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Understand your customers’ needs

Understand your customers’ needs

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 tells you what you need to know about your customers, how to use this information to sell more effectively, and how to win business from your competitors.

What is your unique selling point?
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 customer or product.

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 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.

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 any more.

What do you know about your customers?

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
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 customer 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
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 product, for example. 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.

Ten things you need to know about your customers
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 customers’ 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 have an understanding of 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
If you approach a customer just at the time they want to buy, you will massively increase your chances of success.

5. How they buy
For example, some people prefer to buy from a website, while others prefer a face-to-face meeting.

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 – unless you can identify new customers with the spending power to match.

7. What makes them feel good about buying
If you know what makes them tick, you can serve them in the way they prefer.

8. What they expect of you
For example, 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
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 and 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
Local chambers of commerce
Department for Trade for information on export markets
Invest Business Information Centre and Network provides free access to business directories and market research information.

Buying market resources
If you can’t find the information you require from these free sources, you might decide to buy the information you require. There is a huge amount of commercially published information that you can purchase direct from market information publishers. 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.

Segment your 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.

This can help you 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.