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How to Conduct a Customer Needs Assessment

Written by:

Victoria Yu is a Business Writer with expertise in Business Organization, Marketing, and Sales, holding a Bachelor’s Degree in Business Administration from the University of California, Irvine’s Paul Merage School of Business.

Edited by:

Sallie, holding a Ph.D. from Walden University, is an experienced writing coach and editor with a background in marketing. She has served roles in corporate communications and taught at institutions like the University of Florida.

How to Conduct a Customer Needs Assessment

How to Conduct a Customer Needs Assessment

Knowing what your customers want and need to purchase should be your first priority as a business owner or manager. Every business needs ongoing revenue from making sales to customers to provide cash flow and keep operations running. Therefore, businesses must naturally do their best to provide goods and services customers want, to secure their patronage–and to keep them coming back for more. 

But how does a business know exactly what customers want? Especially in fast-moving times, when it seems consumer opinions, trends, and customer sentiment are changing at the drop of a hat. A company that doesn’t pay close attention to changing customer wants and needs could end up with inventory filled with unwanted items, and inventory that cannot be sold could cause huge financial losses.

So, as a business owner or manager, is there something you can do to help ensure this does not happen? The answer is yes. You can conduct what is known as a customer needs assessment, or customer needs analysis (CNA), to keep your product inventory and business operations aligned with customer wants, needs, and market trends. 

Perhaps you’ve hit a snag when it comes to knowing your customers and their buying trends. Or maybe you’re setting up your business processes and want to ensure ongoing customer satisfaction. To help you stay in touch with what your customers want or need from you, we’ve prepared this guide to teach you everything you need to know on how to conduct a customer needs assessment.

Key Takeaways

  • A customer needs assessment (CNA) is a research process used to identify the problems, goals, preferences, and needs of a business’s future viewed through the lens of existing customers.

  • By conducting a CNA, businesses ensure that their product-customer fit is accurate and that the business appeals to customers, raising its chances of attracting and retaining customers.

  • The five steps to conducting a customer needs assessment include defining the target market and ICP, identifying the needs to be researched, conducting secondary research, conducting primary research, and analyzing and implementing research findings.

What Is a Customer Needs Assessment?

A customer needs assessment or customer needs analysis (CNA) is a process used to identify and understand the problems, goals, and preferences of your potential and existing customers. The results of the assessment and analysis can be used to shape a company’s product inventory or customer service experience, ensuring that the company is able to appeal to targeted customers. 

In short, businesses conduct CNAs to improve their product-customer fit. By doing so, they hope to attract new customers, improve the customer experience, and make more sales.

Why Is a Customer Needs Assessment Important?

Although product development or retail supply teams might have preconceived notions about how products benefit customers, the only ones who can conclusively judge a product’s usefulness to customers are the customers. 

As such, ongoing customer needs assessments are recommended to help companies bridge the gap between product features and attributes, the real and perceived benefits a customer receives from a product, and the traits customers have that allow them to derive those benefits. Conducting a CNA can also help businesses build better marketing campaigns, sales pipelines, and customer service processes. 

In other words, conducting ongoing customer needs assessments not only allows companies to create better products that will align more closely with customer wants and needs, it also helps to inspire better business practices that help to retain customers.

Five Steps of the Customer Needs Assessment Process

So how exactly does a company conduct customer research to determine customer needs? As we see it, there are five steps to the process, which we detail in the following paragraphs.

1. Define Your Market and ICP

The first step is to define your serviceable obtainable market (SOM) and ideal customer profile (ICP). 

Your SOM represents all of the customers in the market you could reach and feasibly capture, either because they’ve never had a product like yours before or because you attract them from other companies. This helps you realistically determine how to position your product among competitors.

Next, you will use your ideal customer profile to narrow your target market down to include only the best possible customer for your business. Your ICP should cover the demographic and firmographic details, location, budget, goals, challenges, preferred communication channels, and more details about your ideal customer. Now, you might be thinking that you don’t know some of these details at this point, but those are things you’ll need to research in the next step.

With your target market clearly defined, you can ensure that in later steps of this process, you’re only soliciting the opinions of people who might become customers. In other words, you only want to communicate with people whose opinions matter for selling your product. The closer someone in your SOM comes to your ICP, the more you should value their opinion.

2. Identify Your Research Needs

Next up is to go into more detail about your ideal customer profile and their needs from the product and from your company. Some questions you might look to answer include:

  • Price Needs
    • What is the customer’s ideal price for this product?
    • How sensitive are customers to price changes?
  • Place Needs
    • Where are the customers located?
    • Where will customers shop for this product?
  • Attribute Needs
    • What product attributes does the customer prioritize?
    • What matters more to customers, looks or effectiveness?
    • Do certain materials or ingredients appeal to the customer?
    • Are customers more drawn to a socially responsible product?
    • How long do customers expect this product to last?
  • Benefit Needs
    • What problem is the customer facing?
    • What intrinsic physiological or psychological need does the product solve?
    • What does the customer use now to solve this problem?
  • Promotional Needs
    • How does the customer learn of new products and services?
    • What communication channels does the customer prefer?
    • Would the customer be more receptive to emotional, logical, or socially based promotional tactics?
    • What sort of authority figures or influencers are customers swayed by?
  • Company Needs
    • Do customers expect a warranty or refund policy for the item?
    • What sort of customer support do customers expect?

While this isn’t an exhaustive list, this should be a good starting point for you to begin shaping a marketing campaign, product, sales journey, and service experience that meets customer desires. These questions will serve as the basis for your research in the next steps.

3. Conduct Secondary Research

Now that we have our question list, it’s time to get into the nitty-gritty of market research, starting with secondary research. 

Now, you might be thinking, by nomenclature, shouldn’t primary research come before secondary research? 

While primary research will be needed to get answers to the questions we included in the last section,  prior to conducting primary research, secondary research is needed to determine what pre-existing knowledge is already available. Perhaps other companies have conducted and published results of research that was completed for a different study, possibly by a different company, and maybe some of the questions you need answers to have already been discovered.

In other words, another library, company, or research group such as JSTOR, Deloitte, McKinsey, Bain & Co., or Statista might already hold the answers to your customer needs questions. If your company has been operating for a while, you might even have access to in-house research such as customer feedback and reviews for similar products or for other products targeting the same target market.

By conducting a quick Google search and searching through secondary research first to find existing answers to your questions, you might save time and money. Of course, it will be up to you to decide whether you choose to use the research you find or not. You might decide it’s outdated, or that the focus and research questions don’t quite match what you’re looking for. Still, any useful secondary research you find will save you the time and money of having to answer those questions yourself.

4. Conduct Primary Research

For answers to questions you couldn’t find through secondary research, it’s now time to turn to primary research. There are four main types of primary research you could conduct: surveys, observations, interviews, and experiments. We suggest mixing and matching these research types to gain a more comprehensive understanding of the customer from all angles.


When you imagine customer research, your first thought will likely be surveys. Conducting a survey allows you to ask dozens, if not hundreds or thousands, of customers about their preferences, needs, and opinions over phone, email, or social media. You can ask multiple choice, short-answer, ranking, Likert scale questions, and more, to gain a full understanding of a customer’s opinion.

A best practice for developing a survey is to place the most important and opinionated questions at the beginning when the survey taker is still alert and fresh-faced, while saving the demographic questions for the end. A person’s demographic doesn’t change, so their answer will be unaffected by survey fatigue if your survey runs on the longer side.


Sometimes, customers can’t explain why they make a choice, aren’t quite aware of why they prefer one thing over another, or simply don’t want to admit certain biases to themselves. However, even if the customer isn’t consciously aware of an opinion they hold, it will still affect their purchase decision and behaviors.

As such, companies can use observational methods to track what a customer thinks, feels, does, and senses at every step of their customer journey to reveal these hidden opinions.


For a deeper understanding of an individual customer’s thoughts, you can conduct one-on-one interviews or arrange a focus group to have an open discussion with customers. With a back-and-forth live conversation between researcher and customer, the company can press for more details in real time, and quickly get to the heart of customer sentiments.

However, because interviews are time and labor intensive, it becomes more crucial than ever that your company only interviews people who perfectly match your ICP to ensure all data collected is valuable.


Finally, for the most complex questions that customers can’t verbalize, companies can conduct experiments to observe how customers behave under different circumstances. Just like any science experiment, a proper experiment needs a hypothesis, an independent variable, and a dependent variable. 

You might conduct A/B testing to observe a single variable, or use two-factor experiments to observe two variables at once. Remember: to conclusively say that one variable causes another, they must be correlated, temporally sequential, and not be driven by a third variable!

5. Analyze and Implement Your Findings

Once you’ve completed your secondary and primary research, it’s time to gather your findings and analyze your results for patterns, trends, and insights that answer the questions you set in the second step. Check for any trends in the data, or even discongruities in the data – they might be representative of a procedural mistake, or a hidden insight that should be researched further. 

Finally, summarize your findings, and use them to develop actionable recommendations on how to match your product, service, or business process to the customer needs you discovered in your research. After that, all that’s left is to reach out to qualified leads and close a sale!


A customer needs assessment researches the needs, wants, and preferences of customers in regards to a single product or service, helping a company perfectly tailor their product offering to best serve customers. It prevents businesses from making hasty assumptions and costly mistakes in product development, marketing efforts, sales conversations, and service attitude.

While an “assessment” may sound intimidating, conducting a customer needs assessment isn’t as difficult as it sounds. By following these five steps, you can quickly and efficiently identify what your customers want and adjust your business to match, boosting your chances for business success.


How often should I conduct a customer needs assessment?

Once you’ve completed your initial customer needs assessment and launched your product, it shouldn’t be necessary to complete the entire assessment again for quite a while. Instead, it’s better to stay on top of recent industry trends and fads, and subtly tweak the product to match gradual changes. So long as the customer and product don’t change dramatically, you can simply conduct touch-up research every six months or so to adapt your current assessment.

On the other hand, you should conduct a fresh customer needs assessment for every product you launch or new market segment you target. These represent entirely new product-customer fits, so it’s important to conclusively determine what those particular customers need from that particular product.

Which of the four primary research methods should I use?

When deciding whether to research your target market through survey, observation, interview, or experiments, know that the order we just mentioned them in is also representative of how costly and intensive they are to implement. As such, we recommend you start with surveys and observations, and only move to interviews and experiments for questions that are proving harder to answer.

In practicality, there is a noticeable trade off between the quality and the quantity of the research you gather. While you could gather a hundred thousand survey responses, you wouldn’t be able to go through all of them in detail. Similarly, though in-depth interviews might reveal detailed information about customers, you could likely only conduct ten customer interviews at most. It’s up to your business whether you choose quality or quantity when researching your customers.

What are some common pitfalls when conducting a customer needs assessment?

The largest pitfall a company could fall into when conducting a customer needs assessment is assessing the wrong audience. This automatically renders all of the results useless, as the data doesn’t correctly reflect the company’s target customers. 

A similar pitfall is not having a large enough representative sample size of your audience, such as by surveying too few people or interviewing people all from the same physical location or demographic.

Another common pitfall is jumping straight to primary research, rather than taking a step back and searching for secondary research first. Purchasing secondary research will often be cheaper than conducting the research yourself, saving your company time and money.

How do I conduct a customer needs assessment for sales?

Conducting a customer needs assessment for sales means checking to see if a potential customer (lead) matches your ideal customer profile and has a need for your product or service. In other words, it’s part of the lead qualification process and a bit beyond the scope of this guide for the company-wide assessment.