Understanding customer needs :Why customers buy is more important than what they buy

To begin recognising customer differences, an organisation must first understand how its customers can be grouped by similar needs. In other words, what are the motivating factors that a set of customers have in common? This commonality allows customers to be put in groups – or portfolios – to be managed by the organisation. The portfolios become the basis for the company’s decisions to customize treatment. Without this step, all customers are treated the same, as if they are universally motivated by the same need.

Observation, research and analysis uncover the common needs of a company’s customer groups; drip-irrigation dialogue with individual customers reveals their individual needs. Once individual needs are known, automated business rules determine the appropriate treatment, and each customer gets treated according to his needs.

Ultimately, an organisation can increase its profitability and enhance the experience it provides its customers by ensuring that the treatment customers receive across different touch points matches their individual needs. The increased profitability is derived from increased efficiency.

 

Don’t follow the demographic path

Demographic information often correlates with customer’s needs and can be an effective tool to begin analysis for targeting customer needs, but it is not the end goal.

The trick is to combine the two – distinguish your customers based on needs and overlay this information with the relevant demographic information you have. This powerful combination is the key to understanding why customers buy your products and services. Once you have that knowledge, you are on the path to unlocking higher sales and improving customer profitability and value.

 

Four levels of customer needs

Common needs: These are needs that are shared by the entire customer base. Common needs are used in mass marketing and advertising efforts to both strengthen the brand position and pique the interest of potential new customers. By understanding the common needs of its customers, an organisation has ‘ground level’ knowledge of what customers expect from the organisation and can align messaging, customer service, etc. to those needs.

Overlapping needs: These are needs that are shared by more than one group, but not shared by the entire customer base. Overlapping needs should be used in direct-marketing efforts aimed at the customers who share these needs. This increases the relevance of the messages to the customers who receive them. Most database marketers use overlapping needs in their marketing efforts.

Group needs: These are needs that are shared by one portfolio of customers, but that are identifiably distinct from the other customer portfolios. Group needs are often identified during the sales process and are used to tailor product and service offerings to be more relevant and in line with the needs of the portfolio.

Individual needs: These are personal needs and preferences of an individual customer. Individual needs are discovered during the relationship with the customer and are used to further refine and customize treatments and products. The result leads to a true one-to-one relationship with the customer. Once individual needs are known, both the company and the customer have made a significant investment in the relationship, increasing the probability of customer loyalty.

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