Understand Customer Needs: 6 Research Methods

Why is it important to understand Customer Needs?

Understand customer needs is essential to build great value propositions and business models. You can have the best product or service (in your opinion), but the product is not that great anyway if it meets the customer’s needs poorly.

So, if you work on a better product market fit, first look at the customer side of your value proposition and then start experimenting on the product/service side of your value proposition. 

6 Research Methods to understand Customer Needs

Understand Customer Needs 6 Research Methods

Method #1: Desk research to understand Customer Needs

To understand customer needs, desk research is a great jump start. But, where to start? ‘The Sector’ won’t buy from you. Companies do. Or better: humans do. Even if you are in a niche, the number of potential customers is huge (if not: reconsider your niche🤔). 

So, the challenge with your desk research is to find the right balance between understanding what happens in a sector in general ánd at the same time reaching enough detail to have a clue where to start and what to do in the further research steps.

Choose a handful 'ideal customers' as a reference point

At the beginning of your research journey, choose a few representative ‘ideal customers’ to focus on. It is much easier to make assumptions about one company, or a small group of companies, than about a sector as a whole. It helps you also to dig FAST to the real customer needs in a later stadium because feedback loops are easier and you can come to results easier.

Read their company websites

Take some time to read their company websites: what is listed on their homepage? Read their mission statement, vision statement. Also, the ‘about us’ information can be very interesting. What do they tell about their strategy, company history, founders profile, etc. 

Look for:

  1. Their value drivers: this is their prio 1, the reason why they exist
  2. How they deliver this value: this is their prio 2, to make sure the business is able to execute
  3. Clues about compliance/regulations: this is their prio 3. Let’s say, their license to operate

Then, take some time to investigate how your value proposition fits in the company: where is your customer profile in the company? On what level, what job profile, etc. And it is important to have  very early a high level understanding how your customer profile is contributing to the success of the company. This makes it further on in the process much easier to understand customer needs and to idenitify how you can help them to be more successful in their jobs to be done. How to do a  quick persona scan?

Do persona research using LinkedIn.com

LinkedIn.com is a very helpful source to identify the right persona within a company. 

How to do a quick persona scan using LinkedIn.com

  1. Do a search query on your first ‘ideal customer’ on your list in combination with your best guess on a relevant job title. 
  2. Look what job titles are listed in the result of your search query, and refine your search query. Repeat this step if necessary.
  3. Visit their LinkedIn profiles. Very often, brief job descriptions are included. Look for tasks, responsibilities, achievements, everything they think is worth mentioning, and what they are proud of to mention on their profile. 
  4.  Document what their profiles have in common. You can use one of the many persona templates, but a simple spreadsheet may be sufficient in this phase.
Note: the process works the same if your target group is better represented on other social media than LinkedIn. Just replace LinkedIn with Maimai (if you work in China), Xing (if you work in Germany), and do your research!  

Do persona research using career sites

Another excellent source for early-stage persona research is reading job offers on career sites. This is a simple, but effective way to get a clear view of tasks, responsibilities, expected seniority, and field of education of your target persona. Remember, job offers aren’t descriptions of real employees. So be careful about the conclusions you draw from career sites. They definitely help you to understand customer needs but aren’t an absolute source of truth.

Read research reports for the right perspective

Now you have created a great anchorpoint with your first understanding of your ‘ideal customer’ group, it is time to put it all in the right perspective. Read relevant sector reports of advisory firms, research companies, governments, banks, etc. That helps you to get up to speed  fast about what is trending in the sector.

Know your literature, but don't overrate it!

The same is true about professional literature. It is helpful to read some standard literature books, but it is seldom needed that you get a PhD in a field to be able to understand customer needs. Knowing the theory can even be an obstacle to listening objectively to your customer. Make sure that you focus on listening to what the customer has to say in stead of telling them what you know. They want you to help them  solve their problem, not to be told what to do. 

Method #2: One on one interviews to understand customer needs

Interviews are a powerful instrument if you know how to use it well: it gives you a  lot of high quality input, validation and, not unlikely, your first ambassadors. Use customer interviews as much as possible in every step of your process. The only downside of interviewing to understand customer needs is the scalability. Even if you train a team to do the interviews, this method scales only to limited  extends.  

How to prepare a customer interview?

  1. Prepare to listen: You can do so, by announcing upfront that you come to listen and not to ‘pitch’. And what do you think is the best setting for the interview: You standing in front of a screen, with a slick presentation? Or, you and the person you want to interview sitting at a table, where you have your notebook and pencil ready to take notes?
  2. Focus on a single job to be done: It is tempting to try to solve all the problems your customer has at once. But this is most certainly not realistic. Instead, focus on improving one task at a time and do that really well.
  3. Prepare your questions: Prepare a list of questions beforehand. It’s not necessary to stick to the list and fire off all your questions one by one, but it will help you structure the conversation. 
  4. Documentation: Take some time in advance to decide how you will extract the valuable lessons after the interview. You can take notes during the interview, ask to record the audio of the conversation, or even video recording may be worthwhile if the interview includes physical products. Also, think about how you can document the interview results to keep them accessible for the future. If you’re recording all your interviews, it’s very helpful to transcribe the core insights so that you can easily read them back and make them searchable for future research.

What questions to ask to understand customer needs?

Put yourself in the shoes of your customer working on the single ‘job to be done’. How would you handle it? Which tools would you use? Is it a multiple-step process? Is there redundancy or repetitive handling? What information is essential to get the job done? Etcetera, etcetera. Doing this exercise, helps you to discover which questions to ask. 

When you are at the beginning of the research process, the goal of the interview is to understand as much as possible the current way of working of your customer and the pains it experiences doing so. In a later stadium, you can shift more and more to the solution you offer. 

Ask questions about how they work today, the current situation. Avoid asking questions about the future, like “would you use…”. This provokes desirable answers.

No brainer: use Open-Ended questions as much as possible. Avoid Closed-Ended questions.

Here are some excellent questions to start with:

7 Customer Discovery Questions to validate pains and needs

Question 1: How do you perform the task (job to be done) currently? 

Question 2: What is the hardest part? And, why?

Question 3: What have you already tried to overcome that problem?

Question 4: What do you dislike about your current solutions/alternatives?

Question 5: When have you paid for the last time for this solution? And, how much?

Question 6: What type of person do you think would benefit most from the product/service?

Question 7: How can we improve  the product/service  to better meet your needs?

5 Customer Validation Questions to validate your Product Market Fit (PMF)

Sean Ellis has developed a compact, though useful set of questions to ask to start the conversation with your customers about how satisfied they are with your product or service. These are the questions:

Question 1: How did you discover our product/service?

Question 2: How would you feel if you no longer could use our product/service? 

a) Very disappointed

b) Somewhat disappointed

c) Not so disappointed (it isn’t really that useful)

d) N/A, I don’t use the product/service anymore

Question 3: What would you likely use as an alternative if the product/service were no longer available?

Question 4: Have you recommended the product/service to anyone?

Question 5: What is the primary benefit you have received from the product/service?

Method #3: Focus groups to understand customer needs

If you find in your interviews more opportunities to solve than you really can handle, or if you are uncertain on which pain point to focus on first, focus groups are a great instrument for prioritization. And, at the same time, get buy-in from a group of early adopters. The outcome from the focus groups is really good input for a new round of one on one interviews.

Send out upfront a clear agenda and outline, so the participants know what to expect.

 Choose a simple to understand and hands-on approach to prioritize the pain points during the meeting. Two suggestions:

Urgency/impact quadrant

1. Print/draw a large canvas with two axes: urgency on the x-ax, impact on the y-ax.

2. Give every participant a set of 5-10 stickies, with on every sticky one of the 5-10 most mentioned pain points you found in the interviews.

3. Let every participant place their stickies in the quadrant

4. Discuss the outcome of the quadrant with the group. Cluster, summarize, ask questions in order to get the pain points in the right order. 

Understand customer needs prioritization quadrant
A variation on ‘Buy a Feature’

Another even simpler method is to use the agile method of ‘Buy a Feature’. It works as following:

1. Print/write all pain points on a large canvas (leave enough space between them)

2. Give every participant a set of 5, 10, 20 stickers, depending on how many pain points you want to prioritize.

3. Ask all participants to rate the pain points with the stickers they have. They have to use all their stickers. They can choose for themselves how many stickers they use per pain point. So, it is allowed to put all your stickers at one pain point if it is the only pain point that is relevant to you. It is also allowed to distribute your stickers over multiple items. 

4. Discuss the outcome with the group. It is important to especially ask questions about the WHY. Why is this the most important pain point to the group? 

Method #4: Surveys to understand customer needs

One-on-one interviews and focus groups are a great way to get high-quality qualitative feedback. Use surveys to put your customer research at scale. Surveys help you to get more both qualitative information and quantitative information that will help you to understand customer needs. 

To set up a customer survey, you can use the free version of SurveyMonkey.com (10 questions per survey), or Typeform.com (10 questions per form). 

Or, most likely you already have a paid business account for Office 365, or Google Worspace. In that case, you already pay for their form builders. So, check out Microsoft Forms, and Google Forms

Last one: referring to the Sean Ellis test: make sure to check pmfsurvey.com, a free and ready to use survey tool to check your Product Market Fit.

Method #5: Social listening

Social media are a good source to learn and understand customer needs. Look for complaints about your competitor’s product, questions about how to solve specific problems, or even when there is no direct ‘problem’ to solve, you can learn a lot about how people approach certain situations. The big advantage of this method is that you can observe your customer, without them being biased by the interview setting where they maybe think too carefully about their answers. Or give desirable answers. So, social listening is a very accessible and cheap way to better understand customer needs.

Method #6: Competitor Analysis

Is your competitor doing better than you are? Then they most certainly understand customer needs better than you are. Learn from them. 

Find out what they are better at than you are. Are they solving a slightly different problem? Is their solution different? How is their messaging, branding, and pricing different from your approach? These are important things to find out. Visit their websites, Google their products, ask about their solutions in the interviews you do, etc. This will give you tons of useful information.

Build a process to understand Customer Needs

For a SaaS company, it is evident to have an efficiënt software development process. And if you offer a service, it is obvious to streamline your service delivery process. But, honest, which processes do you have in place for structural methods of customer research? I don’t mean a customer satisfaction survey now and then, but a structural process to bring in the Voice of the Customer to sharpen your Value Proposition and improve your Product-Market Fit. 

The problems and challenges your customers face are different at all levels of the organization. So, even if your buyer persona is on e.g. the tactical level in the organization, it is very valuable to also be aware of what is happening on the other levels of the company. That makes you sensitive to changing needs within an organization. These insights help you to respond early. 

Understand Customer Needs 6 Customer Research Methods Compared

Strategic level

Customer needs at a general, sector level

You make a good start by reading sector research reports that are relevant to your customers. This way you quickly learn about the major trends and developments in the field of your customers.

The insights you gather from these research reports are great conversation starters to engage with your target audience to validate how these developments are impacting customer needs.

Customer needs at a specific, company level

The typical strategic horizon of a company is 3-5 years. This is the level at which high-impact decisions are made about the company’s course for the upcoming years. A company’s mission and vision may not change very often, but you definitely have to know what your customer’s business is heading to and how their strategy is evolving. Are they up to expanding their business to other sectors, other countries? Are their growth drivers changing? Understanding the customer’s needs at the strategic level helps you a lot to anticipate early and adapt with them, in the direction the company is growing. 

Insights you gain at the strategic level, are excellent input for the development of new value propositions and/or business models. It is also a validation of the long-term demand for your offering. So, before planning to launch a new product line, validate your ideas on the strategic level.

Tactical level

A strategy must be executed. Therefore, the tactical level exists within a company to manage the execution. The tactical horizon is short. Typically 1 year, or shorter. With more focus on a specific business unit. 

Assuming your customers have healthy growth ambition, the execution on the tactical level comes with managing change. And where there is change, needs shift. And where needs shift, opportunities arise!  

Therefore, the tactical level is excellent to discover new opportunities how you can help your customers within the  scope of a productline. Look for: extra jobs to be done or comparable needs. In this way, you can find  new opportunities for modules and features within an existing product line to strengten your value proposition.

Operational level

The operational level is all about running the daily business. Focus on this level on only  ONE thing: create an excellent User Experience (UX). This will help you build a fan base. 

This statement is true in both the situations that your buyer persona is on the operational level or one of the higher levels in the organization. If your buyer persona is on the operational level, they definitely have to love your UX in order to convince them to buy your product or use your service. If your buyer persona is on the tactical or strategic level, and your user persona is on the operational level, you also want to deliver an excellent user experience: they become your fan base, your ambassadors that ‘spread the word’.

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