Adapted from "Conscious Capitalism: Liberating the Heroic Spirit of Business" (Harvard Business Review Press)
The purpose of every business ultimately revolves around creating value for customers. As the great management thinker Peter Drucker said, "There is only one valid definition of business purpose: to create a customer."
At Whole Foods Market, we think of customers as our most important stakeholders because we know that without enough satisfied and happy customers, we have no business at all. Customers are clearly critical to every business, but surprisingly they are often forgotten. It is easy to get caught up in the internal processes of a company and lose sight of the primary reason for the company to exist. Jeff Bezos of Amazon.com points out, "In a typical company, if you have a meeting, no matter how important it is, there is always one party who is not represented: the customer. So it's very easy inside the company to forget about the customer." He started putting an empty chair in every meeting to remind participants of this.
As with all stakeholders, the well-being of customers must be treated as an end and not just as a means to profits for the business. Businesses that think of customers as a means to the end – profits – do not have the same level of empathy, commitment to service and understanding of customer needs as do businesses that treat customers as ends. Customers know when someone genuinely cares about their well-being.
Businesses have to serve their customers and look out for their best interests. Often, this means that we need to educate them, not just respond to what they are asking of us. But this is only possible if they trust us. Without trust, we can push them or pull them, but we cannot lead, educate or influence them.
This is a big issue for Whole Foods Market. Often, what customers desire to eat and what they actually need for their health are not the same things. A person who is obese and at risk for diabetes doesn't need more candy bars, ice cream or sugary sodas, but may be addicted to them.
Educating consumers is not the same as preaching to them. At Whole Foods Market, we believe we have responsibilities to our customers regarding healthy eating and wellness. We have recently launched a Wellness Club program in some stores to help educate our customers about dietary patterns and choices that lead to optimal health and well-being. The challenging art of our business is to educate customers to want what's good for them, but at the same time to give them the freedom to still choose the products they want even if the choices aren't good for them. If we do our job well, over time customers will start to choose differently.
When we started over 30 years ago, organic was less than 5 percent of our total sales. But after years of educating our customers and talking with them as well as working closely with our supplier partners, more than 30 percent of the food we sell is not organic. People are getting the message; it just takes time, trust, patience and continuous communication.
One of the beauties of free-enterprise capitalism is that it motivates businesses to provide greater value, higher quality and better service all the time. Instead of getting trapped into a never-ending efficiency and productivity competition, conscious businesses innovate by thinking of the unmet needs and desires of their customers.
If Whole Foods Market had to compete with Walmart strictly on the basis of supply chain efficiency or distribution economies of scale, it would be impossible for us to win. But what we can do is be more nimble, more creative and more innovative and provide higher-quality service while creating a better store environment. By the time Walmart figures out what we're doing, we will have moved on to newer and better innovations that create new value for our ever-evolving customers.
The Higher Purpose of Marketing
At Whole Foods, we think of marketing as enhancing the quality of our relationship with our customers. To us, everything that develops and deepens the relationship and builds trust is good marketing. Anything that detracts from that is bad marketing.
Trader Joe's is another great example of a company that takes a conscious approach to marketing and advertising. It spends less than 1 percent of its revenue on advertising, much below the industry average. Rather than having frequent sales, as most retailers do, Trader Joe's offers customers great value every day.
Marketing can make customers aware of wonderful new offerings and guide them in a favorable direction, but it also can try to persuade them to do things not conducive to their well-being. Most advertising overpromises benefits and tries to induce customers to buy the company's products whether or not the products are a good fit with the customers' needs.
Customers as Advocates
Conscious companies recognize the power of putting customers' interests ahead of their own and communicating authentically and transparently with people. They provide customers with honest and complete information and help them find products that best fit their needs – even if those products are made by competitors. Research by Glen Urban at Massachusetts Institute of Technology has found that when companies demonstrate such genuine commitment to the well-being of their customers, customers reciprocate in multiple ways; they become much more trusting, increase their future purchases and become advocates on behalf of the company – unpaid but very effective salespeople, in effect.
Conscious companies recognize the power of putting customers' interests ahead of their own and communicating authentically and transparently with people.
The most effective marketers for any business are truly delighted customers. They market the business for you. That is why Whole Foods Market does very little advertising. For us, marketing is about satisfying, delighting and nourishing our customers, creating good relationships with them and building trust. If we do that, customers reciprocate by giving back to the business through loyalty and through positive word-of-mouth communications to their friends and people they know.