10 Reasons why it’s important to understand your customers

To build a thriving business, you must put time, attention, and effort into improving customer experience. Customers are the heart of a business; when satisfied with your products and service, they stay back and may bring in new customers.

When you understand customers' preferences, you can deliver them the best service, fulfilling their needs and expectations. It builds business reputation, drives sales, improves brand awareness, increases conversion rate, and helps in business growth.

There are several ways of understanding your customers, but the best ones are:

Putting yourself in their place.

Using Customer Relationship Management (CRM) tools.

Ask for feedback and what they think about you.

In this blog, we will learn why it is essential to focus on understanding customers and how the information helps your business grow.

The importance of understanding your customers

You don't need anyone to describe how important customers are for a business. When there is no customer, there is no business. Knowing them and gaining insights into their needs is the best way to retain your existing customers while acquiring new ones.

Customer needs can be either physical or psychological. Physical demands are easy to detect, and brands can quickly develop solutions, but understanding psychological needs are complicated. It plays an influential role in the decision-making process of a customer. For example, if a customer is hungry, it is their physical need, but what type of food will fulfill their cravings is a psychological need.

Knowing your customers means:

Knowing the market

More than half of businesses fail in the first five years because the US Bureau of Labor Statistics calls them "No market need." It is, therefore, necessary for a business to understand the market needs and produce goods or services that meet them. Entrepreneurs call this Product-Market Fit, requiring Value Proposition Canvas with Value maps and Customer Profiles at the center. Therefore, understanding your customers is essential to detect how much you provide for the current market need.

Adapting to the changing needs

Customer demands keep changing, and keeping up with the trends is a hurdle for businesses of any size. To keep track of these changes, you must survey customers and understand their differences in behavior and preferences.

Knowing how to reach customers

Previously, there were only a handful of channels to communicate with customers, but today we have multiple channels to connect. This made brands put effort into understanding customer habits and knowing the places where they can connect with them and spread out messages.

How to communicate

To communicate with customers, you need to understand their language, interests, gender, age, demographics, etc. When brands know their customers, they can incite customers' interest, stimulate desires and mobilize in making a favorable decision.

Building strong relationships

Acquiring new customers is more costly than retaining old ones. Therefore, understanding your customers can convert them into a loyal base, and fulfilling their needs makes them satisfied and attached to the business for a long time.

How to understand your customer needs?

Customer needs vary depending on the product and service types you produce. Here are a few general customer needs listed below:

Customer needs for products

User experience: The overall experience of using your product must be intuitive and user-friendly.

Functionality: Customers look for products that are easy to use and solve specific needs.

Convenience: The product you sell must effectively and efficiently meet customer needs. Thus, ease of operation and convenience are essential.

Design: The product design must be appealing, and brands must make a slick and efficient design to excite customers.

Efficiency: Products must be reliable, efficient, good performing, and can be integrated with other tools.

Pricing: Keep your product prices according to your target customers' capacity. Every customer has a different budget; while some may go over the top to buy a product, others can avoid it.

Customer needs for services

Empathy: Customers expect a certain level of compassion when communicating with anyone in your business, from sales and marketing to customer service teams.

Transparency: They appreciate businesses having transparency in prices, services, policies, etc., which builds trust. 94% of customers will remain with a brand that is transparent with its policies.

Fairness: People expect you to be fair in every area, from offering services and benefits to prices and facilities, and not discriminate. A recent study has seen US companies lose $35 billion in customer churn due to avoidable customer experience problems, like lack of fair treatment.

Choices: When a customer is investing in you, they expect you to offer them multiple choices, for example, a range of subscription plans and payment options.

The role of the registration event in the onboarding process

The top two reasons customers walk out of business are: they don't understand the product and don't find any value in it. The customer onboarding process solves both. The process starts with registering with the brand, where the customer puts in all the necessary details to sign up. 

It is crucial for consumer goods brands to recognize their product owners and to see them as high-value partners with long-term potential. With the shift in perspective, product registration becomes an essential component of the onboarding process and an ideal chance to provide a first-class product experience creating the stage for higher engagement.

This registration process is necessary for brands as they receive valuable insights into customer data. It allows them to collect customer preferences, interests, and demands. Depending on this information, a brand can curate its future product design, onboarding strategy, and marketing propositions.

However, ensure you stay compliant with the data security regulations in the country of operation. During onboarding, the data collected about customers helps brands send notifications related to their preferences or purchases. Personalized messages make customers feel valued and emotionally attached to the brand. In return, you can offer a better customer experience, increase loyalty and drive sales.

10 reasons why it’s important to understand your customer

Customer service is one of the crucial aspects of business, yet the most undervalued asset. If a company can identify and understand its customers' needs and consistently serve them with the best, it will keep moving toward success.

Here are the ten reasons why it is crucial to understand your customers.

1. Personalization

71% of consumers are uninterested in impersonal brands, while 91% of users will purchase from brands that offer relevant recommendations to them.

Brands need to know who their customers are, their preferences, interests, and demands. When you understand customers, you encourage personalized marketing and sales efforts to meet the ever-changing needs and preferences in the market.

2. Targeted advertising

By understanding how your buyers think and feel about your brand, you can determine how to market products and services. Predicting customer choices and understanding their demographics and psychographics helps brands to target their advertising to the right audience, which drives sales and increases chances of growth.

3. Product development

Surveying customers give a clear understanding of what they want, helping brands curate products and services that meet their needs. If a brand cannot meet the market's changing demands, it will be tagged as having "No market need," and the business will collapse.

A survey by SmartHQ showed that 90% of consumers are willing to share their behavioral data if it helps them get a convenient, cost-effective experience.

4. Customer retention

Customer acquisition is nearly five times more costly than customer retention. You can make customers stay in business by keeping them satisfied with better services and maintaining quality. A happy customer can positively participate in word-of-mouth marketing and become a brand advocate, helping you acquire new customers and driving overall business performance.

5. Upselling and cross-selling

The revenue potential of a brand doesn't end at the customer's point of sale; there's a huge opportunity for more sales after purchase. Cross-selling and upselling can help you increase business.

Cross-selling is related to selling any product related to the one your customer purchased. Upselling is the purchase of a product that will make additional purchases more expensive with an upgrade or a premium option.

Understanding your customers gives knowledge of who your customers are and their past purchases and identifies opportunities of selling more related to the original purchase or some add-ons.

6. Identifying trends

Knowing your customers gives valuable insights into the pattern of purchase trending in the market. This keeps businesses coping with current market trends, fulfilling customer demands, and enjoying a competitive advantage.

7. Identifying pain points

Businesses need to produce unique products or a solution to current issues in the market to survive the competitive market. Customer surveys will help you understand their problems with the existing products to curate better products and services in the future. It makes you stand out of the crowd and drives sales.

8. Improving customer service

Today's customers are looking for brands with better services, where they are treated more like humans than a bot. However, you need to know them better to satisfy them and offer timely responses.

It also reduces most other problems associated with business, sales, and legal issues. Poorly treating customers will create problems, leading to the company's untimely demise.

9. Building trust

Ask customers what they want and expect from you, and then try fulfilling their needs; they will become your loyal customers. Every successful business stands straight under any market scenario due to its loyal customer base. Retaining customers is challenging but less costly and time-taking than acquiring new ones. Remember, trust plays a vital role in business sales.

81% of customers are alarmed about data breaches, which outweighs the potential benefits of sharing personal information with companies.

A company that openly showcases its security and privacy measures will help garner consumer trust.

10. Data-driven decision making

Understanding your customers means gathering valuable data and ensuring you make data-driven decisions. Such a decision has valid points and logic behind every step, thus improving your efficiency and effectiveness in marketing, sales, and customer service.

Use Layerise to understand your customers.

Layerise helps brands get an in-depth view of their customers along their journey, including their geographical, demographical, and behavioral data. We collect this data during the onboarding process and ensure brands understand who their customers are, what they do, and how they react, and track customer satisfaction.

We notify your customers of any updates or news via our SMS marketing campaigns that send out personalized and relevant messages to increase conversion. Layerise ensures your customers are happy in understanding products without reading manuals with our story-like instructions and maintenance reminders. Plus, we gather feedback from different platforms so that you can keep improving by considering the current deficiencies.