Customer needs is a pretty buzzy phrase right now. Like ‘customer success,’ and ‘customer experience,’ it is popping up in a lot of marketing materials. Many companies tell us they understand customer needs as a way of signaling that their products and services are designed with the customer in mind. It also implies that the company is different from its competitors and worthy of a customer’s investment.

But what does it actually mean to ‘understand customer needs’ in a way that yields better experiences, greater mutual value, and better results for both customers and the organization?

We Understand Customer Needs

We all want our needs attended to and, after handfuls of bad experiences, we want to do business with a company that gets us.

It is a great claim to make because it makes the prospective customer feel cared for and important. It brings some assurance that if they say understand us AND they say they have the best customer experience then it must be true (even if the experience feels pretty glitchy.) Also, unless you are inside that organization, you can’t know what it actually did to understand customer needs or even how it defines customer needs. The only way you can judge whether that claim is true or not is to become a customer and see if it meets your needs.

Understanding customer needs isn’t just a warm and fuzzy exercise – it is strategic and operational processes that organizations must do consistently and rigorously if they desire the benefits that great experience design can deliver.

At a high-level here is what it means to understand and apply customer needs:

1. Distinguish between a need and want

Organizations must be able to distinguish between these 2 things, needs and wants, to get the right type of insight into strategy, product, service, and experience development.

Most times people mix the language up – they talk about a want (a want is a combination of what the person knows they need and what they think is possible to make) but call it a need. A want is easier to execute on because the customer is handing you what appears to be the answer. “Make me an apple pie with 20 apples.” The problem is wants are hardly ever accurate. People can rarely recognize and articulate what they need and are also rarely aware of all the possibilities to solve for it (the want) unless they are on the product development team.

Using a need (a need is a gap or opportunity that may be known or may be latent) is harder. “I always eat desserts. The fruitier and more tart the better.” First the organization (or a firm it hires) has to discern the need from what customers do and say. Then it has to take the need, which excludes the solution or the answer, and mix it with what its cross-functional product development team knows as possible solutions and innovations before they can come up with the final solution. Perhaps, an mini apple tart with the flavor of 20 apples but using only one apple.

(Ugh. All of that? Can’t they just tell me what they want?!)

But when an organization uses needs instead of wants – Wow! The solutions it comes up with are much more innovative, more empathetic, and more successful. Employees are more inspired and engaged because they mixed all the ingredients together to make that great outcome.

We wrote about this in detail and showed examples in Let’s Talk About The Last Time You Took A Bath.

2. Be aware of the hierarchy of needs and the disproportionate contributions to success

All needs are not the same. Satisfying some needs will deliver more satisfaction than others and failing to deliver other needs can cause a disproportionate amount of dissatisfaction. When organizations attend to customer needs and integrate them into their offering, they focus on the needs most relevant to the product and the brand and neglect the base layer of needs that are typically more important to the customer’s experience.

Many people are familiar with Maslow’s hierarchy of needs, what we are talking about here is not the same hierarchy even though we are going to put it into a pyramid shape. Maslow’s hierarchy is a significant contributor to social sciences – it explains how we function as humans and how we grow. Our hierarchy explains the relative size of a needs category and the importance and contribution different types of needs have on a person’s experience with products, services, and experiences.

Figure 1: What organizations typically focus on if they pay attention to customer needs: the top three levels

Figure 2: What organizations should focus on: the base layer – needs that disproportionately contribute to dissatisfaction/satisfaction

Disrespect, lack of kindness, distrustful behavior, massaged truths or any indication of dishonesty, and any perception of the company not valuing the customer have a significantly greater impact on a customer’s experience than not satisfying a need in the top of the pyramid. If you don’t solidify the base, it really doesn’t matter what you put on top of it.

3. Integrate needs into the front of the requirements chain

Companies have a tendency to start with a solution (the concept, the idea, the product) and then try to retrofit it to what our market or customers want (not need). We know we aren’t supposed to do it but it happens more times than not.

It is very tempting to dive right into the thing we want to make, especially if the company is technically oriented. But even the best technical offerings can’t make it in the market if they don’t meet a market and customer need and aren’t wrapped in all the right experiential elements.

At some point an organization is going to have to make trade offs around product and service requirements and features. It is best to have something to trade against and this is where customer needs come in. They enable thorough traceability in the requirements chain. A product requirement that satisfies multiple customer requirements or business requirements is more likely to be prioritized than one that only addresses one requirement or a few low priority requirements. Customer needs are in the front-most end of the requirements chain.

Figure 3: Customer contribution to the requirements chain

Figure 4: Customer needs contribution in perspective

4. Make it an ongoing thing

Understanding customer needs doesn’t happen only once. It happens continuously because customer needs don’t stop growing, expanding, and morphing just because the product or service was launched. It is an ongoing practice that must be integrated into an organization’s product, service, and experience development and management efforts. Organizations must constantly be monitoring for customer and market need changes, making decisions about how to respond or not, and executing those changes.

We’ve written about a number of the ongoing practices that can help organizations develop the skills necessary to stay on top of customer needs: implementing an Enterprise Research Plan, listening even when we aren’t doing research, understanding what matters and using it in design, designing a Whole Offering and not just a product, managing the customer experience, changing the customer experience, and considering whether operational complexity is necessary.

This article, original published on October 4, 2013, has been updated with new research and findings.