Business, Accounting and Tax Advice

Increase sales by identifying customer needs

August 9, 2017

Ever bought a McDonald's thickshake before 7am? No, me neither. In fact, the thought of it makes me feel a bit ill.

But, in some McDonald's stores in the US, up to 40 percent of thickshakes are sold first thing in the morning. Why? Well, we'll get to that soon – and, in the process, you’ll discover precisely how identifying customer needs can increase sales in your business.

First – ask yourself if you know what your customers really want?

How did McDonalds increase sales of thickshakes?

Virtually all businesses are trying to increase sales and, as Peter Drucker wrote, the two ways to do that are through marketing and innovation.

So, if you had a McDonald's store and you wanted to increase sales of thickshakes, you might try innovating with product testing, beginning with asking customers and non-customers what they want in a thickshake and acting on that research: new flavours, different sizes, or the ability to package it in with a value meal, for instance.  In US stores, they did all that, and it didn't work.

Clay Christensen, the man who first used the word "disruption" in the way it is used in business now, led a team to do further research, which is when they discovered that so many thickshakes were sold very early in the morning.

They found that most of the early morning thickshakes were bought by people with long, boring commutes to work. They wanted something to fill them up so that they could get to their lunch break without needing a snack; something that wouldn't be messy and that they could consume with one hand (the other hopefully being on the steering wheel).

So a chocolate thickshake wasn't competing against other flavours or even other drinks. It was competing against doughnuts, bananas, and other snacks. When McDonald's made the thickshakes thicker (so that they would last longer) and added chunks of fruit to make them more interesting, sales increased significantly.

Christensen called this his "Jobs to be Done" theory. By understanding what job the product or service is actually doing for the customer, you are able to better meet their needs.

The importance of identifying customer needs

When I was planning the Tempo Tax website, I met with two web developers. I was happy that both would do the job of providing me with a professional-looking website. However, only one of them really understood that affordability was key and that I wasn't interested in a comprehensive digital marketing strategy just yet.

I just wanted to get the site up and running and we could plan v2.0 down the track. Guess which one I hired.

For this same reason, I never provide ALL of our clients with reports straight off the shelf that include figures, statistics, and graphs that they’ll never use. Instead, I provide customised reports that give them the information they want – and only this.

Some businesses do want the detailed, comprehensive reports that give them a clear picture of the drivers in their business and the results from pulling different levers. However, others prefer simple profit and loss and cashflow reports, along with a conversation about the salient parts. They want to be gradually educated on what is important.

Both types of businesses need a report showing them how well their business is performing but what they really want is vastly different.

The point here is that your target market often behaves in ways that differ to how they say they will behave, and different again to the ways in which you think they will behave.

Given that the vast majority of new products fail, it's worth ensuring that you identify customer needs before launching any new venture, if you want to make sales.

Thickshake, anyone?

 

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