If you have a Liberal Arts background, you might recall Maslow’s Hierarchy of Needs. Abraham Maslow proposed it in his 1943 paper, “A Theory of Human Motivation.” In a nutshell, it describes a set hierarchy of human needs and contends that our basic needs must be met before we can seek to satisfy successively higher needs. One typical depiction of Maslow’s theory is a five-level pyramid—-the lowest level is biological needs, such as food and shelter; the second level is safety; the third level is love/community/sense of belonging; the fourth level is status/esteem; and, the top-most level is self-actualization. The idea that one must have the first four levels of physiological need satisfied before one can address the psychological level rings true on an intuitive basis…which would a homeless person who hasn’t eaten in a couple of days think is more important, shoplifting a can of tuna or participating in a panel discussion on the finer points of situational ethics?
So, what has all this to do with marketing? Why, it’s fundamental to marketing! Are you attempting to engage your targets—-prospective or current-—at the wrong level of their hierarchy of needs? Are you trying to sell a car to someone without a driver’s license; a Cadillac to someone with a used-Volkswagen budget? More essentially, do you provide services to clients, but your business model is suited to meeting the needs of customers (or vice versa)?
Knowing whether or not you are targeting customers or clients (or both) is critical to developing effective engagement, service, and retention strategies. Think Wal-Mart for customers and Nordstrom for clients. Sure, they both sell clothing, but Wal-Mart caters to customers and Nordstrom caters to clients. What’s the difference? Wal-Mart shoppers pretty much know what they want and are fine with helping themselves, as long as they get the best price. So, Wal-Mart has designed everything around the self-serve, low-cost model. Nordstrom shoppers, on the other hand, demand knowledgeable and personal service, and are more than happy to pay for it. So, Nordstrom has designed everything around the full-solution, quality-at-any-cost model. Wal-Mart would eat into its tight margins if it hired consultative sales professionals to engage shoppers one-on-one; Nordstrom would go out of business if it left its shoppers to fend for themselves (without access to tailors for custom-fitting). Neither model is better nor worse on its own; each is just designed to meet a different set of expectations.
The Wal-Mart and Nordstrom examples are fairly obvious and straight-forward. The model that is right for you might not be so obvious. In fact, it might not make sense for you to use a single model all the time for all your customers/clients or products/services. However, you can easily determine the appropriate set of expectations by building your own Customer/Client Hierarchy of Needs. Then, you can easily design an effective model to meet that set of expectations by building your own Product/Service Hierarchy of Needs.
First, “map” your customers/clients and products/services on the two hierarchies—-at what level on the Customer/Client Hierarchy of Needs is each of your customers/clients and at what level on the corresponding Product/Service Hierarchy of Needs are they doing business with you? Then, analyze your customers/clients and products/services according to their relative positions on the hierarchies, noting where they line-up/match/connect or don’t. You want to consider three things in particular:
1) Do you have any customers/clients buying at one level of products/services, but being supported and/or marketed at a different level? As a general rule, costs and revenues rise with each level on the hierarchies. So, funding support or marketing tactics appropriate to a customer/client at the highest level on the Customer/Client Hierarchy of Needs, when they are actually buying at the lowest level on the Product/Services Hierarchy of Needs, is a waste of resources. Worse, you probably have a customer/client buying at the highest level on the Product/Services Hierarchy of Needs or a marketing campaign that could generate sales at the highest level on the Product/Services Hierarchy of Needs, that is getting short-shrift as a result or your misallocation of resources.
2) Which customers/clients have potential for buying products/services at higher levels? What would it take to get (and maintain) customers/clients higher on the Customer/Client Hierarchy of Needs, so you can sell them correspondingly higher on the Products/Services Hierarchy of Needs?
3) Are there levels of customers/clients and products/services that are partially populated or entirely empty? In other words, do you have gaps in your customer/client base (market sectors you have not tapped) or in your products/services offering (lines of business you have not developed)? Both gaps represent potential revenue/growth.
Thereafter, the sky’s the limit! You can extend market and account penetration by evolving customers into clients. Or, you can maximize margins by driving client relationships down to customer relationships (reserving consultant-level resources for clients). Or, you can survive industry shifts by changing your operational mentality from product-based to solutions-based. Or, you can reevaluate and hone your lines of business and, in the process, identify customers/clients/offerings that should be divested. Whatever the engagement, service, or retention strategies you end up developing, you will be most effective if you first use the underlying principles of Maslow’s Hierarchy to identify your targets’ needs/expectations.
This first appeared August 3, 2006 on Kup & Sourcer’s Percolating blog.