10 Steps to Better Understand Your Customers’ Needs

As an entrepreneur, you should understand your customer’s needs as your priority. Businesses that don’t do this quickly fail as an entity.

If you want your business to succeed, you need to work on satisfying real customers’ needs. You must know that you are not selling your products or services, you provide solutions to help them do the job they want to do.

In this article, I want to cover a systematic step-by-step approach for you to understand your customers needs better. Also, at the end of this article, there is a checklist with all steps and questions you can ask your customers for interviews or surveys to achieve the expected results.

Why You Must Understand Your Customer’s Needs

Simply, you will always want to sell more products and services to your customers. But you cannot sell what you want to sell to anyone! You can sell something your targeted customers want to purchase and spend money on your solution. Because of that, it is essential to understand your customer’s needs.

If you don’t understand your customer’s needs, you risk two negative effects on your business:

• A low quantity of satisfied customers and losing every unsatisfied customer.
• You will invest your time, effort, and money in products that cannot be sold. They will stay on your shelves or in inventory at your warehouse.

Negative Effect #1: Low Number of Satisfied Customers

If the customers cannot buy something they want, they will become unsatisfied customers who will search for what they need. However, what is more important is that every new customer that will not satisfy their needs with your business will leave. This means that all your investments in marketing to gain new customers will be for nothing.

Let’s see an example related to this. If you have 1000 current customers for a month and your marketing campaign is good, bringing 100 new customers every month. In the table below, you can see what happens in the next three months with the number of customers you have with 30%, 20%, 10%, and 0% customers with unsatisfied needs, respectively. See the results in the table:

As you can see, with 30%, 20%, and 10% unsatisfied customers, you will continually lose customers, which is the negative butterfly effect. This means you will constantly lose your business’s potential energy in the marketing and current customers. Every improvement from 30% to 10% will give you a dramatic increase in that energy.

With 0% of unsatisfied customers, you will have a positive butterfly effect. (Read in Business Butterfly Effect – The Basics for more about positive and negative butterfly effects.) In this case, you will use the business potential energy in your marketing activities and also in your current customers. You can transform that energy into better income and profit for your small business.

Negative Effect #2: Losing Money Because of a Low Level of Understanding Your Customer’s Needs

With the second negative effect, you will lose your business potential energy stored in your cash and the products you sell to your customers.

First, your cash has a very big potential energy for your business. Without cash, you cannot finance basic business operations. Another thing is that your cash with great business potential energy will be stored in the products without strong business potential energy that you cannot sell.

How can you better understand your customer’s needs?

1. Conduct market research

You should conduct market research to understand your target audience and their requirements better.

You may learn more about their likes, dislikes, habits, and problems by conducting surveys, focus groups, customer interviews, and even using social media.

1. Define your customers. Analyze who your customer is, what, why, when, and where they’re buying specific products to target a specific market niche effectively. In such a way, you will identify your target market and customers with the right purchase intent to respond to their specific requirements.
2. Use surveys. Use surveys to learn more about customers’ experience with your business. They can be online on your website or blog and offline in your store or other places. Using surveys, you can mix current experiences with expectations from potential customers. Use questions about your customers’ demographics, priorities, and pains. To get more personalized information, use an open-ended question.
3. Interviews. Interviews are more personalized ways to get information about your customer’s needs. You can interview your current customers for feedback about your products or services. The interview must include questions about their needs and earlier experience with your products and services.
4. Observe how your customers use your products and services. You need to observe how your customers use your products and services. Observation is more costly and time-consuming but still will bring better results than other methods. With surveys and interviews, your customers know about the process, and there is a possibility that they will not give you the most honest response.

2. Create buyer personas

Buyer personas are imaginary models of your ideal customers that are based on the research you have made in the previous step to understand your customers’ needs better. Here are the steps to create buyer personas:

1. Identify common characteristics. When you look at the data you have collected about your customers in the previous step, try to find common characteristics like demographics, goals and challenges, motivations, and buying behaviors among your customers.
2. Start to develop buyer personas. Now you can start developing your buyer personas. Remember that each buyer persona should have a name, photo, and detailed information about their goals and challenges, motivations, and buying behaviors.
3. Test your newly developed buyer personas: You must test and validate them to confirm that they accurately express their real needs, motivations, and behavior. You can use surveys and interviews to check if they really represent their needs, but it is better to conduct A/B testing of your marketing campaigns. Using A/B testing with different messages based on already developed personas, you can easily see whether your personas drive better results.
4. Use your buyer personas. Use buyer personas for marketing and sales strategies, product development, and customer service steps. This includes how you can contact your customers with targeted messaging.

3. Conduct a Competitive Analysis

Knowing more about your competitors can help you understand what they offer and how they satisfy their customers’ needs. This can help you identify areas to improve or differentiate yourself from them.

Here are some steps you can take to conduct a competitive analysis:

1. Who are your competitors? Start with correctly identifying your top competitors in the market.
2. Collect data about your competitors. You must collect data about your competitors, and you can use these 22 questions to answer. Explore their website and social media profiles. You want to collect data about the following:
   • Competitor’s products and services and features and benefits they offer to their customers;
   • Competitors’ marketing efforts and specifically the pain points they are targeting with their marketing.
   • Competitors’ pricing strategies they are using with their offerings.
   • Customer reviews and testimonials for competitors’ products and services to learn what they are doing well and where they are not so good.
3. Competitive benchmarking. When you get all the data, visualize them using benchmarking that will tell you where they are better than you and where you need to improve something.

4. Create a customer journey map

A customer journey map can help you to improve your customer experience. Map out the typical customer journey from the first interaction to the end of the customer lifecycle. This will help you identify key touchpoints and moments of truth where you can improve the customer experience.

1. Develop your sales funnel to identify the stages of the customer journey. First, you must have developed all your sales funnel stages that a customer goes through when interacting with your small business. These stages will be all the stages inside your customer journey.

You can follow this ultimate guide to build your sales funnel stages and understand the anatomy of your sales process.

2. Identify all possible customer pain points you want to target. This step will require you to build a customer pain map. For each stage, you want to identify possible pains that the customer might be feeling. You can see an example in the image below.

3. Create customer journey map: Create a visual representation of the journey map, including each stage and touchpoint, as well as the emotions customers might feel at each step. This can be a simple flowchart or a more detailed infographic.

5. Define the kind of problems that your customers face.

You can no longer base your decisions on assumptions because customers’ needs, demands, and wishes constantly change in today’s rapidly changing world. So, you must work to identify the appropriate type of problem for every customer segment.

When your product solves a problem that costs customers sleep, revenue, or profits, things are definitely looking up.

Generally, there are four types of problems that your customers can have:

• Latent problem. Customers that have a problem but are unaware of that now are considered to have a latent problem. Because she is still unaware that he has a problem, even if you offer a great solution, she will not buy the product.
• Passive problem. A passive problem is when customers know about the problem but still aren’t motivated or aware of the opportunity to change. Again, these potential customers will require different offerings and different marketing approaches if you want to motivate them to be aware and solve the problem. 
• Active (or urgent) problem. This problem is related to customers that recognize a problem and search for a solution but without taking action steps to solve the problem.
• Vision. This kind of problem arises when customers are aware that they have a problem and have a strategy for dealing with it. They even try coming up with their own solution but are ready to pay more for a better one.

Now you will need to develop a “problem recognition scale” with these four types of problems for each important type of customer.

6. Analyse your customer with the Empathy Map.

A great tool that can help you identify real customers’ needs is the Empathy Map, a tool developed by the visual thinking company XPLANE. This tool helps you go beyond a customer’s demographic characteristics and better understand the environment, behavior, concerns, and aspirations. 

You must respond to six questions using Empathy Map: 

• The first question is, what does the potential customer see? Here you need to describe what the customer sees in her environment.
• The second question is, what does she hear? Answering this question, you need to describe how the environment influences the customer.
• The third question is, what does she really think and feel? At this stage, you must try to sketch out what goes on in your customer’s mind.
• The fourth question is, what does she say and do? At this stage, you need to imagine what the customer might say or how she might behave in public.
• The fifth question is, what are the customer’s pains? You need to think about the biggest frustrations, obstacles between current and wanted situation, and risks she fear taking.
• And the last or sixth question is, what does the customer gain? Think about what they really want or need to achieve, what success is for the customer, and how they want to achieve their goals.

7. Ask your sales team about your customers

Because your sales team is in direct contact with your customers, they can have enough information about them and what they want. Here are some steps you need to take here:

1. Encourage active listening from your salespersons. Your salespersons must be active listeners when they interact with your customers. Ensure that they always ask open-ended questions to find their hidden needs, pain points, and challenges.
2. CRM. In your CRM, they must record their daily interactions with the customers. So, they can record if some customer asks for something you don’t have, and after that, you will analyze if bringing that type of product or service is possible.

8. Customer feedback

Customer feedback is important for understanding their real needs. This data comes directly from your customers.

1. Ensure that you collect and analyze customer reviews. Using customer reviews will help you identify what is good and bad for customers working with your business. You can use platforms for reviews, such as Yelp or Google Reviews, and encourage customers to leave a review. They are great sources of information to track their real needs.

2. Customer service. Also, customer service, like support requests, is a great source of information when you want to understand better your customer’s needs.
3. Use social networks to understand customers’ needs. You need to listen to your customers through social networks to learn about their experience and expectations working with your business.

Also, look for common patterns and themes that can help you identify the areas that need improvement or changes.

9. Market and industry news and trends

To better understand your customers’ needs, you must monitor and follow the news in the marketplace and industry.

Read as many magazines as possible that provide articles on subjects related to your market and industry. You can collect many different kinds of data about what is happening outside of your organization and use it to guide your decisions.

Use these two steps to analyze market and industry trends for a better understanding of the needs of your customers:

1. Business reports. You should first list any important market or industry reports, trade magazines, and other media sources that are crucial to your business. Additionally, you must stay up to date on all of the news and developments in your market or industry.
2. Follow trends. Nowadays, many people research products online before purchasing them to see what’s available and to learn about other people’s experiences with those products and services. You may examine what is trending right now and the phrases that real people are actually searching for using Google Trends and social media trends.

10. Use other online data sources.

Today, everyone shares their own experience with a specific company. So, positive and negative discussions can help you identify potential customers’ needs.

1. Blog comments. Your blog posts may receive various comments if you regularly add new content to a business blog. Don’t ignore the bad comments. Respond that you’ll work to change that impression and seek possible solutions.
2. Explore blogs in your industry and leave comments on them. Choose a few blogs in your industry, read the posts, and add insightful comments. The needs of various people with different problems can also be discovered in the comments area. You can also provide solutions to those problems and invite them to your business blog, where they can read about your business.
3. Locate top industry-related online forums. Start by selecting the best online forums related to your industry. So, search in Google the following: forum: “keywords or phrases.” You will get possible forums with the keywords you’re interested in. Open them one by one and investigate different discussion boards. Now, you can create a list of all the regularly updated discussion forums to keep up with the latest updates.

4. Good and bad things. You need to search the forum you have located in the previous step for potential positive and negative aspects regarding people’s experience with some product, service, or company. Use terms for expressing happiness or complaints regarding their experience with some company. Customers, for example, seem to appreciate the plumber’s response speed and professionalism, according to the screenshot below.

Wrap up

In conclusion, a business’s success depends on its ability to understand its customers’ needs. You can learn a lot about your customers’ preferences, problems, and habits by executing the ten steps listed in this article. With this insight, you can adjust your offers to suit their needs better and exceed their expectations. Always remember that asking for feedback from your clients and listening to them is a never-ending process that demands commitment and devotion. But by doing this, you may improve your customer relationships and achieve long-term business growth.