Understanding customer needs is considered the most important skill for business people and is the key to every successful business. It involves a process called Customer Need Analysis, which helps an entrepreneur determine if there is a demand for their product or service and how to improve their business idea.
The Process of Customer Need Analysis
According to the sources, this process helps answer critical questions about potential customers:
- Do customers actually pay for the kind of goods or services being offered?
- What products or services are they currently using?
- What do they like or dislike about their current products or services?
- Is there a strong demand for the business idea in a specific area?
Identifying Different Types of Customers
Entrepreneurs should look beyond just individual buyers. Customers can be divided into several categories:
- People: Individuals who can be further divided by age, profession, or income level (e.g., a salon serving working women, students, or older women).
- Other Businesses: Places like restaurants, schools, factories, or offices that buy products or services to run their operations.
- Wholesalers: Businesses that buy in large quantities to sell to smaller stores.
Five Key Areas of Customer Needs
To identify what a customer truly needs, the sources suggest checking five specific areas:
- Price: Understanding the customer's budget or price range.
- Quality: Knowing the level of quality the customer requires.
- Experience: Identifying the type of customer service that will make them feel good.
- Choice: Determining preferences such as colours, materials, or "feel".
- Convenience: Understanding the specific use the customer is looking for (e.g., shoes specifically for the rainy season).
Probing and the Funnel Technique
Probing is a method used to understand customer needs and emotions by asking the right questions. The sources recommend the Funnel Technique to deliver better service:
- Open Questions: These are used to start a conversation and understand feelings or opinions (e.g., "What are you looking for?").
- Probing Questions: these go deeper into the conversation to gain clarity on expectations (e.g., "What is your budget range?").
- Closed Questions: These are used to get specific details or confirmation (e.g., "Will this product suit your needs?").
Using Market Scans
A market scan (or market research) is a process conducted before starting a business to gather information about the existing market. This involves observing local shops, using the internet to find prices and service types, and interviewing customers directly to find out what they feel could be improved in current market offerings. By understanding these needs, a business can achieve repeated sales, stay updated with trends, and build trust with its clientele.