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Understanding Customer Needs in a Rapidly Changing World – a Best Practice Guide

Image of the post author Jodie Shaw

Understanding your customer is key to business success. Learn how to make your products or services meet customer pain points along the customer journey.

Customers make or break businesses. Companies that meet buyers’ needs are more profitable, while those that don’t will lose buyers and may fail.

Even so, some businesses pay little to no attention to customers’ expectations. Instead, they chase trends or pursue ideas from their top brass, assuming that they know what interests buyers. And companies that check on customer needs often don’t do so frequently enough to keep up with the rapidly changing world.

This guide is about understanding customer needs—what they are, why they matter, how to identify them, and how to use them to win more customers.

What are Customer Needs?

Simply put, customer needs are the physical or psychological factors that motivate a person to purchase a particular product or service. These can be as varied as the hundreds or millions of customers in your marketplace.

Physical motivators are anything that has a measurable or tangible cause. If a person is hungry, they’ll buy food. If they’re cold, they’ll buy a coat. If their car breaks down, they’ll have it repaired.

Psychological needs are emotional reasons for purchase, and they’re almost always more important than physical needs. Any food, coat, or repair shop would solve the problems above, so how does someone pick where to make their purchase?

Opinions, desires, and preferences shape most purchasing. That’s why things like convenience, pricing, reliability, reputation, service, and values often lead a customer to choose one company over the competition.

“Customer needs” are often called “pain points.” While not all marketing professionals agree that these terms are interchangeable, they are indeed similar. Customer pain points are specific problems that people need help solving. Pain points can happen all along the customer journey and can include any physical or psychological issues that stand in the way of their happiness, growth, or success.

No matter what term you use, understanding what motivates buyers in your marketplace is key to winning new business and keeping loyal customers.

Importance of Understanding Customer Needs
customer profiles

As the saying goes, the customer is king because they’re a company’s most valuable asset. Without a solid customer base, a business will eventually die.

Unfortunately, many sales and marketing leaders take for granted that they know what their customers need. These assumptions can be costly, resulting in lost business and lower customer retention rates.

Other organizations view customer feedback as criticism, which may have a negative connotation. Leaning into their critiques, however, allows you to flip problems into opportunities.

When a business takes the time to identify, anticipate, and meet customer needs regularly, it can expect to:

Improve products/services: Understanding the motivations behind your prospective customers’ purchasing decisions will help you refine your offers. You can identify gaps in your offer stack or enhance existing offers with only limited development costs.

Generate more sales: The better you know your customer base, the easier it will be to identify relevant marketing channels and cost-effectively promote targeted offers, increasing the likelihood of high-conversion sales.

Deliver expected results: When you know what your customers need, you can plan appropriately to meet their expectations.

Improve customer service: Customer service channels constantly evolve, so it’s imperative to keep up with customer preferences. Being available to customers where and when they prefer makes them feel valued and can give your company a distinct competitive edge.

Boost customer retention: Anticipating, meeting, and even exceeding customers’ needs establishes trust and makes them feel valued and engaged in your business. This, in turn, creates loyal and repeat customers.

Survive long term: Agile adaptation is key to long-term success in a fast-paced world where the customer needs frequently change. When your offers suit current needs, you’ll develop a reputation that attracts and retains more customers than the competition.

Managing Rapid Change

Another significant benefit of customer needs analysis is ensuring that your company keeps pace in a rapidly changing world.

One of the biggest challenges any company faces is remaining relevant to its target market in the modern world. Customer mindsets and behaviors change so quickly because they have more choice and opportunity than ever.

When consumers can easily switch to a new company with better products or services, it’s imperative to anticipate, predict, and plan for the future. Falling a step behind is a quick path to losing market share.

For example, the recent shift to mass homeworking and the international uptick in tech solutions to support the change has created entirely new pain points for millions of people.

In a short amount of time, the pandemic taught nearly everyone how to communicate online. Zoom has made tech-deficient industries like food service more accessible and shifted many consumers’ preferences from in-person or in-home to virtual options (even in once digital-resistant markets like Asia).

These types of changes have far-reaching tentacles that can affect consumer needs across a wide range of industries.

Avoid the temptation to use customer research as a tool for reflection. Instead, bring a wide-angle lens to work and examine what’s happening in your industry now and in the months and years ahead.

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How to Identify Customer Needs

Understanding your customers shouldn’t be a guessing game based on experience or hunches. To get inside your customer’s mindset, you need to learn who they are and exactly why they need your product or service. The best way to do this is by asking them directly.

A customer needs analysis helps determine a company’s position in their market or how they stack up against the competition at meeting customer needs.The insights can be used to make changes to offers, marketing, and customer service to deliver the best possible value.

The first step in this process is to conduct customer research to understand customer behavior. You’ll use this information to create personas that provide a detailed description of your target audience.

There are several tried-and-true methods for gathering helpful customer feedback. While any one of them can be beneficial, you’ll get the most robust picture of customer needs by using more than one.

Conducting Customer Needs Research

The easiest way to identify your customers’ needs is to ask them. The goal of market research is to learn about your best customers’ backgrounds, what drives their purchasing decisions, their expectations for your product or service, and what challenges may get in the way of their satisfaction.

The most common tools for this type of research include:

1. Customer interviews

The most direct way to collect data is by having one-on-one conversations with existing customers. Interviews typically elicit the most detailed answers, but customers may be less forthcoming without the promise of anonymity.

2. Focus groups

Pulling together a small group of handpicked customers is a quick way to get more feedback. Hiring a market research firm allows participants to speak candidly. On the downside, individuals can sometimes become influenced by the opinions of others in the group.

Focus group research

3. Surveys

The fastest and most cost-effective method for gathering information from a large group of customers is a survey, typically using an online tool. On the downside, response rates tend to drop if the survey is too long or detailed, limiting how much information they provide.

With any of these methods, you’ll first need to craft questions that elicit the type of feedback you’re seeking. After gathering demographic information (age, marital status, location, occupation, etc.), it’s best to devise open-ended questions that allow the customer freedom to say anything without outside influence.

A few examples of helpful market-research questions include:

● What specific problem were you trying to solve when you chose our product/service?

● What made you choose us over a competitor?

● How well does our product/service meet your needs?

● What do you like most/least about our product/service?

● What challenges have you encountered with our product/service?

● What do you wish our product/service could do?

● How would you rate your experience with us?

● Would you recommend us to others (why/why not)?

Questions should primarily focus on your brand, competitors, and customers’ buying behavior and mindset. This may also include asking broader questions about their overall values, interests, and opinions.

While there’s nothing quite as valuable as a customer’s own words, it’s possible to get valuable insights without speaking directly with a person using social media listening or keyword research.

Social media listening is the process of analyzing online conversations and trends related to your brand and to your industry as a whole. It goes beyond monitoring basic metrics like mentions and followers to consider the mood behind the data instead.

People frequently head to Facebook, Instagram, and Twitter to candidly speak about products and services. Watching for this real-time feedback about what they like and don’t about your company or your competitors is a great way to identify opportunities for change or growth.

Keyword research looks at the popular keywords and terms related to your product or service that people type into search engines. For example, try typing an industry-related question into Google’s search bar and see what auto-suggestions pop up. This is a good glimpse into what problems your customers are trying to solve.

Also, use a tool like Moz Keyword Explorer or SEMrush to research words related to your offer and find similar keywords. Check the average search volume to determine what language your customers and prospects use to describe their needs.

Creating Customer Personas

target personnas

It’s a good idea to turn data you collect during customer research into a customer or buyer persona. This fictional representation of your ideal customer will ensure that every part of the customer experience is tailored to their needs.

Focus on your best, most loyal customers. What are the patterns and commonalities among them? What demographics do they share? What are their similar experiences, motivations, and opinions?

Distill all the data into one profile that includes the most common demographics and interests. Include answers to what needs, and pain points brought them to your solution, what considerations went into their purchasing decision, what objections they had, the competitors they considered, and what made them purchase from you.

If you serve multiple market segments or different types of customers, you may need more than one persona to address each group.

This fictional profile provides a simple, actionable snapshot of your prospective customers’ mindset and behaviors. It reveals the specific needs that drive them to choose you, a competitor, or no solution at all.

Customer personas typically include a fake name, stock photo, and beautiful design, but it’s unnecessary. Sharing the same information as a “customer needs statement” in a basic text document is also perfectly acceptable.

Either way, share the profile with your team to give everyone a deeper understanding of your customers’ needs. These profiles should guide everything from product development to prioritizing projects and marketing campaigns to customer service solutions.

Understanding Customer Behavior

Good customer research should uncover the many factors influencing your ideal customers’ purchasing decisions. The best research is robust enough to determine how customer mindset and behaviors change at various points along the customer journey.

The strategic practice of detailing these changes is called journey mapping. The goal is to outline the exact steps that customers take as they move from awareness to research and consideration, purchase and delivery, and finally (hopefully) to loyalty and brand advocacy.

If your research sample is large enough, segment the results based on where participants fall along the journey map. This allows you to analyze how your customer’s mindset and behavior changes over time.

Look for recurring trends or common roadblocks for each of the different stages. This added context can help you make more specific improvements to the entire customer experience.

How to Deliver on Customer Needs

Once you have all the necessary insights to identify your ideal customer and their needs along the buying journey, it’s time to put the information to good use.

First, review the research for any glaring problems that need a quick solution, especially anything driving customers away. Prioritize these issues and assign the appropriate staff to implement changes.

For example, if multiple customers expressed frustration about long wait times for answers to simple questions, you may decide to add a FAQ section or a live chat option to your website.

Customer research is about more than finding problems. Just as important is using the information to make proactive changes that allow your company to grow. Every part of your company can benefit from the insights of a customer needs analysis.

The key is to look for gaps between your business and customer needs. Finding innovative ways to reduce even minor gaps can make a significant difference in customer acquisition and retention.

Marketing

A customer needs analysis almost always offers insights for optimizing marketing efforts. The better you understand customer mindset and customer behavior, the more effectively you can tweak your marketing messages.

Use the data to speak specifically to the needs of customers at every point along the journey map. Your research should tell you exactly what will motivate them to make a purchase.

In addition to understanding what content will resonate best with customers, you’ll also know their preferred social media or other marketing channels.

Offer development

Asking questions about what customers wish your product or service did can help you discover areas for improvement or create an entirely new offer.

Examining the data to determine a need before taking action dramatically improves the success rate of new product or service offers.

Also, when you repeatedly and consistently conduct customer needs research, you’ll be more likely to notice a shift in market trends early. This can help you be the first to address a burgeoning need and capture market share before the competition.

Customer service

Identifying the varying needs of customers along the journey map can help you better tailor good service solutions. It’s easier to capture questions, comments, and suggestions when you know the preferred social media channels.

Knowing where roadblocks tend to occur along your customer journey map also allows the customer service team to provide perfectly timed help. This includes upsell and cross-sell offers that solve the exact problem that your customers face.

Customer retention

Studies have shown that acquiring a new customer costs at least 5x more than retaining one. The best use of a customer needs analysis is to devise methods for reducing customer churn and creating repeat, loyal buyers and brand advocates.

Customers’ expectations include special recognition when they’re a “good customer,” according to Accenture. Use your research to ask about ways your customers would like to be acknowledged (handwritten notes, social media shoutouts, discounts, etc.).

You can also ask questions to test whether a referral program might be beneficial in growing your market share.

Ongoing Market Research

Ongoing  market research

After making changes based on customer research, communicate them to your customer base. Share the story of how you identified customer pain points and the efforts you took to resolve them. It demonstrates that you care about customer experience, which builds trust and increases engagement with your brand.

It’s also essential to ask for customer feedback on how well those efforts meet their needs. This is an excellent opportunity to send another survey and collect more data.

Your research shouldn’t end there, however. It should never end. Build feedback loops into your business operation so that you are constantly revalidating your unique selling proposition (USP) and always striving to understand your customers’ needs.

Keep a pulse on how your customers feel with interviews, surveys, and social media polls. Also, frequently review metrics like conversion rate, acquisition cost, and customer lifetime value to track how well you’re meeting customer needs.

Some businesses may assign a dedicated team to collect customer insights, while others may prefer to add it to the responsibilities of existing departments. Either way, develop a system for discovering, analyzing, and delivering on customer needs.

By creating a repeatable process, you’ll shine a bright light on customer experience and stay one step ahead of the competition on addressing customer needs.

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How do you ensure that the research you commission moves your company to action, creating competitive advantage and growth for your business?  In our free guide we share our top tips for preparing and running an effective workshop, as well as practical workshop exercises that you can take away, apply to your business and use to ensure that your research really does drive business change.

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