The Business Hierarchy of Needs
Understanding your B2B customers
Doing business with companies is very different from doing business with individual consumers. They behave differently, have different expectations, sometimes the person you are speaking to changes 5 times during one transaction. We still go through all that trouble because the it can be very profitable. Yet for some reason, while there is plenty of literature and research on consumers, there is very little on business behaviour making it more difficult to target you marketing efforts and sometimes understanding the needs of your B2B customers. In this article I will use my experience in telecommunications industry to give a few pointers so you can have a better picture of your B2B customers and increase your revenue. We will focus on product development, marketing and your sales team.
Maslow’s human hierarchy of needs:
Let’s start with a refresher on Maslow’s theory on the hierarchy of human needs widely used in modern management and marketing. The theory is pretty simple: as human beings we have a variety of needs that we try to fulfil in a particular order in order to reach happiness.
Our physiological needs are our need for food, water, warmth and rest. They are the basic conditions necessary for life, if we do not fulfill those needs, we die, which is why they are our top priority. Then come the security needs: our needs for safety and stability. I include stability because even if we are safe in the present, if we feel we might not be in the future we cannot really consider these needs as fulfilled. These two bottom levels of our need hierarchy are our basic needs.
Then we have the need for belongingness and love, that is belonging to a group, having intimate relationships, friends, etc. Our esteem needs are our needs for prestige and accomplishments, having people’s appreciation or respect. These two levels are our psychological needs, they are not vital for our survival but play a very important role in our happiness.
Finally, the final level: self-actualization is the need to feel we are realizing our full potential, it includes creative activities and whether or not we feel “useful” or not. It is our need for self-fulfilment.
When a business designs a product, they are careful to understand which of these categories their product could answer since it will help their marketing efforts and their targeting greatly.
The lower on the pyramid you are, demand increases but so does competition. Also, people tend to be willing to pay more for products or services that fulfil their “higher” needs than their basic needs. For example, a company like Apple does not only sell a phone, they sell a full package including protection of privacy (security need), belonging to a large group of diehard fans (Belongingness) and plenty of prestige. Some could even argue they fulfil a certain self-actualization because they promote positive action in the world, creativity and claim to help you reach your fullest potential. This type of positioning is hard to manage and took years, but it now allows them to charge a very large premium on their products and made Apple one of the largest companies in the world.
However, if your customers are businesses and not individuals you cannot use the same hierarchy of needs because theirs is very different from Maslow’s. Here is a proposed version:
The business hierarchy of needs:
Just like food and water for a human being, profitability is the most important need for a business, it is even stronger because unless it is a non-profit charity or organization it is its reason to exist. In our capitalist society individuals create businesses to generate profit. If a business is not profitable it will go bankrupt and close, ceasing to exist.
Once again security needs are also near the bottom of the hierarchy, but they are different from those of individuals. A business security needs is not only the safety of their employees and the protection of their goods and intellectual property, but also their ability to withstand crisis and respond to competitor’s actions. It is also linked to the risks coming from their operations. Products that could help you fulfil these needs would be insurance, legal advice, patenting, and protection services. These two bottom levels of the business hierarchy make up the operational needs.
Then there are the brand awareness needs which is your reach in your market, how many consumers know a business and WHAT they do. At this level, businesses are in growth mode and are trying to get as many people as possible to hear about their products. They are recruiting NEW customers and need as much exposure as possible in their target segments.
The next step after this for a business is Positive Valence needs, now that they have a large audience of customers, they need to make sure those that have a positive opinion about their brand keep that positive opinion, and they need to modify the perception of those who have a negative view of the brand. This is when they will put much more emphasis on HOW they do things. These two levels are the marketing needs.
Finally, at the top level of the hierarchy of business needs are the justification needs. This is the need to justify WHY a business exists OTHER THAN PROFIT. If a business doesn’t have values and an ambitious mission, it will have trouble differentiating itself from competitors when it tries to recruit and retain talent and in the mind of consumers when they are comparing two similar products. Fulfilling these justification needs allows a business to increase their premiums, facilitates the recruitment and motivation of talent, and to an extent protects it from negative public opinion. If your mission is positive, ambitious, something that can rally a large portion of people and that you are actually honest about attempting to realize it, it becomes very hard for disgruntled customers or competitors to criticize WHY you do things. If you make a few mistakes along the way you can always apologize about HOW you did them. However, if you are “fake” and your mission is nothing but words on your website with no concrete actions behind them it will set you back in all levels of the hierarchy of business needs once it is known in the open. Once these needs are fulfilled you can consider it a kind of “brand insurance”.
Nowadays, when individuals launch businesses, they will try to fulfil all of these needs all at once right from the start (or at least have plans for it). This is a good thing but, in the early stage they generally end up having to try to fulfil the bottom needs first and move up the pyramid. Then as they mature, they will fulfil all of their needs and become a full-fledged, completely realized enterprise.
How to use the business hierarchy of needs:
B2B Product development: Which needs is your product going to fulfill? If your product fulfills needs on the lower levels of the hierarchy, you will have an easier time finding a large number of customers, but you will have to charge lower premiums.
Sales: When you speak to your B2B prospects you can often tell very easily at which stage of their development they are by the focus of their questions and their preoccupations and objectives. After identifying which level of the hierarchy your customer is sitting at and which needs he is trying to fulfill, you can use this to position your offer better and make sure you close your deal. You can also use it to cross-sell other products that fulfill additional needs to what your customer is already looking for. At some point they will have to move up the hierarchy and fulfill them too if their company keeps growing.
As a business owner: this hierarchy of needs helps you understand better where you sit in terms of company development, what needs you have not fulfilled and will need to fulfil later on, etc. This can help you sort through solicitations and projects based on what are your most immediate needs and what needs to be focused on later. Many times, have I seen a young business with big aspirations die out because they had not secured their bases with an adequate business model. Reaching out to a large number of customers if your production line is faulty or your IP is not secured can be a death sentence.
