A customer is an individual or business that purchases another company’s goods or services. Customers are essential because they drive revenues. Without them, businesses can neither survive nor thrive.
All businesses compete with other companies to attract customers, either by aggressively advertising their products, lowering prices to expand their customer bases, or developing unique products and experiences that customers love. Think Apple, Tesla, Google, or TikTok.
Key Takeaways
- Customers are the individuals and businesses that purchase goods and services from a company.
- To better meet their needs, some businesses closely monitor customer relationships to identify ways to improve service and products.
- The treatment of customers can provide a competitive edge.
- Consumers can be customers, but customers specifically purchase goods and services, whereas consumers use them.
Understanding Customers
Businesses often honor the adage “the customer is always right” because happy customers are more likely to provide repeat business to companies that meet or exceed their needs.
Many companies closely monitor their customer relationships to gather information about customer behavior and solicit feedback on ways to improve product lines.
Customers are categorized in several ways, most commonly as external or internal:
- External customers are dissociated from business operations and are typically interested in purchasing the final goods and services produced by a company.
- Internal customers are individuals or businesses integrated into business operations, often existing as employees or other functional groups within the company.
Studying Customers
Businesses frequently study customer profiles and behaviors to fine-tune their marketing approaches and tailor their inventory to attract more customers.
Customers are often grouped by demographics such as age, race, gender, ethnicity, income level, and geographic location. These attributes help businesses create a snapshot of the “ideal customer” or “customer persona.”
This information allows companies to deepen existing customer relationships and reach untapped consumer populations to increase traffic.
Understanding customers enables businesses to craft effective marketing and advertising campaigns, deliver products and services that address needs and wants, and retain customers for long-term repeat business.
Customer Service
Customer service, which strives to ensure positive experiences, is key to a successful seller/customer dynamic. Loyalty in the form of favorable online reviews, referrals, and future business can be won or lost based on customer service quality.
In recent years, customer service has evolved to include real-time interactions via instant message chats, texting, and other communication means.
The market is saturated with businesses offering similar products and services. What truly distinguishes one from another is customer service, which has become the basis of competition for many businesses. Customer service is a key element of the quality improvement methodology, Six Sigma.
Customers differ from purchasing agents, who use corporate capital to buy goods at wholesale for commercial or industrial use.
Customers vs. Consumers
The terms “customer” and “consumer” are nearly synonymous and are often used interchangeably. However, there exists a slight difference. Consumers are defined as individuals or businesses that use goods and services. Customers are the purchasers who buy goods and services. They can exist as consumers or simply as customers.
What Are the 5 Basic Types of Customers?
The five basic types of customers are new customers, impulse customers, angry customers, insistent customers, and loyal customers.
What Is the Best Type of Customer?
Loyal customers are the best because they make repeat purchases over the long term and are likely to recommend you to friends, social media connections, or business associates.
What Do Customers Value Most?
Customers most appreciate high-quality products or services, low prices, good service, and the opportunity to give feedback that is acknowledged by the company.
The Bottom Line
A company’s most valuable asset is its customers. Without them, they are out of business. The best companies go to great lengths to study and understand customer behaviors and desires so they can address issues that displease buyers and promote products and services that customers like and want more of.
Related Terms: customer satisfaction, consumer behavior, customer service, target audience, customer experience
