How to identify, understand, and exceed customer needs

But too many companies create their business plan before determining what it is they’re solving.

They follow a trend, jump on a bandwagon, or come up with a “brilliant” idea without ever stopping to think about what they’re actually accomplishing.

A company’s larger purpose should be rooted in one thing: customer needs. In this post, we’ll look at:

• What "customer needs" are
• Why you need to know your customer’s needs
• Types of customer needs
• How to identify customer needs
• How to solve (and exceed) customer needs

A customer need is anything that motivates your target audience to purchase a certain product or service. It can be as large as investing in new business software or as small as picking up a coffee on the way to work.

Think of a customer need as a discovery of a problem.

For example, a customer considering purchasing new software for their business might recognize that their team could be working more efficiently. Their need would be to improve efficiency within the business.

In the coffee example, the customer’s need would be a pick-me-up before a long day in the office. They’re recognizing that they’re feeling tired, so they need something that will help them stay awake for a positive customer experience.

While customer needs (and the products they ultimately purchase) might look a bit different between the B2C and B2B crowds, understanding how customer needs influence purchasing decisions is important for both groups.

About 80% of companies believe they deliver a “superior experience” to their customers––but only 8% of customers agree.

This disconnect between companies and customers, referred to as the “delivery gap,” happens because brands aren’t paying enough attention to their customers.

In fact, 68% of customers said their main reason for leaving a company is because they felt like the brand didn’t care about them. This is higher than any other response combined.

Understanding customer needs helps you tailor product and service offerings to meet expectations at every stage of the buyer’s journey.

Understanding customer needs before creating a product or service can ensure you’re fulfilling an actual demand and can go beyond customer expectations. By designing your offerings around what your audience is looking for, you can make an instant connection with customers who already recognize your value––which results in a more efficient sales process with happier, more loyal customers.

Understanding customer needs and successful customer loyalty can also help you predict challenges your customer may face as their business goes through expected changes and pivots.

You’re able to grow alongside your customer by continuously creating new products and services, ensuring you’re able to stay up with changing demands and needs throughout a customer journey.

Customer needs come in many different forms. It’s important to understand what they are and how each can be fulfilled. Here are the ones you'll come across most frequently:

1. Price

Price is one of the most common customer needs to think about when providing a positive customer experience. No matter what product or service you’re offering, customers are going to have a budget or price expectations when they're making a buying decision.

When talking to a lead, be transparent about your pricing. Don’t try to hide costs or additional fees for the sake of closing a sale. This could lead to negative customer feedback. Let customers know exactly what they will pay and what they’ll get for that price.

For customers concerned about price after a sale, find out why price is suddenly an issue.

New budget constraints or cashflow issues are a common problem for the customer journey. Customers may also experience a change in value in your products or services if their industry or company goes through a major shift, meaning they may just feel like your product legitimately isn't a good solution for them to pay for anymore.

Recognize that a pricing need for customer satisfaction is not always due to a lack of funds. By understanding the customer’s reasons behind their need for a lower price, you can provide the right solution that makes your customer (and you) happy.

2. Functionality

When identifying customer needs, keep in mind that every industry and business has unique challenges, which translates into each customer using your products or services differently. It’s not uncommon for different customers to have different functionality needs, even while using the same product.

A typical functionality need prevents the customer from using the product or service the way they had hoped, which negatively affects customer expectations. It could be a bug, they might be trying to use the product beyond what it was designed for, or they might just be looking at the problem from the wrong angle.

It’s your job to find that out.

For example, say a customer comes to you struggling to move data from your product to another tool they’re using. They’re currently spending too much time manually transferring information across apps and they feel as if there should be a more efficient way to do things.

In this case, the customer would need your product to be compatible with the other app they’re trying to connect with. By understanding their end goal (e.g. working more efficiently), you can better evaluate the big picture and provide more specific solutions.

3. Support

Don’t stop educating a customer just because they’ve made a purchase. It’s likely that they’re going to need additional support, ideas, or direction as their business grows and changes.

We often think of support needs as a form of customer service: when a customer has an issue, they’ll come to you for help.

However, fulfilling support needs also means anticipating the challenges a customer might experience. Staying one step ahead can help reduce frustration and make your customers more efficient.

To better understand the direction a customer’s business is moving in and the problems they might run into, make sure you’re asking customers to clarify their current needs up-front. Ask good questions and push for more detailed answers.

This can minimize back and forth exchanges and you can get them exactly what they need faster.

You can’t solve a customer need if you haven’t identified it first. Providing helpful solutions means taking the time to properly pinpoint and analyze a need so you can deliver the best option.

Let’s walk through how you can identify, analyze, and eventually solve your customer needs.

1. Gather as much information as possible

Each customer need will have a different outcome, but solving the problem always starts in the same place: research.

In order to properly identify a customer need, you first need to gather as much information as possible from your customer through market research and customer research.

Whether you’re doing market research or you’re talking face-to-face with a struggling customer, think of the acronym SPIN:

• Situation
• Problem
• Implication
• Need/Payoff

The SPIN process builds step-by-step until you’ve recognized the customer’s need/payoff:

While this approach is commonly used in sales, it can also give you the framework you need to better understand where your customer is coming from.

1. Start with understanding the situation.

Take a look at what is already happening, including who your customers are, what they are purchasing, and other demographic characteristics like job title or company size.

Consider why they’re making the purchasing decisions they are and what those costs look like. When achieving customer loyalty, think about what problems they’re trying to solve and how they’re going about it.

2. Next, identify the problem.

As you work on customer research, think about these questions. What is standing in the way of your customer reaching that goal? Why haven’t they been able to achieve it on their own?

Identify the solutions they’ve already tried, as well as the unique challenges holding them back. Also take a look at where they started, asking what pushed them to try and solve the problem in the first place.

3. The third step in gathering information is implication.

Find out what would happen to the customer if they are unable to solve this problem. Would they need to close their business doors or would it prevent them from reaching their annual goals?

In other words, you need to establish the customer’s cost of the problem.

4. Finally, you’re able to understand the customer’s need/payoff.

Using the information you’ve gathered during the other questioning phases, you can start to discover the outcomes they’re hoping to achieve through solving their problems.

For example, a customer comes to you saying they need to cut costs. Working through the situation, problem, and implications, you determine that their team isn’t meeting goals and they want to introduce some additional tools.

In this case, despite claiming they’re having budget issues, they might not actually need to cut costs. What they really need is to empower their current team to work more efficiently.

Through the SPIN framework and prompting your customer with the right questions, you’ve helped them discover a better solution to fit their perceived need.

2. Run a customer needs analysis

After you’ve gotten to know the challenges your target audience is facing, it’s time to analyze how prepared the market is to fulfill those needs––and where your company is positioned.

This is typically done through a customer needs analysis survey.

A customer needs analysis survey helps you see how well equipped your company is to solve challenges or problems compared to your competitors. It also allows you to see how you’re perceived within the market.

Center your customer needs analysis survey around questions related to brand awareness and your brand compared to competitors. Questions might include:

• Who is in charge of purchasing decisions for your company/household?
• Where do you research products before purchasing?
• What is your budget for products in this category?
• What features or benefits do you look for when making a product purchasing decision?
• How do you see this product improving your life?
• What other companies or products did you consider purchasing from?
• How did you see those companies or products improving your life?
• Why did you ultimately make the purchasing decision you did?

Get specific, and provide different options or leave an open response box so you can get an accurate idea of your customer needs.

This customer needs assessment from Project Now provides details responses, giving a more comprehensive look at the challenges their customers are facing:

If you have multiple customer audiences or products, use multiple surveys to ensure you’re able to relate specifically to each individual, which helps with customer satisfaction.

You’ve gotten to know your customer and their challenges. You’ve analyzed where you sit in the marketplace. Now, all that’s left to do is solve your customers’ needs.

Well, easier said than done.

Customer needs continue to develop and change even after a prospect has converted. In order to solve them, you need to look at the problem for what it usually is––a communication issue.

Somewhere along the line, you and your customer have failed to continuously communicate about their expectations for your product’s capabilities. In order to meet their changing needs after converting into a customer, you need to keep the conversation going.

Fulfilling any customer need starts with improving communication on both sides. Here’s how:

1. Create consistent and clear internal brand messaging.

Customer needs often arise out of confusion. They might have been told your product can complete a task it actually can’t, or they are hearing conflicting advice from two different sales reps.

Create consistent messaging among all your team members. Make sure each employee is properly trained on company values and goals, as well as product and service features and capabilities. Use continued training and seminars to ensure each team member is up-to-date with changes or new developments.

Also, make it a priority to keep detailed notes on conversations had with each customer. Log the questions a customer had and the solutions they’ve been given using a tool like a CRM. (That's what we do!)

This allows other reps from any team to continue the conversation smoothly rather than present conflicting solutions that might create confusion:

2. Use a knowledge base to make implementation and troubleshooting easy.

While one-on-one onboarding or customer training is great for building relationships, it’s also time-consuming. It’s not always possible to walk customers through their issues––and they might not always want it.

When customers want on-demand responses and thorough instructions they can refer back to, a great online knowledge base can come in handy.

A knowledge base is like an extremely detailed frequently asked questions page. It’s a centralized database containing information, data, and step-by-step guides for making the most out of your platform.

For example, our Help Center acts as a one-stop location for customers needing additional guidance or instruction:

Having an extensive knowledge base is great for both your customers and your team. Customers are able to get the answers they need without needing to speak with a rep and your support team can point customers to relevant pages, saving time.

3. Make it easy for customers to give you feedback.

Feedback is an inside look into your customer’s mind. It can provide deep insights into what they’re looking for, the challenges they’re facing, and whether or not you’re meeting their expectations.

To collect as much feedback as possible, you need to make it easy for them to share insights and ideas.

Take every opportunity to connect with your customers and ask for feedback. Send survey requests after engaging with a customer service rep or ask for reviews after a customer has made a purchase. You might be surprised by the valuable insights you find.

AND.CO adds a feedback call-to-action at the end of all of their newsletters, making it easy for customers to request features or get in touch.

If you have close one-on-one relationships with your customers, just send a personal email message asking for their feedback and where you could improve. Consider using anonymous forms for more candid responses from customers.

4. Recognize when needs are outside your scope.

You can’t be everything to everybody. There will be times when a customer comes to you with a specific need you just can’t solve––and that’s okay.

However, communication is still key when this happens.

When a customer is experiencing a challenge your product wasn’t designed to solve or they have a suggestion that doesn’t align with your company vision, it’s still important to recognize the thought and effort it took to reach out.

If a customer’s need is beyond what your tool is capable of accomplishing (and it doesn’t align with your goals), point your customer to a supplemental app or tool that can get the job done. Rather than trying to piece together a disjointed workaround that ultimately leaves your customer frustrated and unhappy, a recommendation can improve trust and empower your customers to still work efficiently.

This could be a sign that your market is shifting and customer needs or expectations are changing. Identifying these trends early can help you pivot at the right time.

Your customers will always need something from you. It’s your job to make sure the right information and resources are available to them when that need appears.

Meeting and exceeding customer needs, and gaining valuable insights, begins with being proactive and having productive conversations from the get-go.

Don’t wait for a customer to come to you with an issue. Instead, provide survey opportunities and calls for feedback each time you engage with a customer. Ask follow-up questions to gain insight into their situation, problem, and the implications of that issue. Use a customer needs analysis survey to identify where you fall in the market and what gaps are being left open.

By improving communication between you and your customer, you can create a more efficient needs fulfillment system. With consistent messaging, a strong knowledge base, and a simple feedback process, you can reduce confusion, provide ample support, and stay one step ahead.