Customer Needs and Preferences

Have you researched customer needs and preferences for your products and services?
A. We don’t have time for research.
B. Sometimes we do.
C. We informally assess needs and preferences for most products and services.
D. We have formally researched needs and preferences for most products and services in our main targeted segments.
E. We have formally researched needs and preferences regarding price, quality, availability, functionality, image, reputation, relationship and service for all products and services in each targeted segment.
[A=0, B=1, C=2, D=3 & D=4]


Why is this question important?

People only ever buy two things – solutions to problems and good feelings.  In order to identify potential problems and good feelings it is necessary to ask quality questions.  Much of the time, customers don’t know what they want and do not know what their problems are. This means they don’t really know what they are looking for, or that they even need a particular product or service.

These are key questions in identifying customer needs:

  • What exactly is the business problem the customer is facing?
  • How long has the problem existed?
  • What are the costs or implications if the problem persists?
  • What actions have been taken to solve the problem?
  • What is the cost of not dealing with this problem?
  • What resources are available to fix this problem?
  • Who is the decision-maker?

You buy a product; you expect it to work the first time.  You go to a discount supplier, you expect the quality to be less than the high end dealer, but you still expect what you buy to work, first time every time.

When it comes to products, expectations are pretty clear – people expect a good quality product based on the price they are willing to pay for it.

When it comes to service, expectations can get a little fuzzy.

When a customer begins a relationship with you he or she already has a specific set of expectations. These expectations are based on their perceptions of you, your company and your industry. They are formed through personal past experience, and the experience of others with whom the customer interacts.

Delivering below expectations is obviously bad, but in the context of creating loyalty, so is simply satisfying customers, because they are getting nothing more or less than they expect.

If service levels exceed your expectations, you’re impressed, and if the service you receive meets your expectations you are satisfied.

If service levels are below your expectations … then don’t be surprised by poor results, lower sales and poor customer retention.

Creating customer value and loyalty comes from consistently exceeding expectations.

The Importance of Researching your Customers Needs and Preferences

Identifying your customers’ needs and preferences allows you to shape the strategies and methods you use in your marketing plan. This will help you with:

  • Attracting a greater amount of customers
  • Setting the best price for your products
  • Increasing the amount your customers spend
  • Increasing how often your customers spend
  • Thereby increasing your sales
  • Decreasing your costs
  • Enhancing your customer service.

Effective Sales Strategies

These are strategies that focus on unique customer needs, by customer segment.

Identifying and Segmenting Customers

Not all customers are the same – different segments will have different needs. The more precisely businesses can identify the specific customer segments they want to sell to, the better they will be able to address unique customer preferences.

The first step is to identify your customers and your potential customers. Further customer research can help you develop a more detailed picture of them and understand how to target them. It will also emphasise key characteristics that potential customers share.

Once you’ve identified who your customers are, you can find out what motivates them to buy products and services, to understand why they buy. They may make decisions related to work demands, family needs or budget pressures.

You will also want to be conscious of how they shop. This will involve monitoring what their habits are, such as shopping online, over the phone or in store, and whether or not they make spontaneous or carefully planned decisions.

Learning About Customer Needs and Preferences

The more a business knows about its customers and their needs and preferences, the more successful its sales strategies will be.  Taking the time to learn about customers – what they know, what they value and what their communication preferences are – can help the effectiveness of sales strategies.

Building Relationships

Businesses need to build relationships with customers so they will keep coming back and refer others.  Building relationships requires attention to the customer relationship at all stages, from the initial point of contact through upcoming sales and through times when sales are minimal or lacking.  It is more costly to acquire a new customer than to retain an existing one, so efforts spent on building relationships can pay off significantly.

Engaging in Service Recovery and Continuous Improvement

Despite a business’s best efforts, mistakes may happen and sometimes customers are not satisfied. Effective customer-oriented sales strategies ensure that if errors occur, they are quickly and effectively handled. In addition, businesses need to be continually seeking input from customers about ways products and services can be improved, as well as acting on those inputs to ensure long-standing success.

Five Needs of Every Customer

While individual customers wants and needs are frequently hard to identify and may occasionally be unrealistic, all customers have the following five basic needs:

Customers expect the service they consider is appropriate for the level of purchase that they are making. A small, spontaneous purchase may have a smaller service need that a larger purchase that has been carefully planned and researched.

The cost of everything we purchase is becoming more and more important.  People and businesses want to use their financial resources as efficiently as possible.  Many products previously considered unique offerings are now considered commodities.  This makes price even more important to the customer.

Customers are much less likely to question a price if they are doing business with a company that has a reputation for producing a high quality product.

Help & Backup
Customers need help when a problem or question arises – customer support telephone lines, flexible return policies, etc.

Customers need to know that you appreciate their business.  So let them know – make this a conscious and sustained part of how you do business.

Another Perspective

Most customer needs can be divided into these groupings:

  1. The need to be understood – customers need to feel that the message they are sending is being correctly received and understood
  2. The need to feel welcome – customers need to feel that you are happy to see them
  3. The need to feel important – customers like to feel important and special
  4. The need for comfort – customers need physical and psychological comfort

The RATER Model

There are a number of different ways of categorising what customers want and value.

One of these is called the RATER scale. This is made up of five elements:

  • Reliability –  your ability to perform the promised service dependably and accurately such as timeliness, consistency and regularity.
  • Assurance –  the knowledge and courtesy of staff; their ability to inspire trust and confidence; Specific criteria that customer use include competence, knowledge, respect, credibility and honesty.
  • Tangibles –  the physical representations or images of your service such as appearance of facilities, staff and communications.
  • Empathy – caring individualised attention you provide; access to staff and information, clear, appropriate and timely information.
  • Responsiveness – willingness to help customers and to provide prompt service and problem resolution.

A good way of using the RATER Model is to carry out a Gap Analysis using each of the five categories.  You can then come up with a plan for improving the way that you serve your customers.

To do a Gap Analysis, you identify the following in each of these areas:

  • Future state – the “place” you want to be to provide exceptional service.
  • Current situation – how you currently provide your service.
  • Next Actions – how you’ll move from your current situation to your future state.

When you identify your future state and your current situation, it’s important that you talk to your customers to understand their experiences and expectations fully.