Understand your customers' needs
Why understanding your customers' needs is crucial to the success of your business, no matter how good your offering is, customers want it.
However good your product or service is, the simple truth is that no-one will buy it if they don't want it or believe they don't need it. You won't persuade anyone that they want or need to buy what you're offering unless you clearly understand what it is your customers really want.
Knowing and understanding customer needs is at the centre of every successful business, whether it sells directly to individuals or other businesses. Once you have this knowledge, you can use it to persuade potential and existing customers that buying from you is in their best interests.
This guide helps you find your unique selling point and segment your customers. It outlines ten things you need to know about your customers. It also describes ways to find out about your customers.
What is your unique selling point?
Understand why customers need or want your product or service and your unique selling point (USP).
Every business needs a reason for their customers to buy from them and not their competitors. This is called a Unique Selling Point (USP). You can identify your USP by completing the phrase 'Customers will buy from me because my business is the only...'
Your USP can change as your business or your market changes, and you can have different USPs for different types of customers or products.
For example:
- a stationery shop could offer a free same-day delivery service for its business customers within a local area - an effective USP for customers that need fast delivery
- the same stationery shop could offer a 5 per cent discount to businesses that spend more than £500 a month - this would be a USP for cost-conscious customers
- the stationery shop could also make sure it offers the most comprehensive stock of artists' materials in the area - a USP for local professional or amateur artists
All of these USPs can be effective because they are driven by what the customer looks for when making a buying decision.
Reviewing and refining your USP
It's a good idea to review your USPs regularly. Can you tailor your products or services to better match your customers' needs? Consider asking your customers why they buy from you. This will tell you what they think your USP is - this may differ from what you think your USP is.
Measure all activities against your USP to ensure consistency. You can create a social media strategy based on your USP to raise awareness of what makes your brand different.
It's also useful to check constantly what your competition is doing. Remember - if your competitors are doing the same, your USP isn't unique anymore.
What do you know about your customers?
Understanding your customers can help you improve your sales and marketing and offer them what they really want, ask questions like who, what, why and how.
The more you know about your customers, the more effective your sales and marketing efforts will be. Find out:
- who they are - including individuals in other businesses who are responsible for the decision to buy from you
- what they buy
- why they buy it
- what is their budget
- how they use your product
For information on targeting decision-makers, see the sales process.
You can learn a great deal about your customers by talking to them. Ask them why they're buying, what they may want to buy and what other needs they have. This could highlight valuable developments you can make to your current offering and help you spot new market opportunities.
It's also worth keeping an eye on future developments in your customers' markets and lives. Knowing the trends that are going to influence your customers helps you to anticipate what they will need. Market research and market reports can help you build a picture of where your customers' business - and your own - may be going.
Learn about customers’ needs from competitors
How learning about a customer's current supplier can help you, if you identify why the customer buys from a rival supplier you can work out how to better them.
Chances are your potential customer is already buying something similar to your product or service from someone else. Before you can sell to a potential customer, you need to know:
- who the customer's current supplier is
- if the customer is happy with their current supplier
- if buying from you would offer the customer any benefits - and, if so, what those benefits would be
The easiest way to identify a potential customer's current supplier is often simply to ask them. Generally, people are very happy to offer this information, as well as an indication of whether they're happy with their present arrangements.
If you can find out what benefits they're looking for, you stand a better chance of being able to sell to them. The benefits may be related to price, levels of service or a facility or function offered by a particular produce. Are there any benefits your business can offer that are better than those the potential customer already receives? If there are, these should form the basis of any sales approach you make.
For information on selling your product's benefits, see the sales process.
Ten things you need to know about your customers
Ten things you need to know about your customers to enable you to sell more products, more efficiently – consider who they are, what they do and why they buy.
Consider the following questions to build your understanding of your customers' needs:
1. Who they are
If you sell directly to individuals, find out your customer's gender, age and occupation. If you sell to other businesses, find out what industry they are in, their size and the kind of business they are. For example, are they a small private company or a big multinational? Knowing this can help you identify similar businesses that you could target.
2. What they do
If you sell directly to individuals, it's worth knowing their occupations and interests. If you sell to other businesses, it helps to understand what their business is trying to achieve.
3. Why they buy
If you know why customers buy a product or service, it's easier to match their needs to the benefits your business can offer.
4. When they buy
Your customers may have buying patterns. If you approach a customer just at the time they want to buy, you will massively increase your chances of success. CRM and surveys can you help identify the best time to reach your customer base.
5. How they buy
Some people prefer to buy from a website, while others prefer a face-to-face meeting. For example, if they buy online you can try to find out how they prefer to receive their order.
6. How much money they have
You'll be more successful if you can match what you're offering to what you know your customer can afford. Premium, higher priced products are unlikely to be successful if most of your customers are on a limited budget. This is the case unless you can identify new customers with the spending power to match.
7. What makes them feel good about buying
Ask your customers what makes them feel confident and happy when purchasing from you. If you know what makes them tick, you can serve them how they prefer.
8. What they expect of you
Customers usually appreciate if you take their suggestions into account and like when you improve your products and services accordingly. If your customers expect reliable delivery and you don't disappoint them, you stand to gain repeat business.
9. What they think about you
If your customers enjoy dealing with you, they're likely to buy more. And you can only tackle problems that customers have if you know what they are.
10. What they think about your competitors
If you know how your customers view your competition, you stand a much better chance of staying ahead of your rivals.
Ways to find out about your customers
Different methods of obtaining the information you require on your customers, their buying habits and preferences, such as CRM and business libraries.
Once you have identified what you need to know about your customers you can start gathering the information together.
There is a huge amount of market information available that you can tap into. Much of that information is available free of charge and is readily available. For example, your customer records will tell you:
- which customers have purchased from you
- what they purchased
- when they placed their orders
- how much and how often they buy
Read more about customer relationship management.
External resources
If your current data doesn't provide you with the information you need, it is often worth asking customers directly. You can do this in face-to-face or telephone interviews, online surveys or in group discussions. See plan your field research.
Other sources of free customer information include:
- business contacts
- local business reference libraries
- your local council
- the
- Department for International Trade for information on export markets
Get free access to business directories and market research information from:
- Invest NI's
Buying market resources
If you can't find the information you need from these free sources, you might decide to buy the information. There is a huge amount of information that you can purchase directly from .
Alternatively, you might decide to employ a market research agency or freelance researcher to get the information you need. It can be more cost-effective to use the services of a professional, although you will need to ensure you draw up a clear brief and budget.
Storing Collected Data
It's important to plan how your business will store collected data. Your data storage solution affects how long your data will be available and how it’s protected against leaks or misuse.
One common and effective solution is using a customer relationship management (CRM) platform. A CRM platform allows you to:
- collect and store extensive customer data
- strengthen customer relationships
- drive more sales
Segment your customers
Putting your customers into groups could help you understand and target their needs more effectively and identify the most and least profitable customers.
By looking at factors such as geographical location, size and type of organisation, type and lifestyle of consumers, attitudes and behaviour, you can segment your customers into groups.
Why should you segment your customers?
Segmenting your customers is more than putting people into groups. It offers additional benefits, including help with:
- customising and improving your products and services to meet each segment's needs
- identifying your most and least profitable customers
- focusing your marketing on the segments most likely to buy your products or services
- tailor your marketing messages to suit each audience
- building loyal relationships with customers by developing the products and services they want
- getting ahead of the competition
B2B and B2C segmentation
How you segment your customers will depend on whether you market your products and services to either:
- businesses (business-to-business or B2B marketing)
- individual consumers or households (business-to-consumer or B2C marketing)
If you are segmenting business markets, you could divide the market by:
- what they do - industry sector, public or private, size and location
- how they operate - technology, use of your products
- their buying patterns - how and when they place orders
- how they behave - loyalty and attitude to risk
If you are segmenting consumer markets, you could group customers by:
- location - towns, regions and countries
- profiles - such as age, gender, income, occupation, education, social class
- attitudes and lifestyles
- buying behaviour - including product usage, brand loyalty and the benefits they want from the product or service
Customer profiles
Building profiles of the type of customer you want to target can help you to understand and communicate with them. Think about the type of customer based on their demographics and behaviour and then consider their needs and how you can serve them.
An example of a customer profile for a garden centre might be:
- female aged 60+
- retired with an active lifestyle
- has time to browse for a long time and plan their gardening activities
- appreciates knowledgeable customer service
- willing to spend more for a high quality product that will last for years
The information you collect about your existing customers will help you create these profiles. You can then look for similar prospects.
Market research
You may already have information that will allow you to start grouping your existing customers into segments. For example, your sales records should indicate whether customers are individuals or businesses, which products or services they buy and how they prefer to buy from you.
Read more about market research and market reports.
Niche markets
Segmenting your customers could help you to identify a niche market - a specific area of your market that may be overlooked by competitors.
For more advice, create your marketing strategy.