Article -> Understanding Customers' Needs is Key to Success
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Date Added: August 2004
It’s been said that “the customer is king.” If this is so, why do so many organizations rarely take the time to ask what their customers’ needs really are? And of those that do, few rarely listen to this feedback.
Several organizations spend a lot of money on strategic plans, and marketing plans and materials to generate brand awareness and increase revenues. However, many of these organizations have not asked their customers simple questions such as: (a) how do they decide what to purchase, (b) what products and services they want, or (c) what post-sale interactions do they require?
An analysis of customer needs can help an organization determine which customers – current, prospective and lost – they should target, what marketing venue is preferred by these customers (print, radio, TV, direct mail, Internet, etc.), what messages the customers want to hear, customers’ perceptions of the brand and organization, and many other factors that can make the overall message strategy much more effective.
This information provides a true, comprehensive understanding of customers’ needs. Gaining this understanding can help reduce costs and create a higher organizational return-on-investment (ROI). Costs are reduced because marketing plans, as well as products and services, can be more targeted to specific customer segments.
For example, some companies spend their entire marketing budgets on print advertising without asking customers if this is where they obtain their purchasing information. By asking, organizations can determine that some customers may prefer print advertising, while gaining additional knowledge by determining certain publications to advertise in. They may also discover that customers also prefer billboards, radio or Internet, so they can create a more effective integrated marketing plan.
With this valuable information, organizations can generate a higher ROI because their limited budgets will be spent more wisely in the right venues. They can also structure their products, services and brand messages accordingly.
Based on what they learn from customers, organization’s also can align their market positioning with customers’ needs, reposition for future growth, re-evaluate strategic plans and improve processes.
This type of customer analysis is typically most effective when completed by an independent third party. Many customers are either reluctant to be truly honest with their supplier (even when customer-supplier relationships are fantastic) and/or are unwilling to speak with a supplier (in the event of a lost or prospective customer).
Understanding customers’ needs also can help organizations identify gaps in terms of customer perceptions of “what is” versus “what could be.” It helps organizations reconnect with customers to provide them with more personalized products and services that each unique customer requires. It allows organizations to ask and listen to customers – instead of presuming to know what they want. It gives customers what they want, instead of telling them what the organization believes they need.
Most organizations’ products and services are commoditized, so identifying customer gaps and needs, and offering personalization, becomes a differentiating factor versus competitors. Those that ask, listen and execute will win and grow market share.
While many organizations are becoming better at trying to understand customers’ needs, oftentimes, they are still reacting to these needs. Organizations need to be proactive and combine an understanding of customers’ needs with forward-looking market requirements. This combination connects customers with organizational product and service offerings.
There are five process steps to effectively understanding customers’ needs. These include:
1. Identifying customers to target
- This should include current customers, lost customers and/or prospective customers.
2. Understanding customers’ needs and perceptions
- This step is the foundation for success and future growth. It involves primary research to focus on items such as demographics, buying behaviors, budget size, competition, decision makers, etc. to determine customers’ needs related to these items.
3. Developing brand messages
- Once needs and perceptions are known, messages are developed to align the market positioning and strategic plan to customers’ needs, delivering what the customer really wants.
4. Aligning the organization
- As the external view of the customer is determined, this information and market positioning must be shared internally with employees so they understand it and are involved in the process.
5. Measuring the impact
- Ongoing analysis to ensure both customers and employees understand the positioning, to determine if and when customers’ needs change, and to clearly measure increased productivity and success.
The end game of this process is to isolate and identify key business drivers based on customers’ needs. In a commoditized market, gaining an understanding of customers’ needs builds a stronger customer relationship, while recognizing specific activities to reposition the organization and gain an emotional connection with customers. The result is differentiation from competitors, leading to increased revenues and market share.