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How to Identify Customer Needs — a Step by Step Approach

Ania Rubkiewicz and Kasia Kowalska

12 min read

May 25, 2021

What distinguishes industry-leading brands from the average ones is how well they know their customers. According to Salesforce, 73% of consumers expect businesses to understand their needs and expectations. This means one thing — if you don’t know your customer, you’re in big trouble.

In the following article, I am going to talk about the benefits of identifying client needs and how to do it effectively, and I’ll give you a few tips on conducting a customer needs analysis.

The benefits of identifying and understanding customer needs

Before we dive in, let’s first quickly explain what customers' needs are.

Customer needs are the triggers that drive clients to seek solutions to their problems. Understanding client motivation, such as their goals and challenges, helps businesses comprehend how they can market their products to catch people’s attention.

If you put in the work to understand client needs, you can expect the following benefits:

Boosting brand loyalty

Did you know that 56% of American consumers say that they stay loyal to brands who “get them”? And it’s impossible to fully “get” your customers without understanding what drives them in the first place.

Now, I know what you might be wondering: What does this actually even mean? It roughly comes down to two things. Firstly, solving your clients’ problems and, secondly, making sure your service or product is enjoyable and easy to use. These two factors make up brand loyalty. We don’t want to give clients an excuse to look for alternatives.

Creating more customized marketing campaigns

As a marketer, I know from experience that creating a successful marketing campaign is no easy feat. However, take my word for it that the more effort you put into building your customer persona, the easier it will be to come up with effective marketing campaigns. By identifying customer needs, you can learn:

What their goals and pain points are, which will help you figure out what to focus on in your messaging so that your target clients can relate to you.
What communication style appeals to them so that you can choose a style that reflects the way they communicate.
What values and beliefs they represent so that you can adjust your offer. For instance, if you learn that your customers care about the environment, you can use your findings and use biodegradable packaging.
What communication platforms they prefer to use, for example, email, social media, or live chat.

A great example of a campaign deeply vested in customer needs analysis is Dove’s Campaign for Real Beauty. In the early 2000s, Dove were slowly losing their edge, and consequently, interest from their customers, who were mainly women.

They partnered up with Ogilvy & Mather and PR agency Edelman, who conducted research and found out in their study that, sadly, only 2% of women considered themselves beautiful. Through this discovery, they identified a pain point no other major cosmetics company had addressed. Dove decided to leverage their findings and launch the now world-famous beauty awareness campaign, breaking the taboo around how people look unretouched. They have also positioned themselves as a company that appreciates authenticity and diversity.

The result?

Dove sales grew from $2 billion to $4 billion in just three years. This would not have been possible without prior research on the target group.

Speaking of revenue, this leads us to the last point in this section.

Improved sales

Building products that perfectly meet client needs shows a good product-market fit, which naturally translates into higher sales. Former CEO of AppDynamics, Jyoti Bansal, makes a good point of embracing the product-market-sales fit approach. It comes down to not just conducting product-market research in a way where you analyze which features match the market itself, but also researching sales potential. Simply put, if you’re thinking of pricing your product at $500, but your target customers can only afford one at up to $350, it’s well worth knowing that before you bring it to market.

If customers are satisfied with the product and the price (which they should be, considering the fact that it was tailor-made or refined to reflect their needs), they are more willing to recommend it to their friends and family. And nothing boosts sales as much as word-of-mouth recommendations.

How to identify customer needs — which tools & methods to use

With all of the above in mind, you might now be wondering, “Which methods will allow me to collect the necessary insights?” Below, I recommend a few tools and tried-and-tested tactics.

#1 Review the most recurring questions from customers

For starters, reach for the data you already have in your customer communication tools. Review all the touchpoints: the conversation history stored in your live chat and chatbot software, emails in the CRM, recordings of conversations between Customer Support and clients. Ask yourself: What are the most frequently asked questions or reported issues with the product?

Next, reach out to your client-facing teams and ask them about any between-the-lines, qualitative feedback you might not have found yourself. Remember to take into account more than just feedback on your service or product. To gain a 360 overview, it’s also worth learning about any website-related issues, such as performance or the user flow.

#2 Run customer satisfaction surveys

I also recommend running customer satisfaction surveys. There are three metrics you should take a look at — Net Promoter Score (NPS), Customer Satisfaction (CSAT), and Customer Effort Score (CES). The first metric lets you assess customer loyalty and calculate the proportions between those who love and hate your brand. The second one focuses on measuring client satisfaction levels, while the latter checks how easy it is to complete any selected process (for instance, payment).

You can run these and other surveys easily through live chat or chatbot software if you use these tools to communicate with your customers. Here’s a great example:

Also, here’s a tip from my own experience: Make sure to add qualitative, follow-up questions to your surveys. If you get a low score, ask in an open-ended question how you can improve the CX. Respectively, in the case of high scores, ask about the exact features that work in your favor. You’ll be able to use your findings to further distinguish yourself from your competitors.

#3 Conduct social listening

Not all customers will want to fill out your customer satisfaction survey, and that’s OK. What you can do instead is conduct social listening to check what people say about your brand online. You can approach it in two ways: Do a quick dive into your social media accounts and take a look at the comments, or turn to social listening tools like Google Alerts to run a more detailed analysis. I recommend the second method as it will allow you to scour the entire web, and not just social media platforms.

All you have to do is input your brand name or any other term that you want to gather information on. This will help you fill in any information gaps and determine what needs or problems your product fails to tackle.

#4 Run competition research

One of the most important and easiest ways to gain an understanding of client needs is spying on your competition. There are plenty of opportunities to do so online. Start by visiting product review sites such as G2Crowd, Capterra, or Serchen, and read about what people like and dislike about using competing products.

You can then use the findings to improve your offer. For example, if you discover that users frequently complain about poor customer service, and you know for a fact that yours is great, then you should emphasize it more in your communication.

Running competition research is one of the recommended methods of collecting insights for your customer needs analysis — Source: G2Crowd

I hope it goes without saying that you should also check what customers say about your brand. These platforms are a great source of knowledge as people often specify how the product can be improved, and that’s priceless!

How to conduct a customer needs analysis

Once you’ve collected the data from all of the above-mentioned tools (and any other channels that are relevant to your business), it’s time to begin your analysis. Follow the steps below:

#1 Categorize your findings thematically

As you collect insights from users, you’ll probably notice that they relate to tens (if not hundreds) of random topics. This means one thing: Before you conduct your customer needs analysis, you need to sort them into batches.

Depending on your product or service, you might find it useful to divide your data into any of the following groups:

Pricing (for example, customers mentioning that your prices are too high, questions about discounts, custom plans, etc.)
Features (applicable if your product offers a number of features)
Quality (i.e., how does it compare to other similar solutions? If you offer a physical item, what is its durability? Do customers report any errors?)
Customer experience (i.e., any feedback related to your website or app’s UX, sales team, or customer support interactions). Remember to collect insights for all of the stages in the sales cycle, including after-purchase support.

#2 Conduct a means-end analysis

Make sure that you follow a “means-end customer needs analysis” approach to determine why people decide to buy your product. If it’s the first time you’re hearing of it, it’s built around three areas:

Features, i.e., the features that trigger the person to purchase a product/service.
Benefits, i.e., the benefits (or the consequences) of the above-mentioned features. These can be personal (i.e., how the features make your customers feel) or functional in nature.
Value, i.e., what the end result of buying your product is.

Don’t worry if this sounds a bit confusing! Here’s a great example of a means-end analysis from market insights consultancy Rockbridge. In the scenario below, we can see what drives car dealership customers to buy an SUV over a standard minivan.

Understanding customer needs by conducting means-end analysis as shown by Rockbridge

#3 Visualize your findings

If you managed to collect your insights and made sense of them, you’re already halfway there! You should now share the data with relevant teams to open up a discussion on how you can better cater to customer needs.

To make it a little easier for all stakeholders to understand your findings, it’s worth visualizing your data, and Miro is a tool that can help you with that. Not only can you quickly turn your insights into graphics, you can also easily share them with your team or invite others to contribute. To give you a sense of what you’re in for, below is an example of a user persona created in Miro.

Using Miro to visualize customer needs — Source: Miro

#4 Put your findings into action

Finally, the last step of your customer needs analysis is putting your findings into action! Create an action plan that includes Key Performance Indicators (KPIs), Objectives and Key Results (OKRs), and ideas for improvement, along with a list of people responsible for the delivery of your objectives.

For instance, if during your research you identify that customers often complain about a missing feature that would make customer segmentation easier, then you can include it in your product roadmap with a strict deadline. Make sure to regularly review your action plan and hold people responsible for delivering on your goals.

Examples of companies who put their clients’ needs first

Now that I’ve discussed how you can go about identifying customer needs, it’s time to look at some examples!

Zappos

To be able to provide an exceptional customer experience, you have to know your clients inside out, and Zappos serves as a perfect example. Constantly ranked as one of the top brands in terms of customer experience, they always seek new ways to delight and surprise their customers, which also helps them build closer connections. For instance, they send baby blankets to parents after hearing a baby crying while being on the phone answering queries. Have you ever heard of any other brand that does this? It’s a first for me!

LiveChat

At LiveChat, we strive to always be present for our customers and deliver on our promises.

Firstly, we provide 24/7 support through a mix of our resources — most importantly, our live chat and chatbot. Our help center not only covers all the common questions, but it’s also a great resource of ideas and inspiration.

Secondly, what makes us stand out is that we don’t say no to customers. We want to walk the walk and be truly customer-focused. In order for that to happen, we must be flexible.

What helps us keep our word is building short-term and long-term plans for our clients. In order to know how we can best serve their needs, we ask them about their goals for each quarter and any upcoming milestones. For instance, if we learn that a client is hiring for a number of openings for their customer support team (which means they’ll need to upgrade their subscription plan for more seats), we might be a step ahead in offering a special deal or custom pricing.

Tune in to our podcast to learn more about the way we cover customer needs at LiveChat.

Netflix

Netflix is literally obsessed with their customers, which clearly pays off as the company has been continuously growing their subscriber base year over year since 2013. They gather huge amounts of in-app data to suggest shows and movies that their customers might like. And their recommendations are usually spot on. No wonder we spend an average of 3.2 hours a day watching Netflix (yes, we’re all guilty as charged of binge-watching).

Identify your customers' needs now

With all of the above in mind, I’m sure you’ll agree that identifying customer needs and understanding them is a no-brainer. Among others, it lets you create products that allow customers to easily solve their problems, boost sales from word-of-mouth recommendations, and launch campaigns that strike all the right keys among your target group.

The best part yet is that it’s easy to identify customer needs if you use the right tools and tactics! I particularly recommend digging into your live chat and chatbot conversations as they hold a wealth of insights on the values, pain points, and goals that matter to your clients the most.

Good luck, and if you’d like to learn more about our customer-first approach at LiveChat, you’re more than welcome to reach out!

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How to Identify Customer Needs — a Step by Step Approach

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