A Guide to Understanding Customer Needs in New Markets
Understanding customer needs across markets is a key prerequisite for global expansion. When entering international markets, besides identifying your potential customers, you also need to know what motivates them to purchase a product or service.
Customer needs are wide and may vary across markets because of differences in culture, language, beliefs, habits, economics, or local competition. Understanding those needs will help you adapt your product and better address customer expectations in each target market.
To help you get started, this guide will walk you through what customer needs are and how to both identify and address them for international success. You’ll learn:
- 3 key reasons why you need to understand customer needs
- 4 techniques to analyze customer needs
- 5 proven ways to address customer needs
What are customer needs?
Customer needs are the motivators that drive customers to buy a product or service over others. These motivators come in different forms that can overlap. However, for easier understanding, these needs fall into two groups—physical and psychological.
Physical needs are the most obvious needs of customers and are easily spotted.
For example, if you’re thirsty, you need a drink. If you want to browse the internet, you need an internet service provider. If you’re sleepy, you need something to rest on (whether a mattress, sofa, etc.).
Most people buy products to fulfill their physical needs, but some buy products even when they have no physical needs.
Unlike physical motivators, psychological motivators exist only in our minds and get shaped by culture, beliefs, opinions, desires, and preferences.
Psychological needs include convenience, reliability, status symbol, freedom, culture, and good service.
Using the same example above, the psychological need of a thirsty person is why they buy water instead of soda and why someone would specifically buy luxury bottled water rather than cheap bottled water.
Let's see the differences between physical and psychological needs:
- Physical needs: basic, essential needs, for example, food.
- Psychological needs: mental motivators that control most decisions, for example, status.
Psychological needs help the buyer choose a brand or product over others.
Why does a business need to understand customer needs?
At a conference to announce Nokia's acquisition by Microsoft, Nokia's CEO said:
“We didn’t do anything wrong, but somehow, we lost.”
Nokia was once a leading mobile phone company, but it failed to improve and adapt as customer demands changed. eBay and Chevrolet have a similar story. eBay failed in China in the early 2000s, and Chevrolet faced defeat in India in 2017.
These examples show that customer demands will always change, whether you're entering a new market or not. It's up to the company to keep up with those changes.
In a survey by Salesforce, 66% of over 6K consumers expect businesses to comprehend their needs and expectations.
In other words, to provide a positive customer experience, you must take time to understand customer demands. This also helps you define your brand positioning and build brand loyalty.
Here’s how your business can benefit from understanding customer needs:
Product improvement and innovation
By gaining a deeper understanding of your customers' motivations, you can discover the gaps in your products and develop a practical unique selling point.
With these insights, your business can enhance its products or services to meet customer requirements better.
Better marketing across markets
Understanding customer needs helps you develop targeted marketing campaigns for each market. It helps you tailor your message to each market and as a result, you can effortlessly address their needs.
Offering efficient support in real time
Real-time support is one of the most common customer requests. However, a company can only provide effective multilingual customer support in real time across markets when they truly know their customers and their possible problems.
By identifying your customers' demands, you can create use cases of your product for customers, compile a knowledge base, and document answers to FAQs. This way you can provide faster and more efficient support when they need them.
How to do a customer needs analysis?
A customer needs analysis is a comprehensive analysis that determines the value customers seek from your products and services.
It provides valuable insights about your target audience which you can incorporate into your market positioning to ensure that it allows for exceptional customer value.
Here are 4 ways to carry out a customer needs analysis.
- Surveys and interviews
- Means and analysis
- Social listening
You can also conduct interviews with some of your existing customers. A 1:1 setting may allow you to obtain more detailed responses than a simple survey.
During the interview, ask questions like:
- What are you hoping to accomplish with this product?
- Now that you have the product, does it match your expectations?
- What do you feel we can do to improve?
- What do you like about the product?
A means-end analysis examines customer responses to ascertain why they would purchase your product.
Generally, buyers choose to buy products for 3 reasons:
- Attributes: For example, a customer might purchase a TV because it has a sleek design.
- Perceived benefits: The user may select the TV because it is smart.
- Personal values: The user selected the TV because owning one improves their social status.
As you might expect, customers' purchasing motivations vary, so it is essential to conduct surveys, collect responses, and organize them into these 3 categories.
Then, you can determine which motivating factors you’ll address and which can be enhanced to make your product or service more competitive.
Ask customers about their experiences working with your business. Customer and service team member interviews can enhance the customer lifecycle.
Identify friction points and unexpected moments of delight in your customer needs analysis.
The following questions can help you in resolving customer issues:
- What can your business alter in its products and services?
- What are the building blocks that you can use for product improvement?
- What aspects of the experience require improvement?
You can also conduct surveys to get feedback. Surveys provide businesses with a picture of their market position in meeting the needs of their target customers.
The survey should include questions about your brand, competitors, product awareness, and brand attitudes.
You can conduct in-person, phone, or online surveys. Use open-ended questions that allow respondents to express their thoughts without being influenced by a list of options. An example of such a question is: "What additional features would you like to see in our product?”
Keeping track of social mentions is also a great way to identify customer needs. This is called “social listening.” People frequently use social platforms, like Facebook, Instagram, or Twitter, to provide frank feedback on products and services. Monitoring their opinions and potential annoyances will help you identify unmet needs and areas for business improvement.
As you identify customer needs, compile the results and implement the suggestions.
How to address customer needs?
Now that you’re familiar with the basics, let’s look at some strategies for addressing your customers' needs.
Develop buyer personas
To get a grasp of your customer's needs, you must first understand who they are. You can begin by developing a buyer persona.
A buyer persona is a fictional description of your ideal customer based on market research and your current clientele. It should describe the psychographics and demographics of your target market.
Demographics include their likely age, gender, location, income, and interests. Psychographics include their attitude and mindset—values, goals, interests, lifestyle, emotions, etc.
If you already have some customer data, then this is the optimal starting point for your research.
Can you deduce pain points from this customer data? Are there any notable patterns?
Keeping track of your current customers and their past interactions with your brand will give you a better understanding of where your customers come from and whether you're meeting their demands.
For example, consider a company that sells shoes. Children will have different requirements than men in their 70s. While children may need more colorful shoes, older men prefer more comfortable ones.
A buyer persona lets you keep your ideal customer in mind while researching and defining their needs in later stages.
Provide quality customer service
Don’t mistake thinking customers only want good quality products. The truth is, there are so many brands that can produce quality products. However, customers favor brands that provide real-time assistance.
Studies show that 25% of customers are willing to pay up to 10 percent more in almost every industry if they’re assured of superior customer service.
After establishing rapport and gaining a client's trust, it becomes difficult for a rival to win them over. Customers will continue to shop with you until the quality of service drops.
Therefore, your support teams should prioritize frictionless service delivery and enhance customer handoff.
Below are 2 practical tips to improve the quality of your customer service:
- Automate your customer service: Use a chatbot template for information collection to interact with customers around-the-clock and promptly respond to their simple questions.
- Use live-assistance solutions: You can provide solutions more quickly by reducing the number of touchpoints and utilizing tools such as co-browsing and video chat. You can connect with your customers via live chat to provide real-time assistance for sales and support inquiries.
Measure customer satisfaction regularly
It’s not enough to identify and solve customer needs—you need to measure customer satisfaction continuously.
Customer needs change over time, and you need to identify the changes and adapt proactively.
Apple is one of the best examples in this regard, as the company has continued to have the highest customer satisfaction rating in the US since 2019.
One of the reasons the company stays ahead of competitors is the company's ability to recognize and satisfy consumers' psychological need to purchase premium products.
Apple consistently meets many customer requests with enhanced functionality and improved aesthetics. It has a voting system where users can vote and decide what features they want to see on their new devices. This helps Apple cut costs and provide only what its target market wants.
There are several ways to measure customer satisfaction to stay updated. The standard techniques are:
- Net promoter scale: uses a pointer scale of 1 to 10 to rate customer satisfaction, where 10 means most likely to recommend, and 1 isn’t likely to recommend.
- Customer satisfaction score: rates the satisfaction of a customer using a score; its scale ranges—very unsatisfactory, unsatisfactory, neutral, satisfactory, and very satisfactory—the more positive answers you get, the higher your score.
Monitor your competitors
Your competitors also play a role in determining the needs and desires of your customers.
You can examine your competitors to know what works and what doesn’t.
When you start devising your market entry strategy, consider who the biggest players in your target markets are, and what their customers might complain of.
Analyze your competition, conduct focus groups where the two products are compared side by side, conduct interviews with customers of the competing business, and monitor their social mentions.
You can then use this information to improve your products and position your brand.
Localize your product and services for each target market
Product localization is adapting and modifying your product, be it a web or mobile app, website, or video game, to make it more suitable for a target market.
Some people confuse this with translation. Translation transfers your original product from one language into another. Localizing your product, on the other hand, involves incorporating cultural specifics, local slang, beliefs, expectations, and many other aspects along with translation.
That way, you aren’t just producing another product for your new market. Instead, you’re creating a product that meets the psychological needs of people in the new environment.
If you seek a global audience, this means that about 80% of your potential market is inaccessible to you—unless you invest in localization.
Localization is what most big brands are doing right now. Brands like Netflix, Slack, Airbnb, Nike, etc., all develop localized products for all their target markets. That way, they can meet their customers' physical and psychological needs.
Let’s take Slack as an example. Slack has over 10 million daily active users presently spread across over 150 countries, including Japan, India, Germany, and France.
To break into these new markets, Slack localized its application to meet its customers' communication needs. More importantly, their app meets the cultural needs of the people in these business regions.
According to Slack's localization manager, “localization builds customer trust in a language they understand and with cultural references they recognize.”
There are many paths to implementing a localization strategy as part of your global growth plan. However, the most reliable way is to use a robust localization technology. A complete localization solution designed to bring teams together, automate workflows, and flex for your evolving needs, Phrase can help you truly connect with your global audience.
The most important things you need to know about your customers
There are many things you should know about your customers. The more you know—the better your solutions.
The following are the most important things you must know about your customers.
Who are your customers?
If you want your business to make massive sales, then you can’t make assumptions about your customers. Invest time in getting to know your customers. That is, you should be able to describe essential demographics about them like age, gender, or profession.
What motivates your customers to buy products?
If you understand why customers purchase a product or service, it will be easier to match their needs.
When do your customers buy these products?
People and businesses mostly buy products when the need arises. Understanding the moments when people will need your products or services helps you stay ahead of competitors and increases your chances of success.
What are their shopping preferences?
What is the best way to shop for your product or service? Customers can choose to buy online or in person.
How much are your customers willing to pay?
There’s always a price people are willing to pay in exchange for specific products or services. Your products will have tremendous success if you can match the price of your product to what you know the customer can afford.
What makes them pleased with their purchase?
If you understand what makes your customers happy, you can serve them according to their preferences. According to a PwC Future of Customer Experience Survey, customers consider aspects like bad employee attitudes or unfriendly service key when doing business with most companies.
What do your customers expect from you?
These are value-added services that your customers require you to provide along with their products and services. Customer expectations could be discounts, special promotions, delivery, etc.
If you fail to meet these expectations, you stand to lose your customers to competitors that offer these value-added services.
What do they believe about your rivals?
If you understand how your customers perceive your competitors, you can work on that to get ahead of them. It is called competitor advantage.
Who do they consider you to be?
Finally, what perceptions do customers have about your business? The more people see you as a friendly brand—the more likely they’ll buy from you.
A recipe for winning across markets
Understanding customer needs in each target market is a recipe for success in expanding a business internationally. When you incorporate the right techniques and best practices into your international strategy from the start, it can quickly give you a competitive advantage.
The world's most successful companies are customer-centric and fully aware of customer needs. Putting customers first is not just a wise business decision. In today's world, it’s a survival skill that every business needs to harness for growth.
Last updated on November 15, 2022.