Sales in marketing. The most appropriate customer retention strategy that Omnico Inc should adopt.

Sales in marketing. The most appropriate customer retention strategy that Omnico Inc should adopt.





Sales in marketing. The most appropriate customer retention strategy that Omnico Inc should adopt.


In contemporary times, marketing is among the foundational disciplines of effectual management. Marketing is vital in all facets of a company, and customers form the rationale as to why the companies exist. Indeed, marketing efforts, including innovative services such as promotion as well as distribution usually account for approximately 50% of the product’s price. Based on the eminence of marketing, it entails deliberate exchange relationship whereby both sides ought to be willing parties. These parties should be able to communicate effectively with each other through diverse mechanisms (Brodie 381).

Therefore, in the contemporary highly competitive business environment, companies require to precisely understand their clientele. This would be particularly in regard to which customers are the most beneficial, and the most appropriate way to retain them. Studies reveal that it costs a company ten times more in generating new customers than it would cost in maintain the existing one. In the event that a company has a small customer base, losing a small number of customers would cripple the company. Alternatively, if the company has a broad customer base, a diminutive increase in the customer retention rate ought to dramatically increase the company’s profits. This paper posits to investigate the most appropriate customer retention strategy that Omnico Inc should adopt.


In regard to Omnico Inc, the company is depicted as one that has enjoyed substantial success in the industry to an extent that it has lost track of its customer retention ratings. It is evident from the case study that the company requires to improve on customer retention. This is seen from the different opinions expressed by Buddy and Laura in regard to the strategy that Omnico should implement.

Summary of the Facts. In regard to the market research report, Omnico Inc had neglected its relationship with its customers. This is evident in that, the market report depicted Omnico’s customer retention ratings as below the industry’s average. This type of a scenario materializes if, the customers do not usually have alternative suppliers, or in the event that the rival supplies were equally poor in services and quality. It may also be caused by rapid market growth to the extent that the company takes customer satisfaction for granted. A company may loose a hundred customers per week, but acquire another one thousand customers in the same duration, and thus evaluate its sales as acceptable. This kind of a company operates on a leaky bucket theory of business (Brodie 389).

Q. 2 A company such as Omnico may believe that an adequate number of customers will always be available to replace those who leave. Omnico requires understanding that customer retention is essential to all companies since the cost of gaining a new customer surpasses the cost of preserving a relationship with an existing customer. For many companies, customer profitability may be skewed in such a manner that dropping the major profitable customers causes serious effects. For instance, in the banking industry, a bank’s the top 30% percent of customers, when rated by profitability, may constitute 100% to 150% of the entire customer profitability. This would mean that, the bottom 70% of customers may offer no profitability or, even destroy 50% of the bank’s profitability (Meindl 105).

Over and above saving the profitable customers, retention programs facilitate companies in collecting pertinent data concerning their customers. This data may be utilized to understand the target market as well as in communicating with customers. The data may also be utilized in customizing future interactions with customers. Retention programs may be a comparatively inexpensive approach of making the company’s clientele feel special, boost their purchases as well as recommend prospects (Brodie 389).

Analysis. The perspective illustrated above meets through diverse channels such as customer relationship management (CRM). This kind of information presents the company with critical competitive differentiation in order to gain market share and minimize operational costs as the company retains its customers. On the other hand, the universally accepted rationale of CRM is to facilitate a business to serve its clientele in a better way. This is through the introduction of dependable processes and interaction with customers. It is a methodology employed to learn more concerning customers’ requirements and behavior in order to develop concrete relationships with them (Meindl 162).

In the perspective of Mr. Buddy, Omnico requires to appreciate the significance of relationship selling. This perspective is informed by his follow-up strategy whereby he maintains personal relationships with his customers by playing golf with them. However, according to Laura, Omnico requires more that just the buddy-buddy relationship strategy of Mr. Buddy. With this in mind, it is important to bring the two divergent opinions into the perspective of contemporary marketing strategies. This is because both parties have similar underlying intentions, which are to improve the company’s customer base and hence increase the profitability of Omnico. In the opinion of this paper, the company requires to strike a balance between the follow-up, buddy-buddy strategy, employed by Mr. Buddy and the strategies suggested by Laura.

Although marketing is based on relationships, Relationship Marketing (RM) is considered as a new phenomenon in the marketing arena. The dawn of mass marketing as well as mass production obscured the concept of RM for a long time. Vicious competition, erosion of brand loyalty, dirty price war amongst competitors and heightened customers’ expectations have been helpful for the recent prominence of RM. conversely, RM as a marketing technique that still unclear to numerous practitioners. Accordingly the general rationale of relationship marketing is to facilitate as well as maintain durable customer relationships. This leads to modification of focal points as well as adjustments in regard to the marketing management process. The common objectives of all customer retention strategies are enduring distinctive relationships with customers, which would be replicated by competitors and hence present sustainable competitive advantages. One particular notion regarding relationship marketing is that, it is the expansion of basic transaction marketing or simple seller-buyer-relationship. However, relationship marketing supersedes the transaction marketing theory, although several scholars consider relationship marketing as the reverse of transaction marketing (Brodie 390).

Transactional marketing emphasizes on focuses on distinct, point of sale transactions. The focus in this strategy is on capitalizing on the volume and efficiency of individual sales instead of developing relationships with the client. This is the perspective of Laura in the case study. The transactional marketing methodology is based on the four conventional elements in marketing, usually known as the four P’s. The four P’s are product, pricing, promotion and placement. Product in this case represents generating a commodity that meets the needs of the customer. Pricing refers to the establishment of a commodity price that would be profitable even as it attracts customers. Placement refers to the establishment of an effective distribution chain for the commodity. Promotion refers to the creation of a visible product profile that makes it attractive to customers (Taylor 62).

It is appropriate to draw a comparison between some available customer retention strategies in order to draw an appropriate balance between Mr. Buddy and Laura’s perceptions. This is in regard to the most suitable customer retention strategy that Omnico should employ. ,

A comparison between the two concepts is presented in the table below:

Comparison between relationship marketing and transaction marketing and some implications

The strategy continuum

Relationship marketing

Transaction marketing

Time perspective.

Focuses on the long-term. Focuses on the short-term.

Dominating marketing function. Interactive marketing that is supported by activities of the marketing mix. Marketing mix.

Price elasticity.

Customers are usually less price sensitive. Customers are usually more price sensitive.

Dominating quality dimension.

Quality of interactions. The functional quality dimensions develop in significance and may become dominating. Quality of output. The technical quality dimension is usually dominating.

Measurement of customer Satisfaction. Managing the clientele base. Utilizes a direct approach. Monitoring the market share. Utilizes an indirect approach.

Customer information


Customer feedback systems are real-time. Utilizes ad hoc customer satisfaction surveys.

Interdependency amongst

operations, personnel and

Marketing. Interface of considerable strategic importance.

Interface of no or limited strategic significance.

Role of internal marketing. Internal marketing of considerable strategic significance to success. Internal marketing of no or limited significance to success.

(Meindl 201).


Building on these postulations, Omnico must emphasize increasingly on retaining the existing clientele than attracting new ones. With time Omnico will realize that relationship marketing is the appropriate approach for the 21st century. However every business has its distinct characteristics. Therefore, drawing on the comparison between relationship marketing and transaction marketing, Omnico requires to exploit the strong points in each methodology as befits its characteristics. This approach would provide the key in establishing the success of enterprises in the contemporary highly competitive business environment.

Works Cited

Coviello, Brodie. “Contemporary marketing: Developing a Classification Scheme”, Marketing Management, 9. 4 (2009). 381-93. Print.

Meindl, M. Supply Chain Management, Upper Saddle River, NJ: Pearson Education, 2007. Print.

Taylor, R. Operations Management: Quality & Competitiveness in an International Environment, New Jersey: John Wiley & Sons, 2009. Print.