Apple retail stores celebrated their 10th anniversary last week. The stores have defied all analyst expectations and have become the highest grossing retailers in the world. The company’s market cap exceeds all of the other players in tech. Its $5,000 in sales per square foot leave Best Buy ($1,000) and Tiffany’s ($2,700)  in the dust. Even in the midst of the worst recession in my lifetime, stores are packed and sales are through the roof.

Why did Apple succeed when most others have failed at retail? Apple understands the importance of the end-to-end customer experience. Marketing, product, retail, packaging and services all work together to form a cohesive customer experience.

When you walk into an Apple store, you can actually use its products. Want to make a call with a phone? Go ahead. Want to surf the Internet? There’s free WiFi. Want to talk to someone about product problems? Sign up. Want to learn about a product? There’s a class for that.

As a result, not only does Apple sell more of its products, it also gets to keep the retail margin.

In contrast, when I went to a Best Buy to look at a Google TV, there was a sign next to it apologizing for the store’s poor broadband network and promising that the product wasn’t really that slow.

Apple’s television advertising is elegant, emotional, evocative and educational. Take a look at this ad:

Not only does it tell a compelling story for people thinking about buying an iPad, it also works for people who already have one. I get a glimpse of apps I might not know about. But the experience doesn’t end there. In the App Store, there’s a section devoted to apps from the TV ads. If something catches my eye on TV, I can quickly find it.

Unfortunately, too many companies are bound by organizational boundaries and don’t think holistically about the customer experience.

I was interviewing for a product marketing leadership role. The interviewer asked me how I would market their finance product. My response: I would create a widget that would automatically scan a blog post for mentions of public companies and then present live quotes and charts in a module on the page. I would then work with financial bloggers to incorporate that on their sites. It provides value to the blogger (live market data), value to the reader (instant, relevant information) and value to the company (an introduction to potential customers in a meaningful way).

The response: “That’s a product idea. Give me a marketing idea.”

No, it’s both. Yes, I could run banner ads or do search advertising. With a large enough budget, I could advertise on CNBC or Bloomberg TV. Those are traditional marketing ideas. But I can guarantee you that they will be less cost effective than this “product idea.”

Some of the best product ideas are also the best marketing ideas. My favorite example of this is the people tagging feature on Facebook. Before more than 600 million people were on Facebook, it encouraged people to sign up. Consider the many functions that people tagging supported:

• Acquisition. Because you could tag people with an email address if they weren’t already on Facebook, it served as a user acquisition tool. And instead of a generic “Hey, you should sign up for Facebook!” message, it was directly relevant to you. People’s vanity undoubtedly increased open rates.
• Retention. Keep in mind that photo tagging came out before people lived on Facebook all day. The notification you received prompted you to go to the site and check out the photo. Once you were there, you could leave a comment. … Which would trigger a notification to the person who posted the photo. And the cycle repeats.
• Education. The messages served to educate users about the photo tagging feature. If you got an email, you became aware that it was possible to tag people. This encouraged more people to tag people. And the cycle repeats.

With Internet marketing, we have a huge advantage in that we can use data to create custom messages that introduce new products, ensure satisfaction with existing products and measure how we’re doing.

For example, Square is introducing a new product called Card Case that gives customers a digital wallet, complete with loyalty programs. Square has already been sending email receipts when people use a credit card. Instead of sending a generic message that says, “Hey, sign up for Square’s Card Case and loyalty offers,” the message could be “Thanks for eating at Chili Inside. You’re only 5 more purchases away from a free hot dog… Click to download Card Case and keep track.” (I haven’t seen Card Case in action yet, but this is what I’d like to see.)

Even shipping data can be used to create a better end-to-experience. APIs from the post office, UPS and FedEx will let you know that a package has been delivered. How about reaching out a few days later thanking the customer again for the purchase and offering product setup information and help links? Not only will this create a good impression, it can cut down on customer support costs. If a product requires online activation and you haven’t seen the customer activate it, it would also be a good time to reach out and figure out why. (This could also reduce return costs.)

Consumers don’t make a distinction between the marketing that gets them to a page, the sign up flow, the product features and the support that a company provides. Part of this is the result of a blurring of the lines in experiences. You could buy shrinkwrapped Microsoft software from Staples. If the store was loud and dirty and had a 25 minute wait to check out, you didn’t blame Microsoft. If the software was difficult to install or crashed a lot, you didn’t blame Staples. Online — as far as the customer is concerned — these are done by the same entity. Of course there are different groups of people behind the scenes. But customers shouldn’t see that.

In the early days of the Internet, I could easily tell which sites were likely to fail. If I could faithfully reproduce your org chart simply by looking at your home page, you were doomed. It’s rare to see cases that egregious these days. But it’s also rare to see user acquisition, marketing, product and customer care working seamlessly.

See also:

• Can Google cross the retail chasm with Google TV?
• The power of the social graph
• What Square’s new Register and Card Case means for small businesses