Understanding Customer Needs: Types and Examples

Posted by
Anastasiia Neverkovets

May 25, 2022

Companies focused on customer needs are 60% more profitable than those that do not do this. But what exactly does this mean for your business?

It is pretty obvious. Customers are the cornerstones of any business, so you have to treat them and their wishes properly so that they get the best possible customer experience. Still, today many companies are not paying any attention to the customer needs as they only make assumptions about consumers' wants. And they, sooner or later… just fail. Such companies do not last long, primarily if they work in retail and eCommerce, where understanding customer needs are paramount for sales.

This article covers the key reasons you have to understand customer needs and their main types to ensure that your business gives customers what they need.

What are Customer Needs?

First, let's define customer needs. It's pretty simple — they are some psychological and physical impulses that influence customers' purchasing decisions. Physical impulses or motivators are pretty easy to identify, while psychological ones are not. It's natural as psychological impulses are abstract. They exist in people's heads and are shaped based on many factors like people's opinions, beliefs, preferences, and many more.

Types of Customer Needs

Consumer needs can be divided using different criteria. So, we will describe physical and psychological needs and product and service ones. However, there are many other classifications out there as well.

Physical needs

As we already said, physical needs are not very difficult to identify as they have an evident cause. For example, if you are hungry, you search for food. If your phone is broken, you search where to fix it. What is more, physical needs are the main reasons people lookout for a product or service. When we talk about physical needs, it is crucial to mention impulse buying. It's a condition when a customer drops everything and purchases a service or product they were not looking for without any pre-shopping intention.

Psychological needs

Unlike physical needs, psychological ones are not urgent. Besides, they are the driving sources that make a buyer choose you over multiple competitors. Unfortunately, such demands are very tricky and challenging to identify for businesses. To meet the psychological needs of your customers, you can't just play a guessing game but have to ask your customers directly. Another way is to conduct a thorough analysis of their behavior to find the reasons behind their purchases.

Product Needs

The customer product needs are primarily about the product itself — the better your products match customer needs, the higher chances you will get a potential buyer. That is why you should care about such factors as:

• Features: it is no secret that customers search for the features that solve their problems, plus the product's reliability.
• Price: generally, each сustomer has a specific budget for any purchase they make.
• Effectiveness: any product should be effective in terms of its functionality. Besides, it should save customers' time.

Service Needs

Service needs are mostly connected with customers' emotional needs, giving your business a competitive advantage over other companies. Consequently, service should have such attributes as:

• Information: customers are always searching for information during the whole customer journey. That is why it is essential to have different sources of information for your customers like FAQs, Knowledge Base, video tutorials and instructions, and others.
• Empathy: most customers choose brands that show compassion towards them.
• Clarity: customers do not like being cheated and search for transparency, from pricing to refund policy.

Identifying customer Needs: Why is it Important?

Any business must identify and meet customer needs at the earliest possible stage. Moreover, before any product launch, you should determine your customers' needs and wants.

But how to do it effectively?

Thorough marketing research and asking your customers lots of questions to understand them correctly and fully can help you immensely. The more you know about your customers, the better you can build your brand positioning. Besides, it is crucial to understand the psychology of your customers. This way, you can significantly improve your customer service, build life-long customer relationships, and generate more sales. Besides, this will help you skyrocket your business operations, too. Here are just some of the areas of improvement:

• Improve your products and services: by understanding your customer's needs, you, in turn, will better understand the customers' motives during the whole buying process. You will also find your bottlenecks and what you are missing and build a more efficient USP. As a result, this will help you improve your products and services and meet customer needs thoroughly and efficiently.
• Decrease the number of tickets: when you know what your customers need and build products they want, this will help you ensure finding more effective and faster solutions to any of their issues.
• Enhance your customer support: by identifying the real needs of your customers, you will be able to provide adequate customer support.

How to Understand Customer Needs

When you conclude that customer needs are of great importance for your business, the question is 'How to understand what our customers want? ' Here are some valuable techniques that would help you in no time.

Create and implement buyer persona

If you want to understand your customer's needs, you should start by identifying who your customer is. Defining a buyer persona is a technique that will help you a lot with this task. It describes your ideal customer based on thorough research of your current customers. It also includes information about your customer base's probable age, location, gender, income, and hobbies.

The buyer persona is the one that finds your business appealing, so you have to know them. When you see a clear picture of such a person, this information will help you better understand your customers' needs. Important that even people of a different age or gender have different needs.

Take advantage of direct feedback from your customers

Another option for defining customers' needs is collecting your customer feedback. By doing so, you will be able to find out about both likes and dislikes of your consumers.

Multiple companies widely use this method because of its simplicity. For example, the famous brand Apple always listens to its customers' needs. Then, it improves their main product line to better deliver to the customers' needs. And they do this quite successfully, don't you think so?

Here are some of the most common methods for collecting direct feedback:

• Surveys: this is one of the simplest yet effective methods for understanding your customers. You can conduct customer surveys via phone, in person, or by utilizing some popular survey tools. The successful survey should include open-ended questions for people to express their honest thoughts on the subject.
• Interviews: interviewing your existing clientele is an excellent way to get helpful insights into improving your product or service. Besides, if you conduct a one-on-one customer interview, you can get more detailed and sincere answers from your customers.
• Social listening: knowing what your customers are saying on social media and monitoring your social mentions could also help you understand your clients better. Why? The answer is that today social media is a place where people speak sincerely about everything. And knowing what frustrates or inspires them can help you identify what needs improvements from your side.

Study your competitors to get helpful insights

Never underestimate your competitors when it comes to finding out what your customers need. The reality is that with the popularity of the internet, now you compete with many businesses throughout the globe. And they can significantly influence customers' expectations. So, you need to keep up and stay updated with everything your competitors are doing and what they are offering to their customers. You will get lots of valuable data to improve your business operations.

Build a comprehensible customer needs statement

Creating a customer needs statement is a well-known marketing, customer success service, and even product development technique. To put it simply, it is a detailed overview of your customer. This technique is very effective as it helps better understand how to make your products or services meet customer needs with the help of specific features, benefits, or traits. Unfortunately, there is no common concept of what this statement should look like. However, it should answer some basic questions about your customers, such as:

• Who are they? — Knowing personal information about your customers is essential. It could include their age, gender, location, marital status, etc.
• Why do they buy? — Finding the motives behind their purchases can help you improve your offers to the customers.
• How do they buy? — Knowing where your customers shop (online or offline) can give you helpful insights.
• How much money can they spend? — If you know how much money your customers can spend, this can help you match your offers to the sum of money they can afford. Thus chances of buying your products or services are higher.
• What is expected from your business? — If you know what clients expect from you (for example, free shipping or some discounts for return customers, etc.), the chances that customers will return for more are higher, too.
• What makes them choose you? — Knowing why your customers choose you over your competitors can help you better meet consumers' needs.

Now the question is 'Where to gather such information?' You can look through the customers' buying history or conduct special surveys. If you prefer a survey, make it simple and easy to understand.

Plan How to Implement Customer Needs into Your Operations

Now that you know why customer needs are essential and their main types, it is time to add them to your business operations. But how to make it effortlessly? The secret is that you have to plan everything in advance — from identifying your bottlenecks to finding how to improve them.

For example, your customers complain that your customer service is busy and can't resolve their issues instantly. What should you do in this case? First, you should find additional resources that would help you out, like live chat. It could provide your customers with timely answers, and self-service (Knowledge base or FAQ section) can help them find the needed answers themselves.

Many well-known brands listen to their customers very carefully. As an example, DHL, a famous logistics company, asked their customer feedback to increase the company's productivity. So, they invited their customers to join them for workshops in Germany and Singapore to share their thoughts and practices and create new value together. The main aim of this event was to brainstorm and find solutions that would benefit both parties. As a result, the company received many suggestions, while the customer satisfaction score boosted to 80%, and on-time delivery to 97%.

What does this example depict? When you let customers contribute to your business, they will most likely get a positive perception of your company. It's all because of the feeling that they are heard and their needs are prioritized. In turn, you will get more loyal customers and an improved satisfaction level. You will even be able to find a solution that would give you a competitive advantage over other companies. Isn't it what you are looking for?

How to Solve Customer Needs

How to solve your customers' needs  The main rule is always to put yourself in customers' shoes. Try to understand what customers feel when they buy your products and what they are looking for. What is more, strive to identify customers' main pain points. From this stage, create a plan to help them get the most out of your products and enjoy them thoroughly. You can also enrich your roadmap with the tips listed below.

Advance customer interaction

• Listen to your customers' feedback

Collect all your customers' complaints and suggestions during the whole customer journey. Of course, critique is treated as something terrible, but in reality, it gives you vast room for improvement. Conduct interviews, surveys, and polls. Also, send customer feedback emails to keep a pulse on everything that your customer feels. If you include all these into your business routine, you will be able to improve your business drastically.

• Build strong relationships with your customers

Customers mainly fulfill their immediate needs by buying certain products or services. However, your main goal is not to lose them and think about their future needs. That is why you should build strong relationships with your customers. How to do this?  You need to create an effective communication strategy, rewarding system, and special host events. These would help you transform your potential customers into brand ambassadors.

• Solve the proper needs

Yes, you can't solve all the customers' issues. However, that is why it is essential to recognize the proper needs to solve at the moment. To identify the priorities, you can look for customer trends and customer retention patterns. Also, provide excellent customer service and constant communication to know what your customers need right now.

• Provide excellent customer service

When your customers face some problems, you need to resolve them fast and efficiently. Make them feel they are heard and listened to. It would be best if you also used the most convenient channels for your customers as some prefer speaking on the phone, while others use chats. Naturally, they get easily irritated if contacted via the wrong channel.

Improve customer service support workflows

• Create your consistent brand messaging

People don't like hearing different things from different people about your products or services, as this can make them confused. So your goal is to create consistent communication across all your departments. That will help you create a customer-centric mindset. Besides, it will also help your team members understand all your company's goals, your services or products, and their capabilities. In turn, all of these will help them meet your customer needs better  To get on the same page with your team, you can organize meetings and provide detailed onboarding to the new employees and training and seminars for your existing ones.

• Create detailed instructions for your products

Any customer buys goods or services with the intention that they will solve at least some of their needs. However, sometimes the adoption process is not transparent. Consequently, customers end up disappointed and not finding any value in the goods or services they bought. That is why it is essential to create a post-purchase strategy with all the necessary instructions so that customers know what to do and have no further technical questions. For this reason, some companies send emails with a detailed walkthrough or update their online knowledge base regularly. Others create educational guides or host webinars.

• Use special software to identify customers' needs better.

Numerous apps can help you know your customers better by collecting necessary feedback. For instance, with Proactive Campaigns for Zendesk, you can send mass email campaigns with ratings and feedback. You can determine what your customers think of your products and services, thanks to this. By receiving such data, you will be able to improve your business processes further. So, if you haven't tried such services yet, it is about time.

Examples of Most Common Customer Needs

Understanding and meeting customers' needs can improve customer experience and loyalty. But how to know which needs most customers have? There are some similar patterns when it comes to customer needs. Most of them need:

• A balance between price and usefulness of a service or product;
• A great and convenient shopping experience;
• Fulfillment of the promises that a company gives about their product or services;
• Feeling heard in case of any issue with a product or service.

If you want to dive deeper and understand more, you have to learn the psychological motivators of your customers. Among the specific psychological needs are:

• Making customers' lives easier;
• Save money;
• Feeling trust with the company they choose;
• To save time and nerves;
• To live a wealthy life and many more.

Wrapping Up

Understanding customer needs is a must for any business today if you want to survive the tough competition. Most world-known companies are already customer-centric, where the entire business model concentrates on customers' wishes, needs, and desires.

Of course, it is not simple to keep up with them. However, you can make small steps to understand your customers better, conduct research, listen to customer feedback, and create a proper communication and marketing strategy.

Knowing what customers want can help you tailor every stage of your business so that they fit any needs of your customers. And as a result, you will get loyal brand advocates, an enriched customer base, and increased sales. Sounds like a plan, right?