Two years before the end of the Second World War Abraham Maslow wrote ‘A Theory of Human Motivation’, one of the most influential works in the field of psychology. He argued that human beings seek the fulfilment of basic physiological needs before all others. These being satisfied, they move on to seek fulfilment of safety, love and belonging, esteem and finally self-actualization.
Given that businesses are made up of human beings and that – like human beings – they have an innate drive to survive and excel, it makes sense that a similar hierarchy could exist when it comes to businesses. Based on over 2,000 studies looking at the needs of businesses, this article sets out to show that there is a hierarchy of needs in businesses which is very similar to the Hierarchy of Human Needs.
Figure 1: the Business Hierarchy of Needs
Level 1 – Survival needs
The basics of human survival include food, water and shelter. Similarly for a company to survive a small number of basic conditions must be fulfilled.
Many of these basic needs of business survival are – as with Maslow’s hierarchy – rudimentary. The business requires funds, whether owned by someone in the business or borrowed from elsewhere. They must have an offer – a product or service which they sell to others. There must be customers who value those offers and are willing to pay for them.
However, a successful company should have a differentiated offer. One that is different and hopefully better than others on the market. Every company needs a ‘big idea’ around which its marketing strategy is built. It needs to be clear what is on offer, to whom, how, and at what price and, most crucially, how this is different to existing offers?
These fundamental needs remain important throughout the life of the business and great businesses constantly revisit them to make sure they have got the basics right.
Level 2 – Development needs
Once the physiological needs to maintain life are met, humans need to consider their safety and security. Likewise, once a business is up and running it must become a sustainable enterprise. Many businesses fail at the development phase, as demonstrated by the fact that 55% of UK businesses cease trading within 5 years of establishment.
At this development phase, businesses seek to grow rapidly and marketing and sales become even more important. Businesses that have thus far been product-focused frequently begin to recognize the importance of having a true “customer value proposition”. Also at this stage the business’s knowledge and experience of the market allows it to develop and implement a segmentation strategy around which marketing communications and NPD (new product development) are built.
Level 3 – Relationship needs
The need to experience rewarding interpersonal relationships and belonging is intrinsically powerful within humans, and can often override the more fundamental need for safety, or even physiological needs; an example being the child who remains bonded to a neglectful parent. In businesses – consisting of a collection of human beings, after all – interpersonal relationships are important to building a growing, profitable and durable business.
Most important, companies focus on harvesting relationships with customers. The sales focus that dominates start-up businesses becomes complemented by a greater focus on tactical marketing and key account management. It is well known that it is many times cheaper to maintain an existing customer than to win a new one. Market research consistently proves loyalty to and advocacy of a provider are driven by emotional or added value attributes such as brand, going the extra mile and demonstrating passion for the client’s business. Customers who are prepared to recommend a provider to their friends and colleagues are far more likely to give repeat business, to increase their own spend, and to spread positive word of mouth.
Relationships are also crucial in terms of employee engagement, which correlates closely with the financial success of a business, productivity, efficiency and attrition. An engaged workforce is more likely to ‘go the extra mile’ and put in higher levels of discretionary effort beyond what they are contracted to deliver. Companies therefore focus increasingly on topics such as training, staff benefits and improved communication.
Level 4 – Structural needs
Beyond the early growth stages of a business, there is a need to organize the activities which make up the business into a more defined structure. The effective creation of teams, departments and working groups – whether permanent or ephemeral – instils a sense of belonging, shared purpose and responsibility in employees. As businesses establish more layers, loyalty to an individual’s own manager and team members is frequently stronger than to the senior management or the business itself. It is this loyalty which is a key element in building employee engagement.
Systems are established and become increasingly technology-based. CRM systems enable businesses to structure their management of and communication with customer accounts. Upgraded finance systems allow businesses to manage more complex financial transactions and compliance responsibilities. Businesses begin to recruit more middle-managers and establish departments as increasing numbers of staff and systems need managing. This in turn reinforces the need for reporting structures.
Level 5 – Recognition needs
The fourth level in Maslow’s hierarchy is esteem. Humans have a need to feel respected and have a desire to be accepted and valued by others. Factors contributing to human self-esteem and self-respect include achievement, status, responsibility and reputation.
Once businesses have established themselves in their target markets, developed an organizational structure and instilled the necessary systems, they turn their attention to being truly recognized as leaders in their field. It is at this point that many businesses develop a new level of ambition. They may diversify or expand into a different geography. They may set themselves explicit market share goals or mission statements to be ‘the recognized market leader in ….’.
Above all, when companies begin to value recognition they start to think seriously about their raison d’être and their brand. Does the ‘big idea’ that the company set out with still hold true, or has it evolved? How can we ensure that our large workforce, our systems, and all of the customer touchpoints they entail deliver a consistent customer experience? What exactly is the brand promise of this expanded company and how do we ensure we deliver against that promise?
In summary, the transition from structural needs to recognition needs is marked by a great deal of self-reflection and something of an epiphany. Operational decisions are delegated as the leaders of the business return to strategy. Leaders place more emphasis on inspiring staff and less emphasis on managing them. And the brand becomes recognized as the biggest asset the company has, the very essence of the business; not only a promise delivered to customers but also a ‘guiding star’ for employees.
Level 6 – Self-actualization needs
Maslow estimated that only 2% of the human population are ‘self-actualisers’; that is those who are principally motivated to fulfil their potential via personal growth and peak experiences. We surmise that an even smaller percentage holds true for businesses, as we are referring to businesses that truly focus beyond the bottom line and on making the world a better place. CSR (corporate social responsibility) activities are a typical example of business self-actualization, as is thought leadership that places the business activities of a company within a far broader context.
In the business hierarchy of needs, self-actualization refers to a higher purpose for the business, often ‘higher’ than the original raison d’être of the enterprise. However true self-actualization cannot be manufactured; it must be closely linked to the brand promise of the business, an externalisation of the very essence of the business. In this way Xylem, the worldwide provider of water technology solutions, can be seen to be focusing on self-actualization with its emphasis on ‘solving water’.
At the self-actualization level, the role of the strategic b2b marketer is critical. How can the essence of the brand, the positioning of the brand, the aspirations of the brand and the brand’s higher purpose be interlinked in a way that convinces customers and employees alike? How can we ensure that our focus on self-actualization does not come at the expense of the more operational needs further down the needs hierarchy? These questions, never fully answered, require constant focus and no little resource for any business seeking to establish itself as a genuine market leader.
Implications for B2B Marketers
As this paper has described, the business hierarchy of needs starts and finishes with strategic business-to-business marketing. Unlike any other business function, the role of the b2b marketer is integral to every stage of the business hierarchy of needs. To a new company that is focused on survival, an effective marketing strategy is a must. As the business moves on to the development stage, a customer value proposition is built and marketing strategy is refined based on early experiences of the market. The strategic b2b marketer goes on to lead the harvesting of key accounts; drive the establishment of a CRM system; build, refine and operationalise the brand and ultimately identify and establish a ‘higher purpose’ for the company, often above its original raison d’être.
In practice, few businesses achieve even a fraction of the above, with over half failing to even move past the development stage. Short-termism is frequently the core problem. Many businesses simply do not understand development needs and the requirement for a continuous investment in marketing. Still more do not work hard enough at building strong relationships with their employees and their customers. Others are reluctant to invest in systems and infrastructure that will clarify responsibilities and unlock value in the future. By the time we arrive at the level of recognition and self-actualization, there are so few business-to-business companies who achieve success they are like rare and tiny diamonds on a large sandy beach. The message to B2B businesses is surely to recognise the importance of being marketing-led at every level of the needs hierarchy. The company that regards marketing as a support department rather than the engine room of the business will fail to reach its potential.