How To Understand Customer Needs in 4 Steps

Knowing and understanding customer needs is at the centre of every successful business, whether it sells directly to individuals or other businesses. Once you have this knowledge, you can use it to persuade potential and existing customers that buying from you is in their best interests.

One of its most potent features is the potential for data to help us better comprehend and respond to the shifting behaviors of customers. By enabling us to comprehend human behavior and movement, it has been used to address the spread and effects of the Covid-19 pandemic on a societal level. Many of the methods used for this were initially developed by businesses; for example, in the financial industry, businesses have mastered the art of spotting suspicious behavior that could indicate fraud. It is used in marketing to create the “360-degree customer view,” which aids in identifying those who are prepared to make purchases and firmly places goods and services in their line of sight. Data helps us better understand the world around us, including the incredibly diverse range of people who live in it, whether it’s about projecting the spread of pandemics or predicting what people want to buy!

The fundamental tenet is that you can more accurately predict what your customers will want the more you know about them. Additionally, you can do so in a manner that is most convenient for them. I like to use the analogy of tuna fishing here. Initially, this line of work was very hit-or-miss; fleets of boats would set out with little more information than the spots they had previously found to be productive.

Our capacity to locate and catch fish increased as we advanced technologically, first by learning to navigate by the stars, then by studying meteorology to predict the weather, up until the development of GPS and sonar. Today, satellites and underwater sensors allow us to track the movement of fish. Commercial tuna fishermen must stay on the cutting edge of this technology arms race. If you don’t, your business will quickly fail as a result of competitors outfishing you.

A common starting point for many businesses is transactional and point-of-sale data. It allows us to understand both general consumer trends and regional preferences by telling us what people are purchasing and how much they are paying for it. This aids in the design of goods and services that consumers are likely to purchase. Additionally, it enables us to price our products at a level where we are confident they will sell.

Also hugely valuable is customer demographic data. We can determine who is buying what once we know what people are purchasing. As always, combining these various types of data is much more beneficial than doing so separately Working with personal data entails certain risks and responsibilities, so it’s crucial to comprehend data governance principles in order to comply with all applicable laws and ensure that you are worthy of the high level of trust that your customers are placing in you by giving you access to their personal information.

Attitudinal data is a different type of data that shouldn’t be disregarded. This information is gathered either through basic market research or, in more advanced data strategies, through techniques like social media sentiment analysis. By monitoring chat over networks like Twitter and Instagram, advanced analytics applications that use artificial intelligence (AI) – typically machine learning – can generate automated reports telling us who is using our products and what they are saying about them.

Internal data (generated by and specific to your company) includes transactional data, point-of-sale data, and customer information that is gathered through programs like loyalty programs or behavior tracking. However, you can also purchase customer data, and other external datasets can be very beneficial for gaining additional insights.

This can include economic information and GDP growth to ascertain where the purchasing power is, meteorological information to comprehend how the changing seasons or weather patterns affect purchasing habits, and local and global events One enterprising window installer and manufacturer is credited with being the first to use publicly available data on crimes like vandalism to determine the most effective locations for its rapid-response window repair services.

It also includes the kinds of information we use when we use tools like Google Trends to find out what people are searching for online, as well as more recent innovations like Facebook’s Custom Audience service. This allows users to upload information about their own clients, and then uses algorithms to display their ads to other clients who have a similar profile.

When you combine all of these datasets, which calls for a fairly sophisticated analytics infrastructure, you can perform all kinds of magic. In a well-known early analytics revolution example, retailer Target showed that it could foresee when customers would become pregnant before they even began shopping for baby products. More recently, Amazon has talked about developing anticipatory shipping. This allows it to make sure that products are kept in the distribution centers that are closest to where they will be needed right now, but in the future, it hopes to be able to send products to customers before they even purchase them.

A company can start to move towards advanced use-cases involving real-time data as its capabilities and experience with data and analytics grow, with the goal of capturing so-called “micro-moments” — split-second buying opportunities that exist for only a moment but can be extremely profitable if identified and taken advantage of at scale. Retail behemoth Walmart collects petabytes of data on customer purchasing patterns, but its prediction algorithms only take into account the most recent and up-to-date transactions. This is because it is aware of how quickly consumer behavior can change and that only recently collected data can be used to predict what will happen in the near future.

An illustration of a micro-moment is someone getting off an airplane after a flight. They might want to get a hotel room, hail a cab, or simply eat. Businesses in the past might have hoped that customers would see an advertisement for their services in the arrivals area. As people check in to let their friends and family know that they’ve arrived safely, marketers can now take advantage of this life moment to send them a personalized text message, phone notification, or Facebook pop-up.

Businesses now have unprecedented abilities to understand their customers thanks to data technology. We can more accurately anticipate what customers will want by combining transactional, demographic, and attitudinal data from internal and external sources, and we can ensure that we are in the right place at the right time to deliver it.

10. Understanding Customer Needs

Types of customer needs

Essentially, there are two categories of customer needs: physiological and psychological These needs frequently overlap, which can make it difficult to distinguish between them. The easiest needs to identify are those that have immediate solutions, such as physical needs. For instance, when someone is hungry, they require food.

Although psychological needs are frequently the more potent influence on customer decisions, they can also be more difficult to identify. For example, a customer may have a physical need to eat, but may also have a psychological need to eat something that will make them feel a certain way. Customers’ psychological needs may determine whether they choose a salad over a burger because they want to feel healthy.

Consider both the physical and psychological needs of the client in order to better comprehend their requirements. Some common types of customer needs include:

What are customer needs?

Customer needs are the motivation behind a customers decision-making process. Consumers are motivated by their desires, which lead them to choose one product over another when making purchases. Businesses research the needs of their customers to develop better products, marketing plans, and customer service.

How to understand your customers’ needs

A thorough understanding of your customers needs requires analysis. Here are four steps you can take to comprehend your customers’ needs and translate this knowledge into results you can act upon:

1. Create a buyers persona

You must first comprehend who your customer is in order to comprehend their needs. Making a buyer persona, which is a fictional account of your ideal customer and is based on research and your existing clientele, is a good place to start. It outlines the demographics of the target market for your business, including their likely age, gender, location, income, and interests.

You can consider the requirements of that audience if you have a thorough buyer persona. Women in their 50s, for instance, may have different needs than men in their 20s. When you are later researching and defining your ideal customer’s needs, a buyer persona assists you in keeping them in mind.

2. Seek feedback from your customers

Getting direct feedback from your customers is one of the best ways to understand their needs. Customers can be questioned about what they like, dislike, and would like to change about your products. There are various methods for doing this, including distributing surveys, hosting focus groups, and monitoring conversations on social media.

Whenever you ask your clients for feedback, keep in mind to include a variety of questions. Learn as much as you can about their physiological and psychological requirements. Along with their actual use of the product, inquire about how they felt after using it.

As you gather this feedback, total up the findings and put the suggested changes into practice. After that, you can check with your clients to see if the modifications have improved their experience. Understanding customer needs and effectively using the information you receive depend on this process of getting feedback, making changes, and reevaluating.

3. Analyze your competitors

Determining the requirements and preferences of your customers involves your competitors as well. Your audience will start to anticipate that all of their purchase options will include this if one of your major competitors introduces a new service or feature. For instance, your audience might anticipate that you will provide a 30-day free trial if a software provider that sells a product similar to yours does so.

As you gathered customer feedback, you can similarly assess your competitors. Interview clients of the competing company, hold focus groups where you compare the two products, and monitor social mentions of those clients. You can use this information to better your products by understanding how your competitors are meeting the needs of your audience and how they could do so.

4. Craft a customer needs statement

You can precisely define and condense the needs of your audience with the help of a customer needs statement. Your customer needs statement’s content should be informed by the information you gathered in the preceding steps.

There are a few components to strive for when creating a useful customer needs statement:


How do you understand customer needs and expectations?

Here are some practical tips for understanding customer needs:
  1. Ask yourself and your team members these simple questions: …
  2. Put yourself in the shoes of one of your most important clients and ask yourself:
  3. Utilise external surveys to gauge customer satisfaction: …
  4. Analyse your customer feedback: …
  5. Get personal feedback from your customers:

What are the 4 main customer needs?

The four key customer needs
  • A fair price.
  • A good service.
  • A good product.
  • To feel valued.

How do you understand your customers?

6 Tips for Understanding Your Customer and Your Business Competition
  1. Use syndicated research to gain a 360-degree view. …
  2. Ask these six key questions about your customers. …
  3. Identify important consumer segments. …
  4. Evaluate consumer motivation. …
  5. Do a competitive analysis. …
  6. Consider your indirect competitors as well.

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