“Three out of 4 small business owners found a green vendor to be more appealing than a non-green vendor if the service and price are the same.” (Emphasis added.)
This statement comes from PayCycle, a payroll service from Palo Alto serving 85,000 small businesses. Recently they did a survey of 202 randomly chosen businesses from among their customer base, and that was one of the conclusions.
This result sounds realistic. Here’s why: notice that it focuses first and foremost on service and price. Those two factors will resonate loudest with the largest group of small businesses. More importantly, those are basic survival needs of small businesses.
Green initiatives have to take their place under a kind of Maslow’s Hierarchy of Needs for businesses. Maslow’s theory says that the most basic needs have to be met first, before higher needs can be considered:
At the lowest level of the pyramid are survival needs. In business terms, that is price. A small business needs an affordable price from a vendor. Cash flow is usually at a premium and small businesses operate on narrow expense budgets.
A second survival need is service: The difference between good service and poor service can prevent a small business from in turn properly serving its own customers. In extreme cases, disruptions in service from a vendor can put the small business out of business.
Only when those two needs are satisfied and survival ensured, is it rational to turn your attention to whether a vendor is socially responsible. Idealists and environmentalists may wish this were not true. But for most small businesses it’s just a practical matter of meeting one’s survival needs. First and foremost you have to stay in business (or you won’t be supporting any green business initiatives).
Just like Maslow’s hierarchy, once the survival needs are met, then the business can start to realize the higher level needs that are based on emotion and esteem (i.e., being held in high regard by society). That includes acting on values that are socially desirable, such as green principles.
That’s why adopting green values and principles in your business matters to customers — but only after the customer’s basic needs are met.
Earth Day is April 22, 2009. Will you be committing to a green initiative?
This is a great point and I think that it is one that is missed by the “green movement”. I would tend to believe that most people would be interested in the green option except that the price is usually significantly higher. This is exactly the scenario with many products. As an example hybrid cars, it takes years to have a return on investment on the premium that is paid for hybrids.
I am afraid that some people believe that market forces don’t work in the “green” marketplace but I would tell them that market forces work in ALL marketplaces. You may be able to get a premium for the green product but probably not when the ROI is years away or the price is double the price of the non-green product.
Jeremy @ RefocusingTechnology.com
Wow, I love the pyramid graphic of needs and your take on this concept is insightful and very interesting. Its really all about health, the health of your business. And once your business is “healthy” and stable, you can move onto fulfilling its other needs and rounding it out as a well balanced vehicle.
You’re making a great point with this article. Lots of people and businesses have the desire to buy green but as noted, we’re less likely to do so if the cost is significantly higher. Especially now.
I will celebrate that we don’t have “earth day” here in Sweden yet… 😉 I will celebrate that you have a moral right to exploit the earth for your purposes and needs (physiological, safety, love/belonging, esteem, self-actualization).
Last year Thomas Friedman got a pie in the face by the “green” mob…
A local Seattle company called EcoHaus did a cost comparison of green home products and found that the cost was in some cases the same or better than traditional, non-green products. http://ecohaus.com/
The point is that it doesn’t have to cost more as many people think. Over time, as we adopt earth-friendlier solutions, the price will drop for those solutions (assuming they are of equal or better quality than existing product). I completely agree with your point about you have to stay in business to make green choices later and that you have to make sure you don’t lose sight of serving consumers base needs first.
I learned a lot from this post by Nellie Lide back in late 2007: https://smallbiztrends.com/2007/10/the-green-umbrella-green-business-opportunities.html
This is something that much of the press about the “green movement” and “green iniatives” overlooks. Green is a very worthy ideal, but for any business, large or small, it must be financially feasible, especially in these cash-strapped times.
So true-> That’s why adopting green values and principles in your business matters to customers — but only after the customer’s basic needs are met.
A wake up call. Most of the time, people forgot the basics. We tend to be too advanced and aims life to be fast forward yet this article awakens us the fact and the significance of “basic”. 😉
Very nice article. I am new to Maslows theory and am starting to see how it relates to my life and my business. With the collision of the green movement with the bad economy it is nice to step back and look at it from Maslows Hierarcy of Needs pyramid. It helps in how I market to potential clients.