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Wednesday, May 18, 2011

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.

Monday, May 2, 2011

Business Disaster Preparation

We all know that “Hind Sight” is indeed “20/20”. We know it now more than ever here in the North Jefferson Business Community. As many in our area of digging out and moving on after this weeks devastating weather, it is never really too late to look at your emergency business disaster plan. In fact, now may be a great time to look at not only your business disaster preparation, but also the readiness of your church, your civic organization and of course your local municipality. Your employees and co-workers are your business's most important and valuable asset. Here are some procedures you can put in place before a disaster, but you should also learn about what people need to recover after a disaster.


It is possible that your staff will need time to ensure the well-being of their family members, but getting back to work is important to the personal recovery of people who have experienced disasters. It is important to re-establish routines, when possible.

Here are some tips to get you started or to improve your plan that may already be in place.

Two-way communication is critical before, during and after a disaster. You should include emergency preparedness information in newsletters, on company intranet, periodic employee emails and other internal communications tools. Consider setting up a telephone calling tree, a password-protected page on the company website, an email alert or a call-in voice recording to communicate with employees in an emergency. Designate an out-of-town phone number where employees can leave an "I'm Okay" message in a catastrophic disaster. It is good to provide all co-workers with wallet cards detailing instructions on how to get company information in an emergency situation. Include telephone numbers or Internet passwords for easy reference. Maintain open communications where co-workers are free to bring questions and concerns to company leadership. Also, talk to co-workers with disabilities. If you have employees with disabilities ask about what assistance is needed. People with disabilities typically know what assistance they will need in an emergency. Understand how to alert people who cannot hear an alarm or instructions.

It is recommended that you have both a battery-powered commercial radio and a weather radio with an alert function. The weather radio can alert you to weather emergencies or announcements from the Department of Homeland Security. The commercial radio is a good source for news and information from local authorities.

Keep copies of important records such as site maps, building plans, insurance policies, employee contact and identification information, bank account records, supplier and shipping contact lists, computer backups, emergency or law enforcement contact information and other priority documents in a waterproof, fireproof portable container. Store a second set of records at an off-site location.

Talk to your co-workers about what emergency supplies the company can feasibly provide, if any, and which ones individuals should consider keeping on hand. Some suggested emergency supplies include but are not limited to water, a three day supply of non-perishable food, battery powered radios and extra batteries, flashlights and of course, extra batteries for them. A First Aid kit, with a signal whistles along with some dust or filter masks are good to have on hand. Moist towelettes for sanitation, a wrench or pliers to turn off utilities, a can opener for food, and some good plastic sheeting and duct tape to seal off a room if required. Lastly, some garbage bags and plastic ties for personal sanitation.

There are several sites with clear instruction on creating your emergency plan. You can begin at Ready.gov and expand your search from there.