Many businesses assert that the quality of their product or service sets them apart. However, what held true two to three years ago may no longer be the primary driver for customer choices today. The key to winning customers in the current landscape revolves around delivering an exceptional customer experience. To achieve this, a profound understanding of customers’ needs is crucial. Thus, conducting a thorough analysis of customer needs becomes essential in ensuring an optimal customer experience.
What is customer need analysis?
Customer need analysis includes various factors that drive consumers to purchase and be a continued user of a product, brand, or service. These needs range from basic requirements like quality and affordability to more intricate considerations such as aspirational brand identity or alignment with personal values. Ongoing analysis and capturing customer feedback, often through surveys and benchmarking studies can lay the foundation for a holistic customer needs assessment.
Understanding customer needs is important for several reasons. Firstly, it aids in making informed decisions regarding product development and packaging, allowing businesses to prioritise features based on customer preferences. This insight can also be applied to existing products and services, enhancing and evolving the product offering over time.
Secondly, a deep understanding of customer needs is invaluable in continued acquisition. Tailoring messages to align with customer desires and highlighting features that matter most ensures that marketing efforts resonate with the target audience. For example, in the case of freight movement, shifting gears towards sustainable practices and zero-carbon processes can be required if deemed important by companies with carbon-neutral goals, as revealed through customer needs analysis. Overall, this understanding becomes a strategic tool for businesses to align their offerings with customer expectations and enhance customer satisfaction.
Besides, staying aligned with evolving market needs is another important task for businesses to remain relevant in a changing landscape. We all know that consumer preferences shift and technologies evolve very quickly, these factors can reshape whole industries in no time. Thus, businesses have to adapt to meet new demands. For instance, the transition from paper invoices to digital invoices has become prevalent as companies seek efficiency, cost savings, and environmental sustainability. Digital invoicing streamlines processes and demonstrates a commitment to innovation and environmental awareness.
Similarly, in recent years consumers started to prioritise convenience and speed increasing the demand for expedited shipping options, such as next-day delivery. To cater for this need, businesses may need to invest more in logistics infrastructure and optimise supply chains.
Research indicates that companies, especially SaaS firms, tend to significantly boost their revenue by investing in customer experience initiatives such as customer needs analysis and others. The Temkin Group’s findings highlight that companies with a $1 billion annual earning can anticipate an additional $700 million within three years of such investments, emphasising the substantial impact of prioritising customer experience on overall financial success.
Types of customer needs
Functional needs
Functional needs focus on the basic utility of a product or service. These are aspects like usability, design intuitiveness, and affordability. Ensuring that customers can easily comprehend and make use of your offering is crucial, as is making it accessible through reasonable pricing.
Customers typically assess potential solutions based on their ability to fulfil a specific task or function. The product or service that best addresses their functional needs is likely to be the one they opt for.
Functional needs can vary widely or be highly specific, depending on the customer’s purchasing criteria. For instance, a novice chef might express a basic need for a kitchen knife. At the same time, a seasoned culinary enthusiast will likely specify a need for a precise, high-quality knife suitable for intricate food preparation. Another customer who has experienced the inconvenience of using subpar products might articulate their need as requiring a durable and easy-to-clean kitchen knife.
With a keen understanding of these diverse functional needs, a company specialising in kitchenware could innovate and introduce new products, such as a range of knives catering to different culinary requirements and preferences.
Social needs
Social needs centre around the impressions customers form during interactions with your products or services. While not typically the primary consideration during a purchase decision, social needs can exert influence on the final choice.
Taking the example of kitchen knives, imagine a customer who is part of a culinary enthusiasts club that values artisanal and handcrafted kitchen tools. In this scenario, the customer might opt for a knife with unique design elements or from a renowned artisan brand to align with the preferences of their culinary club peers.
On the opposite, if the customer is a health-conscious individual engaged in online cooking communities, their social need might centre around selecting knives endorsed by chefs to promote healthy cooking practices. This choice aligns with the health-conscious community’s values and could influence customer decision-making.
Emotional needs
Emotional needs, akin to social needs, typically take a backseat to functional requirements. While social needs are connected to how a customer wishes to be perceived when using a product, emotional needs centre on the desired feelings associated with the product or service.
Shifting the focus to kitchen knives again, consider a customer who sees cooking as a therapeutic and calming activity. In this case, they may be inclined to choose a straightforward, reliable knife over a more intricate option. Conversely, if the act of cooking brings forth nostalgic emotions connected to family gatherings, the customer might lean towards a brand that resonates with those sentimental memories.
Identifying emotional needs can pose a challenge, but companies that successfully discern these needs among their customers can leverage this information to customise and enhance their product messaging effectively.
Understanding and addressing these 3 types of customer needs are key to delivering a comprehensive and satisfying customer experience.
Uncovering customer needs
One of the most efficient tools for disclosing customer needs is a customer needs survey. For active customers, the survey focuses on their direct experience with the product. Questions include inquiries about how well the product met their needs, the ease of learning to use the product, the simplicity of completing tasks, and any specific features they might want to change. These questions aim to gather feedback on the product’s functionality, usability, and overall satisfaction from customers actively engaged with the brand.
Passive customers, on the other hand, are targeted with questions that explore the motivations behind becoming a customer, potential improvements to enhance their experience, reasons for discontinuing product usage, and features preferred in competitor products. These questions into the factors influencing customer loyalty, areas for improvement, and insights into competitive product advantages.
| Questions for Active Customers | Questions for Passive Customers |
| How did our product meet your needs? | What motivated you to become our customer? |
| How easy was it to learn to use the product? | How can we improve your experience? |
| How easy was it to complete the task? | Why did you stop using our products/services? |
| What features do you want to change in our product? | What features do you prefer in our competitor’s product over ours? |
Beyond standard surveys, the inclusion of a Voice of Customer (VoC) program can be another useful tool. This program involves more in-depth surveying or interviewing of customers to gain a deeper understanding of their experiences. It emphasises the importance of placing the customer’s voice at the core of strategy development to identify unmet needs within the target audience.
To enhance the customer needs analysis, the VoC program can be supplemented with online survey tools that offer various survey types such as Net Promoter Score (NPS), Customer Experience Score (CES), Customer Satisfaction (CSAT), and more. Gathering textual responses and employing sentiment analysis tools further enrich the analysis by uncovering qualitative insights.
This approach to customer needs analysis is invaluable, particularly in highly competitive markets. By systematically gathering and analysing customer feedback, businesses can uncover key areas for improvement and potential drivers for increased sales. The summary concludes by hinting at an upcoming exploration into the methods involved in performing a customer needs analysis.
Conducting a comprehensive analysis
As you can see, conducting a thorough customer needs analysis has a direct impact on the bottom line. Below are essential steps that can result in valuable insights about your customers’ needs.
1. Identify the Customer Journey
Customer journeys show various buyer interactions with your product and help track how and why prospects become paying customers.
First, try to identify points in the customer journey where expectations are not met. Users enter interactions with preconceived expectations, and when these are not fulfilled, pain points emerge. To recognise such instances, delve into the user’s persona, understanding their priorities, background, and existing knowledge. Assess interactions for conflicts with these expectations, considering both explicit complaints and subtle cues. In some cases, users may bring expectations from past experiences, and organisations should be mindful of setting accurate expectations early in the journey to avoid potential disappointments.
Proceed with identifying unnecessary touchpoints or interactions that could be streamlined for efficiency. This may involve eliminating redundant steps or incorporating elements to enhance the overall process.
Simultaneously, pinpoint the low points or areas of friction within the journey. These critical pain points, often visually represented as dips in the journey diagram, need prioritised attention. Collaboration with the team is essential to determine which issues should be addressed first, considering dependencies and constraints.
Additionally, focus on high-friction channel transitions, especially in journeys spanning various devices or channels. Streamline points of friction, ensuring a seamless transition for users. For instance, when users switch from newsletters to websites, provide a smooth experience, avoiding disruptions like landing on irrelevant pages. Thinking creatively and building bridges for users can significantly contribute to the overall success of the customer journey optimization process.
2. Collect Data through User Segmentation
Define your target audience for a detailed view of their needs, enhancing the overall experience. Once the target audience is established, the next step is to segment customers based on relevant factors. They can include demographics (age, gender, location), psychographics (lifestyle, values, interests), behaviour (usage patterns, purchasing history), or any other characteristics pertinent to your business. The goal is to create distinct groups that share common traits.
Surveys can be a useful source of data related to demographics, purchasing patterns, preferences, and other distinct categories. You can also use interviews, existing customer data, focus groups, and other data collection methods.
3. Curate In-App Customer Feedback
Continuously collect feedback throughout the year using embedded app tools, revealing ongoing customer needs and goals. One of the ways is to integrate feedback collection tools directly into your application. These tools can take the form of surveys, feedback forms, or prompts strategically placed within the app interface. Ensure that they are unobtrusive, user-friendly, and seamlessly integrated into the overall user experience.
4. Examine Data Using Appropriate Tools
Visualise data trends through powerful web tools, collaborating with product and development teams to implement suitable interfaces. The best data visualisation tools include Google Charts, Tableau, Grafana, Chartist.js, FusionCharts, Datawrapper, Infogram, ChartBlocks, and D3.js. Besides, you can use your NPS dashboards to get a better perception of your customers’ preferences and complaints.
5. Analyse Findings to Determine Customer Expectations
Then you can proceed with grouping responses by positive or negative emotions.
Positive Emotions:
Now, with a clearer understanding of the required changes, you’re well-equipped to enhance customer satisfaction. Additionally, identifying your strengths and planning future enhancements.
Negative Emotions:
By analysing negative user feedback, you’ll pinpoint areas for improvement, crucial for boosting customer satisfaction. This process also helps identify weaknesses. For instance, users might highlight dissatisfaction with support and UX, signalling areas that require attention and improvement.
6. Align Organisational direction with Customer Needs
Further on you will need to act on the gleaned information by working with product and service teams to interpret data and plan actionable changes, focusing on adjustments to understand effectiveness.
Conclusion
When conducted effectively, a customer needs analysis not only showcases your business’s strengths but also highlights areas for improvement. The key is to prioritise your customers and cultivate expertise in your product and industry. Additionally, stay attuned to external factors like pandemics, evolving regulations, market trends, or emerging technologies that could impact your product’s relevance. Be prepared to swiftly adjust your plans to align with your customers’ expectations.
