External Customer - Definition, Importance & Example

Published in Marketing and Strategy Terms by MBA Skool Team

What is External Customer?

External Customer is a type of customer who does not have any direct relationship with the company but buys and consumes the produced products and services. External customer is what is commonly referred to as a ‘customer' in general. They purchase a company’s products or services but are not employee or partner or vendor or part of the organization in any other way. Some common examples can be a people who go to a retail store to buy groceries, visitors buying tickets at monuments or parks, the guests that stay in hotels, the diners that eat in restaurants.

External customers are often contrasted with internal customers who are customers of the company and are also a part of the organization like the employees of the company.

Importance of External Customer

External customers are essential to any business as they provide a revenue stream, make repeat purchases and refer your products to other people. Or alternately, they may also dissuade others from becoming customers of the company.

When a company normally defines a customer base, mostly it is being referred to the external customer. External customers in terms of scale would provide more value to a company typically. Internal customers also play an important role in the success of a business. For example. if a salesperson does not work well with customer service representative, it may result in a poor level of service.

If a company manufactures a product or provides a service, it is mostly designed and positioned for the external customer whereas means, tools, software, training and other similar aspects are which are designed to enable the business are for the internal customers mostly the employees, partners and stakeholders.

Example of External Customer

Consider the case of Starbucks Coffee. It has both internal and external customers. The internal customers will be the people that work within the business of Starbucks like the Board of Directors of the company, the supervisors and team members that serve coffee. External customers will be the everyday public that come in and buy coffee.

Another example can be a software application for ecommerce. Internal Customers are the employees who use the same to list products and pricing and external customers are the ones who use the portal to order and buy products.

Hence, this concludes the definition of External Customer along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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