintenance services this company so ably provides. The 1300 sq. ft. annex has two parts. In the Studio and Design Gallery, visitors can view the latest flooring materials displayed in a strikingly dramatic setting.  The studio offers designers an inspiring background for their consultations with clients. 

The conference room, with its comfortable seating, audio-visual technology, restrooms and kitchen, can host design seminars and other meetings. The Starks invite area architects, interior designers, building contractors, realtors, and other community organizations to use this space for presentations and meetings (hense the community service aspect). It can be used during regular store hours, as well as evenings and weekends. It has a separate entry and parking area.

Already, two real estate offices have booked the facility for their monthly sales meetings. A local home mortgage company asked to use it to present a new program to the local Board of Realtor members.  A Chamber of Commerce mixer is scheduled for the end of the month, and Habitat for Humanity has requested the space for monthly board meetings. Three other non-profit boards have used it for evening board meetings. Mohawk Commercial is planning to conduct accredited classes for area architects beginning next year. 

One of the Stark’s own staff designers is hosting a “Rug Night” (with wine and cheese), to showcase Mohawk, Karastan and Sphinx rugs. Hans and Alicia’s daughter is hosting a baby shower for her best friend. One of their local builders will use the room to make presentations to eight to 10 potential customers.  Hans and Alicia will use of this room for client presentations or home design layouts, and also for home maintenance displays. It will also be ideal for their Christmas party and customer appreciation get-togethers. 

Imagine how many people will visit this facility. Many would not otherwise have a reason to come to their store! You can bet more than a few will see flooring that catches their eye. Many will make it a point to return to Michigan Tile and Carpet. 

The Stark’s return-on-investment will likely be measured not by customer count at a week-end sale, but by greater public exposure to their facility and to their brand. 

That’s innovative … and that’s marketing.  Are you thinking about  both?