Value Creation and Keeping Customers

Getting and keeping customers is an expensive endeavor and keeping the doors open in a time of local crisis makes it even tougher. The average U. S. business loses half its customers in five years. Generating a new customer costs five times as much as keeping a current one and firms pay a steep price when customers stray to other brands, or stray to other communities to make their purchase. In a slow economy, creating unsurpassed value for a customer so that they stay with you is even more important. So how do we create value?




Value creation in a firm takes a minute to think about. Ask yourself this question: Why does an individual make a purchase? The short answer is to fill a need. But the real answer is found in what motivates a person to do something to fulfill that need.



Psychologist A. H. Maslow developed a theory that characterized needs and arranged them in a hierarchy to reflect their importance called Maslow’s Hierarchy of Needs. Maslow identified five levels of needs, beginning with physiological needs and progressing to the need for self-actualization.



Physiological needs are the most basic. They fulfill the needs for survival like food, water, shelter and clothing. Pepperidge Farm French Toast Swirl Bread appeals to this need by stating “It doesn’t go with breakfast. It is breakfast.” Campbell’s Soup hits the mark with “Mm, Mm, good!” as does, “Got Milk?” Food is the most basic of need and as we like to say here, “Full Stomach, Open Mind.”



Next up the ladder you find safety needs which include security, protection, and avoidance of the unexpected. State Farm Insurance appeals to this need by saying, “Like a good neighbor State Farm is there.” In the wake of our damage recovery, maintaining a sense of security in our communities is a key element of recovery. The presence of the National Guard as well as the local elevated sense of social responsibility has been a critical element of pulling us up by pulling us together.



Third are social and belongingness needs which include the need to be accepted by an individual or group. Think about Olive Garden and their tagline, “When you’re here, you’re family.” We also see this come alive with the wonderful belongingness and leadership given by our Churches to support our tornado relief efforts. Many of them continue to request anonymity in their efforts, but rest assured, we know who you are and we thank you!



Fourth is the esteem need such as a need for a sense of accomplishment, the need for respect from others and the need to perform better than others. This is a universal human trait that emerges after lower order needs are satisfied. This may present in the purchase made to upgrade an airline seat, to have premium concert tickets, or as Sony touts, “Like no other.” I have found myself reassessing how I view this for myself in the events of the past few weeks and those in our community. Even in tragedy, this need is still obvious all around. I am reminded of Shakespeare and Twelfth Night where we read that “some are born great, some achieve greatness, and some have greatness thrust upon them.” If you are a leader in your community, please remember that the best help may come from the least obvious place.



Lastly, and also the very top need, is self-actualization. This is the desire for a person to reach their full potential. Many educational tours appeal to this need with an appeal to a person’s talent or capabilities. It may include a trip that includes a course of study such as language, history or cooking. Nike’s famous “just do it” is right on the mark for reaching potential. Self-actualization appeals to the desire to experience and learn something new such as at GE where “we bring good things to life.” Or, it may appear as the nice neighbor that you really don’t know who shows up with his chainsaw to help clear some trees from your driveway. And he also offers to get you some water and a sandwich. How cool and inspiring is that!



Understanding how your product fills one of these needs, and fits into the experience desired by your customer will help you to understand how to motivate that customer to act on a purchase. In light of the damage to our communities and continued recovery, I am reminded that this is not just about products, but it is in fact also about US. It is about our elected officials, our churches, and all the elements of our community. It determines who we are and how we react when the chips are down.