What is a customer needs analysis?

Understanding and meeting your customers’ needs is the cornerstone of business success, regardless of your industry or size.

Hard data is one of the best ways to deeply understand your customers’ needs so that you can align your offerings with them.

Instead of making assumptions about what your customer needs, conduct research and analysis to get a better idea of how you can serve them. This process is known as a customer needs analysis. It can transform your relationship with your customers.

A customer needs analysis is a data-based evaluation of a customer’s need for a product, service, or solution. Data for this analysis can come from various sources, including in-person or online surveys, market research, focus groups, customer feedback, or product usage trends over time. Once collected, this data allows customer service and product teams to tailor their offerings to meet specific customer needs.

A customer needs analysis can help a business learn more about its customers and lead directly to revenue growth, customer retention, more conversions, and happier clients.

Customer needs encompass all the factors that influence a purchasing decision, ranging from tangible attributes like price and product quality to more abstract factors. For example, if a customer is in alignment with a brand’s vocalized vision or a particular set of values, the brand’s products might fulfill the customer’s needs.

Customer needs can be very complex. They can also vary a lot, even between target groups in the same business. Additionally, many customers don’t explicitly state their needs upfront. That’s why research is often needed to determine why a customer connects with a certain product or solution, or what would help build that connection.

There are several categories of customer needs, including functional, emotional, and social. While your analysis might reveal more needs in one category than another, it will likely show many customers have needs in every area.

Functional needs

Your product or service will need several basic functional uses to establish value for your customers.

Functionality is one of the most important types of customer needs. If your customer can’t figure out how to use your product, it won’t solve any of their needs.

Usability, such as an intuitive, user-friendly design, is another important factor, along with product performance and efficiency.

Price is another functional need you should consider. Your product or service might not be accessible to the target group you are trying to reach if it’s too expensive.

Social needs

When a customer interacts with your business on any level, they will come away with an impression of how you can bring value to their lives.

Often, their needs in this category revolve around your customer service department’s accessibility and friendliness. Most customers want to be able to get in touch with a business easily, without lengthy wait times or complicated email chains.

Transparency is another type of customer service need, with many customers wanting businesses to offer honest explanations for topics like pricing and product availability.

Emotional needs

Every customer has certain emotional needs that have to be met to build and maintain a strong relationship with a business. Customers need to feel empowered when they make contact with your company, whether they are speaking to a member of the customer service team or the sales department.

Information should be easily accessible on your website, and customer service teams should be trained in how to interact with anyone who reaches out, whether by phone or email.

Friendliness is another important customer need that you should always prioritize. A friendly attitude helps ensure good brand recognition and fosters better relationships with the customers you serve.

Performing a customer needs analysis can give you insight into all of the areas above, informing your business decisions and directly impacting your bottom line.

Here’s how to conduct a thorough customer needs analysis in six steps:

1. Identify the customer journey

Before you start collecting data, break down every step of the customer journey and examine each one. By understanding each step of the customer journey and the various ways that clients interact with your business, you will be better prepared to address individual pain points and identify needs that you haven’t yet thought of.

2. Collect data through user segmentation

Once you have defined your target audience, it’s time to segment your customers. This allows you to get a more granular view of customer needs and improve the overall experience of various customer segments.

If you’re unsure about which determining factor to use when segmenting data, consider creating one group of users who haven’t yet engaged with a core feature and another with those who are further along in their journey with your company.

3. Conduct primary research

There are several ways to conduct primary research, but some common methods include:

• Customer need surveys (online, postal, or in-person)

• Interviews (telephone or in-person)

• Focus groups

• User needs assessments

• Ethnographic studies

3. Curate in-app customer feedback

Many businesses make the mistake of only collecting data once or twice a year, through focus groups or specific surveys. However, collecting customer feedback throughout the year via embedded app tools allows you to collect a goldmine of expressed customer needs.

You can do this by implementing small surveys at different stages of the customer journey, with two or more questions that can reveal your customers’ primary goals.

4. Examine data using appropriate tools

Visualizing your data through a powerful web tool can help you spot trends and better analyze specific customer needs.

Work with your product and development teams to find and implement a report or interface that works for your needs. Then, curate your customer data accordingly. Ideally, look for a solution that enables you to view the usage of a specific feature and gives an overall view of appropriate customer journeys by the target group.

5. Analyze your findings to determine customer expectations

If your customer needs analysis questions were created thoughtfully, combing through the collected data should reveal lots of helpful information about your customers’ needs and wants.

You can see what’s working well in your organization as well as what changes might be needed to better serve your customers and fulfill their unique needs.

If you need some assistance analyzing and interpreting the data you collect, consider partnering with a business that offers custom analysis and deep data insights. This will enable you to uncover patterns and spend more time getting to the core of your customers’ needs. 

6. Align your processes with customer needs

After collecting and analyzing the data, it’s time to act on the new information you’ve gleaned from your customers. Work with your product and service teams to interpret the data to better understand customers’ specific needs and start making a plan for actioning changes.

Don’t overcorrect at this stage. It’s best to make small, actionable changes instead of large ones to understand what’s actually working and how you can address customer needs more appropriately.

Done correctly, a customer needs analysis should demonstrate your business’s strengths while revealing the areas where it can improve.

As you prepare for your customer needs analysis, consider including questions for both passive and active customers. Segmentation allows you to obtain feedback from both groups. 

Here are some example questions to include in your research for active customers:

• How easy or difficult is it to use the product?

• How well did our product meet your needs?

• What is one thing you would improve about our product?

For passive customers, consider including the following:

• What made you stop using our products?

• What first encouraged you to become our customer?

• What can we do to improve your experience?

Put time and thought into these questions, as they form the core of the customer needs analysis. It’s a good idea to run them by the appropriate team members. Ask if they have any suggested changes or want to make any additions.

The purpose of a customer needs analysis is to understand the needs and wants of a business’s target customer group. It can serve to increase revenue, improve customer retention, and enhance customer service efforts.

To determine a customer’s need for a specific product or service, you should conduct research through survey questions, feedback forms, in-depth interviews, or focus groups. A customer needs analysis can reveal whether your target customer might be interested in purchasing your product or service.