Understanding Your Customers’ Needs: How To Do It, And Why It’s Important  

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No matter where you are, what you sell, or how much it costs, a business needs customers to survive. 

It’s only by being aware of what your customers want that you can succeed. 

But for businesses with so much on their plate, this can be easier said than done. 

In this post, we’ll explain what customer needs are – including the different types. We’ll discuss how you can work to meet these needs for your customers, and the benefits that doing so will bring to your business. 

What are customer needs? 

This question might seem like it has an obvious answer but stick with us. 

Yes, they’re the motivators that drive a customer to make buying decisions. But did you know that these motivators can be broken down into two types? 

Physical vs Psychological Needs 

Physical needs are tangible. They’re usually more basic and aren’t tied to a need for a specific product. For example, if you’re thirsty, you’ll need a drink. If your hands are cold, you’ll need gloves. And if you’re hungry, you’ll need food. 

Psychological needs are where things get really interesting. Physical needs are always present on the surface, but psychological needs run deeper and are shaped by experiences and values. 

McDonalds is a great example of physical and psychological needs and how they differ. Let’s take the earlier physical need example – you’re hungry. You could make yourself a salad, but you value convenience and speed – something that McDonalds is well-known for. 

How to understand your customers’ needs

Physical needs are easy to understand, as they’re pretty universal. Psychological needs are, too – but knowing the specifics is less so. 

There are some tried and tested methods businesses use to gain insight into what their customers find important: 

1.      Collect Feedback 

This is one of the easiest wins when it comes to getting to know what your customers value about your product or service. 

How you collect feedback depends on what resonates with your customers, but the most popular ways are: 


Companies are now adding surveys to their customer journey, either in person or over the phone. So, after receiving a product, the company would automatically ask the customer to complete a survey about their experience. 

Social Listening 

If there’s one place where you can be guaranteed peoples’ honest opinions, it’s social media. Set up alerts for posts mentioning the name of your business – then, see if there are any common concerns and act on them accordingly. 


To learn why customers choose you over competitors, consider conducting in-person interviews for detailed insights. Speaking of competitors… 

2.      Monitor Your Competitors 

Knowing what your competitors are offering is vital – especially if you’re in a crowded market where switching is easy. Social listening isn’t just for following what people are saying about your business. You can use it to get an inside track on what your rivals are doing too. Even if both companies lack a strong social media presence, competitor analysis can show where your competitors are excelling. 

It’s also key to note that your competitors’ decisions can directly impact what customers expect from you. So, if you’re both software developers, and your competitor offers a 30-day free trial, customers that come to you might well be expecting the same perk. 

3.      Create buyer personas 

Saying that you want to get to know your customers is all well and good but doing that kind of research in detail can be a huge drain on time and resources. 

This is where buyer personas can come into play. You don’t need any fancy templates or algorithms to put one together – just a few bits of data about your customers. For example: 

  • How old are they? What area do they live in? 
  • What pain points do they have that your product or service could solve? 
  • What values are important to them (e.g., sustainability, convenience, quality)? 

Don’t worry if a lot of it involves educated guesses. The beauty of a customer persona is that it can change over time based on new data. 

Of course, you should also make sure to share any documents you create with your whole team so that everyone knows who they’re targeting. 

What are the business benefits of understanding customer needs? 

Now you know how to understand your customers’ needs – but what positive effects can you expect to see after you start taking them into account? 

1.      Your product or service can improve 

By incorporating customer feedback, you’ll gain insight into their preferences and desires. With that knowledge, you have the foundations to tailor your offering now and in the future. 

2.       You’ll keep your support requests low 

This one follows on from the point above. When several customers are bringing up the same issue in their feedback, that means you can make proactive changes. This in turn should lead to a lower volume of support requests and higher levels of customer satisfaction. 

3.      You’ll Optimise Your Resources 

Knowing your customers’ needs helps you allocate resources more efficiently. If customer feedback tells you certain products or services aren’t performing as they should, you can refocus. This reduces waste and can optimise your wider operations. 

In a landscape where customers are faced with more choices than ever, standing out is a necessity. By taking the time to recognise what your customers want from your product or service, you can do just that, and reap the benefits it provides. 

Are you a business wanting to put your data to better use? PKF Smith Cooper Systems is an award-winning Sage Business Partner with experience in Business Intelligence software.

Contact us on 01332 959008 or use the enquiry form.

Interested to know more about our Sage solutions?

Call 01332 959008 or enquire online today

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