Needs versus wants

Incidentally, I use “needs” and “wants” interchangeably in this area. It might be incorrect but it’s a useful simplification that has no material impact on the actions you can take with the insight.

No sale, buddy!

Need states may not always include actually buying anything. Early sales journeys will often feature the need to research or to compare only because the emotional and practical needs exist right from the start. A customer might want to research sizes, styles, pricing and options of a new sofa before buying one, but will bring with them emotional needs too – to demonstrate their design ideas, to make their living space more comfortable for the family, to experience the nice feeling of settling into deep comfort after a busy day. Because these things are there even at the research stage, retailers must always be alive to the opportunity to at least ask if the customer would like to buy now.

It is remarkable how many consultants in this age of the “omni-channel” misunderstanding (see Secret six) will advise retailers to facilitate research and pre-sales activity without any sales element at all. That’s just daft. I’m not advocating aggressive selling of the old school type, but a modern customer-led process of assistance that includes gentle attempts to close, assisted by genuinely attractive calls to action, is an opportunity that is foolish to ignore.

If online, then data must be captured unobtrusively and used to make it clear there is benefit to that specific customer in completing the transaction today. In a store, a selling process, both passive and via assistants, must be built around passing on knowledge and tailored, curated recommendations with opportunities to close a sale liberally sprinkled throughout.

Crazy mixed-up people

The need states customers bring to a given retail interaction are rarely singular, but are usually a complex conglomeration of needs, though the emotional are always the most powerful (see Secret two for more on that).

Take one example: a customer wants to buy a new outfit for a job interview.

Practical needs are driven by the occasion:

• Need a new outfit suitable for a job interview.

Emotional needs might go beyond the occasion:

• Need to boost my confidence.
• Need to be taken seriously.
• Need to project an image that fits the job and my personality.
• Need a stress-free shopping experience.

Mechanical needs are likely to be from a stable set:

• Need to be assured that the quality is up to standard.
• Need a 34 trouser and a 40 jacket.
• Need to feel comfortable.

And for every different person, there might be another 20 related needs. Our job as retailers is to look at defeating friction by meeting the practical and mechanical needs and then meeting the emotional by boosting the reward side in some of the ways below.

Just because I want to be happy

We were working on a project for a massive client, part of which was to define a new Big Idea. I love doing them because you get to look in so many interesting places for inspiration, evidence and ideas. This particular client is a great business but operates in a sector that customers and media alike sort of hate. After three months of working, including finding incredible inspiration back in the history of the sector, a time before people despised it, we had a Big Idea.

The Big Idea included the word “happy” in it. And, almost universally, the leadership in that business hated the idea, the MD even said: “We can’t make people happy.” We argued our case, especially as the Big Idea we’d created was predicated on a series of transformation programmes that would take this business from a dictatorial one to a culture where customers would be in the driving seat.

But no, some felt “happy” was unobtainable, and others, I thought, hated it because it didn’t sound businessy enough. Happy isn’t a jargon word, they believed it would look strange in an annual report. But customers aren’t cattle, and in this particular case, making them happy was not only vital, it was completely possible because we were considering them as people, not as numbers on a spreadsheet.

We do this too much in retailing. We forget that our success depends on Keith, Alejandra, Mary, Derek, Umesh, Priti, Medhi, Sue, Ginal, Rob, Arthur, Rosy, Isabella, Ebele and Indira and thousands like them, deciding to choose us.

Sometimes the emotional needs leading to a desire to shop are very simple: to be happy, to be cheered up, to enjoy wandering around websites and stores shopping.

Don’t forget that when you consider how need states drive the way your offer and formats work.

There’s more than one of us in here

You are psychologically in a different place, your motivations, your patience, even your physical senses are working differently when you dive into South Mimms service area on the M1/M25 to grab a pitstop burger, versus sitting down for a 30-day dry-aged artisanal hamburger with your partner in your local gastropub. Same meal but completely different you. You’ll make your choices in each at different speeds, you’ll want different things from the food itself, you’ll accept quite different standards of service, you’ll react differently to sights and smells and your pace of eating will be very different – and you’ll pay wildly different prices for the two meals and possibly judge the far more expensive one as the better value.

The customer insight team will describe these as two different customer missions. I hate that kind of labelling because the word “mission” feels so military relative to the reality of wandering into a shop, or lazily loading up an app. A mission is something we consciously plan for. I don’t believe the vast majority of what we do as shoppers is conscious at all beyond the initial impulse. Even then, that initial impulse can and will be directed autonomously by the many influences and biases we’ve built over the years and by other influences we’ve been exposed to subconsciously seconds earlier.

I prefer the description of those two burger scenarios as being different need states. It’s a much simpler idea – we need x from transaction y. We need a pitstop burger for fuel. We need a nice place for a date night so we can spend quality time together.

Thinking in need states is easy too. It’s a simple game of getting to what possible needs might people might have when they shop with us.

Once armed with an exhaustive list, it is possible to look at which groups of needs:

Some groups that sit in (b) might require an experience that is cheap and fast, some might need significantly more sales support, some might welcome guided experiences, some might react best to clear menu-driven product selections. Some might work only in conjunction with the lowest possible price, while others might react better to a combination of services that unlock the opportunity to improve margin.

There is also a further point, d) need states related to the things we sell that we could or should also meet but that we currently don’t. Do our customers satisfy those needs better with competitors? Or by spending money in a different sector instead?

Or the Big Daddy of marketing, e) a set of need states that nobody currently meets because people don’t know they even exist.

“They don’t even know they want the thing they want” is staggeringly powerful and the people who find those are retiring to private islands in the Caribbean.

“We think you need to take your music out of the house with you – here, enjoy our Walkman.”

“We think you’ll need to access the internet sitting on a bus – this is for you, try our Handspring Treo smartphone.”

“We think you’ll need to buy books while sitting on the toilet – here you go, we call this Amazon.”

I don’t actually know if Jeff Bezos ever mentioned toilets during investment pitches, but I know I’d have had a PowerPoint slide showing someone doing just that, which is probably why he’s sending rockets into space now and I still consider a McDonalds milkshake a massive treat. So here’s another example.

“We think you’ll need your burger and shake within seconds of ordering it – come to our restaurant where we’ve set up everything in the kitchen to enable that speed of turnaround. We’re the McDonald brothers.”

Once we know and understand need states

What next? The first job is to make sure you are meeting the needs of the most relevant customer groups identified earlier. This sounds straightforward but I guarantee there are two things you do at the moment that make this harder:

• You will be doing some things that your customers really appreciate but that you take for granted as just part of the deal. If you undervalue these things, so will customers.
• There will be parts of your set-up that make life difficult for customers, that force them to do too much of the work, or that otherwise get in the way. These will be things that you have convinced yourself you can’t do much about, but that is a lie you tell yourself instead of facing up to change. See Secret one on friction/reward: change! Change now!

Frames and need states

Sometimes the frame is writ large and as a structural part of the way a business has presented itself, while other times the frame is a more subtle collection of elements. Ask yourself how you are framing product, experiences, stores, sites and apps in the business. Are we pitstop businesses but where customer need states suggest they might respond to a different frame? Can we win “First Visit Advantage” (explained soon) with our current framing or are we their second, third or even fallback choice each time?

Framing, Big Idea and winning FR indexes

There’s a gigantic fat link between your business’s Big Idea and how you might frame the retail experience. In the example of Aldi and Trader Joe’s, it is immediately obvious: the former a no-nonsense and efficient presentation, the latter a fun tiki lounge. More subtle is how McDonalds has been working hard to move its own frame from fast-burger-and-hang-the-taste to one that plays on food quality and European coffee shop cues. One of the ways in which it has done this is through the highly successful McCafé stores, initially operated in Europe. Gone are the red and yellow primary colours of the archetype fast food business and in came euro-style earthy tones, mustard yellow, browns and natural finishes. As the Big Idea moves away from the falling trend of fast food, the frame too moves towards the explosive success of a coffee shop Big Idea.

Net-a-Porter’s Big Idea, to sell luxury fashion online through an editorial style-magazine look and feel, incorporates the frame in the Big Idea itself. IKEA’s Big Idea to democratise access to great design led to a framing of that idea in spaces that had to show people how things could go together and that had to lead them through the whole narrative, telling the story of how easy it is to achieve high-design results for better living. It’s the Big Idea’s show and tell.

There is also, and this must be obvious, a huge link between the frame and your opportunities to build richly rewarding experiences that boost the reward side of your FR analysis.

Make me want it …

You’re a clever person, an experienced retailer and you know marketing. Like me, you never fall for the tricks. You’d especially never be taken in by the adjectives manufacturers now put in front of every single product description. You know that gently sparkling cool mountain spring water is just fizzy water. You know the difference between marketing horseshit and how you feel about a thing.

But you don’t. We’re wrong. We all are.

The mountain of evidence is now so huge that we have to give in and accept it. Study after study proves that we are cognitive sheep and that our decision making is influenced by the most banal and obvious tricks, more than it is by our experience and biases. Researchers have shown regularly that expertise can narrow the band of our susceptibility but cannot defeat it. For example, in experiments on price anchoring in categories where we are expert, we will still be influenced by external cues but the range of our forced errors will be narrower.

We are experts on retailing, we know marketing and, if even we “insiders” are susceptible, it tells you something incredibly important about framing and description, especially the use of adjectives.

A ‘crisp white, cotton summer-weight shirt’ sets up lots of very particular thoughts and expectations that “shirt, white” does not. We can no more ignore the runaway freight train of images, biases and expectations the long description conjures than we could ignore a person standing in front of us screaming the words at us.

The language of retailing is incredibly powerful. Brian Wansink of Cornell University’s innovating and brilliant Food Lab has shown again and again that the use of adjectives in menu descriptions boosts both sales of the options described that way and that subjects will rate the taste of those items and their satisfaction with the eating higher than those who have eaten the same menu items described plainly.

Wansink’s wife Jennifer is a skilled chef, which his friends are aware of, and from time to time they set up an experiment using different groups of friends and an invitation to dinner. One thing the Wansinks also do is to write descriptive, adjective-laden menu cards and put them at each place setting.

The cards and the prior knowledge that Jennifer is an excellent chef set up an expectation that the meal will be great. And so it turns out. Beautifully presented courses are served on beautiful china at a table set with flowers and candles and other lovely things.

After the first two courses, guests are shown that what they’ve actually just eaten is rather ordinary pre-prepared supermarket food taken out of its packaging, brought to table as if home-cooked and presented wonderfully. There’s that moment of “Aha” but what happens next is incredible. Dessert is served, again beautifully and in the context of a flowery description full of powerfully positive adjectives. But this time the guests all know it’s a pretty standard dessert from a supermarket that Jennifer has dressed up a bit.

But they still swear that it tastes better than it should do and some will insist that there must be another level of experiment. Maybe the food actually is home-cooked and the test is to see if being told it isn’t has an effect. Astonishing that, even given the facts of the framing and descriptions, sensible people like us do not accept the truth.

If descriptions and adjectives can influence us so completely that even when we are in on the joke we still retain the effects of that influence, is it a stretch to suggest that frames and language in retail environments must be at least as important?

A critical insight is that Wansink’s hypothesis is that the ways in which description, context and use of positive adjectives set up expectations are the source of their power. That we are placed in a state of positive expectation by those things and that natural human tendency to loss aversion acts as a confirmation bias and tells us we were right to expect things to be great, even if they are revealed later to be ordinary.

Starbucks experiments with the coffee frame

You might wonder why I’ve used a lot of food and drink examples and I suspect it’s because the sector changes so quickly as food trends change. So they are great at frames.

Starbucks was among the very first to package the coffee house “small holiday from the day” frame into a repeatable chain format. Rapid expansion, near global domination in a handful of hyperactive years and an incredibly impressive consistency of delivery were all part of the remarkable story.

But that packaged frame is starting to show weaknesses and vulnerabilities around its edges. Coffee trends are changing, customers are beginning to explore new ways to enjoy coffee and the artisanal and maker elements of the hipster movement are beginning to cross over into mainstream. At the same time, there is evidence of more people making better coffee at home.

So Starbucks has developed a handful of alternative framings and placed these in interesting locations around the world. Two of these alternatives are the Starbucks Roastery in Seattle, where the frame has a kind of “world of coffee” credibility, and the fascinating Starbucks Reserve on Upper St Martin’s Lane in London. Starbucks Reserve is an attempt to bring artisanal values and maker theatre to coffee. So you’ll find the Reserve counter where customers can choose from four different small-batch coffee beans and have those beans prepared in one of four different methods, from Airopress to Clover or pour-over. As the coffee is brewed, baristas engage customers in the story of the beans and the farms from which they are sourced and will talk about the science and pseudoscience of the various brewing options. You’ll hear adjectives galore as your tastebuds begin to tingle.

They will charge you £6 for the privilege of enjoying a coffee that may have taken as long as five minutes of manual preparation to brew, and what is incredible is that you will gladly pay and describe it later as a brilliant cup of coffee and worth every penny. Here is where smells, sights, tastes, sounds and textures mingle together to create an incredible coffee experience that feels very special indeed.

The Upper St Martin’s Lane store has some mechanical problems, as it is also trialling tablet ordering, ordering by app and table service and is struggling to find the right methodologies to manage those processes as part of the customer journey. The concept accidentally introduces additional friction that in some areas trumps the perceived reward, but battle your way through to the Reserve counter and you will find something really rather special.

These aren’t ideas Starbucks has had in isolation. There are indie coffee houses around the world doing incredibly involved things for their customers. We visited a “third wave” coffee place by the name of Bonanza in Berlin’s trendy Prenzlauer Berg and found exactly the same principles as the Starbucks Reserve Counter in play, perhaps with a little less theatre but certainly with all the authenticity and artisanal respect for the coffee and for the drinking experience.

This is a great example of the chain business being open to learning from the indie. I should add that I’m the champion of the indie here. Independents can always trump the chains by being faster to change, faster to trial and faster to adapt to new and developing customer needs. Starbucks copying is a compliment that indie coffee businesses should celebrate at the same time as moving themselves ever further forward.

Also placed high up in Starbucks’ experimental formats is retail: selling the store experience to customers to take home with them and make part of their home coffee rituals – all the machines used on the Reserve counter are for sale, the beans are for sale, the process of making is for sale.

Starbucks may not roll out a new estate of either Roastery or Reserve stores but the process of experimentation with the frame will find its way into the main estate. This process of iteration through wild experimentation is very powerful, provides far more insight than passive research and is exhilarating for team and customer alike.

I can offer you nothing but my loyalty

With our great engaging frames in place and with all this lovely meeting of needs that we’re doing, you might expect customers to begin to show you some loyalty. Which is a shame because loyalty to retailers simply does not exist beyond easily disruptible habit. Loyalty is a consultant’s pipe dream, it’s a nonsense. Trying to win it or, worse, trying to buy it is costly and pointless. A customer is no more loyal to American Eagle than they are to Gap. They will happily shop at both, they will flow like water towards whichever is meeting their needs better and doing so at the lowest FR level.

When it comes to loyalty to brands, there’s a good argument to be made, certainly, but a customer will have far more loyalty to their favourite brand of toothpaste than to the store where they buy it.

You may say: “But it looks like my customers are loyal”

Groups of customers might well exhibit behaviours that look like loyalty, such as spending loads of money in your stores regularly and giving you a high net-promoter score, but this only lasts for as long as you are consistently meeting their needs and while a competitor meeting the same needs is doing so at a worse FR index. A person who is fiercely loyal to Patagonia, who may even be something of an advocate for a form of responsible consumption that revolves around buying clothes at Patagonia, will eventually jump ship, should another retailer begin to meet those same emotional and practical needs in a convincing and authentic way but at a lower FR number. Fabulously ethical clothes but with an additional re-use dynamic at a lower price brought to their door might do it, for example.

Scheming schemes

Programmes such as Sainsbury’s Nectar, Tesco’s Clubcard and Macy’s Star Rewards are called “loyalty programmes”, but they aren’t really. They’re customer data-for-cookies exchanges: if you nice customers allow us to dig into and learn about how you shop, then we will give you a few tokens as a thank you. Customers are not stupid, they understand full well that there is no something-for-nothing in these schemes, and they are also increasingly aware of the value of their data and that’s fine.

Tesco, in particular, has been able to do amazing things with that data. It’s a worthwhile exchange and customers enjoy taking part when the rewards are pitched right. But be aware that it can be a gigantic cost of sale and that you cannot claim customer loyalty as one of the elements of your ROI.

So if loyalty doesn’t exist for retailers, is there an alternative? Luckily, yes and here it is.