A printed note on the clothes I receive from my local laundry says "We Love Our Customers!" It makes me think of the general question of consumer sovereignty, and the motto of South African company Pick n' Pay, which is "treat the customer as a queen and you will become a king." How could the importance and efficacy of the attention paid to consumer sovereignty by a company be measured, and what is the best way to measure its effect on returns? Also how do our friends devolve so often from our ongoing business contacts, and how does this relate to the economic analysis of friendship as a utility maximizing activity? Are there intangible assets of consequence on a company's balance sheet, related to reputation and brand name and repeat purchase likelihood, that might help us to value value companies? One wonders how to test such things and what your thoughts on the importance of consumer sovereignty for investments and life might be?

Steve Leslie adds:

A great place to start with this thought is at your local church, synagogue or temple. In an environment where one is expected to give personal money and private time to have the religious organization thrive, it is critical that the needs of the members and guests are attended to. Plus when you look at it on a large scale, competition is fierce, as all denominations and independent groups are essentially preaching the same or similar message, and it is available 24/7 through cable and Internet, so continually seeking out new members is vital. Take a look at the most successful ones — what are their defining characteristics?

A feeling of importance, convenience, and involvement are critical components for success, in my church especially. I am a member of the largest Southern Baptist church in my city. We have a very organized Sunday School that thrives, due in a large part to a very active Minister of Studies.

Each Sunday, we hold two Sunday School sessions. Members are strongly encouraged to attend. There are a large variety of classes to choose among.

Classes are offered with respect to ethnicity, age, marital status, race, language, time and almost any other variable you might think of. For example we have a Caribbean class where discussions are held in French.

The goal is to afford every member and guest an opportunity to meet with others who have something in common. From there, bonds are created, relationships are forged and ministries are built.

We also have a nursery, day care and youth facility to meet those needs.

Our church understands that a thriving Sunday School flows into greater attendance in the Services and thus the offerings are more generous. It all begins by getting the individual involved in more than just coming to worship service for one hour and leaving.

Plus, from there other outgrowth ministries are developed. For example, We have a wonderful hurricane relief group that is mobilized on demand whenever we have a disaster.

It is a platform that works very well, and when running at peak efficiency is a wonder to behold.

Similar events can be observed in the secular world with the mega auto dealerships in vogue today that now have movies, hair emporiums, gymnasiums, food courts, and Internet access on site. This flows from the premise that once you get a customer you want to retain him and make his experience as pleasant as possible.

Ryan Carlson Offers:

A selection from Nock's Memoirs always struck me as the ideal way to run a business:

A salesman for the great house of Bagstock and Buggins, wine-merchants in the City ever since Charles I was beheaded, is a very different breed of cat from a high-pressure salesman of mass-produced gimcrackery. Bagstock and Buggins have always had about as much trade as they can carry comfortably, and their clients are their old hereditary friends, whose tastes and wishes they know as well as they know their own merchandise. So, when the salesman goes out he is aware that the House is distinctly less interested in his drumming up new clients than in his taking proper care of those he has.

Merchants of this type can be found on St. James Street in London and I have made a habit of frequenting there on every visit to London. My favorite store on St. James is James J. Fox, cigar merchants since 1787, and in the back of the store is a museum where one can light up and browse the history of the store which includes many items that Churchill ordered. Although the Davidoff store at the top of the street has a better humidor, it does not have anywhere to sit and smoke, or the ghosts of so many historic customers.

Also on St. James are wine merchants Burr Brothers and Rudd who have been on the street since 1698. My only purchase there was a moderately priced bottle of Scotch from their house label, and it felt as if they desired to make me a life-long customer, with wonderful service.

The world's oldest barbershop is now on St. James also, although it moved there in 1994. For guys, I think their shaving products are worth the premium and someday I will go for a hot lather shave.

A couple other shops of St. James are Gun & Rifle Makers William Evans and Lock's Hatters.

In regards to the market, does a company's unwillingness to split a stock and not cater to more pedestrian investors help or hurt it? Do companies which were established more than a century ago use their credibility to bring in and satisfy their new investors better than standard benchmarks?

My thought process would run a lot deeper if I were sitting in Winston Churchill's old chair at Fox's, enjoying his namesake cigar.

Gary Rogan offers:

Monopolies have similar economic characteristics to customer friendly companies. It is hard to tell one from the other from financial statements, but it is relatively easy to tell that it is either one or the other. All you need is return on invested capital. If it is (a) unusually high (b) unusually consistent over a number of years you have got a winner. If you look at real capital as financial capital plus intangible capital, then you can state that over time market forces will bring the return on real capital to the average rate of return available to investors. If the return on financial capital remains consistently high that means that there is a permanent intangible component symptomatic of either monopoly power, repeat customer loyalty, or both.


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