Customer

Published by MBA Skool Team, Last Updated: May 23, 2020

What is Customer?

Customer is an individual, group of individuals or an organization who receive or may receive goods, services, products or ideas from another individual or a company in return of value which can be money or anything of equivalent value. Customer forms the backbone of business. Usually more is the number of customers, more is the business thriving and vice versa. Business need customers to buy their products. A customer may not buying your product right away now but may buy it in future but still remains part of your target customer group.


Types of Customers

Customers can be of various types depending upon their ability to buy products or services.


Customer Types

Below are the 8 different types of customers:

1. Potential Customer : Kind of person who is very likely to buy the product or service offered by the business

2. Loyal Customers : Those who are loyal to one business and repeat the purchases irrespective of minor changes in parameters like price, quantity etc.

3. New Customer : Those who have used the product or service for the first time

4. Discount Customer : Those who only buy or use the offering because it was on discount or offered a cashback. These people are more likely to switch brands easily if prices reduce unlike loyal customers.

5. Former Customers : Those who were once buyer of one business and became buyers of a new business because of some reason. These people would still be potential customers as they have already tried the product or service once.

6. Internal Customer : One who is connected to your organization and is internal to your organization. These are your shareholders, employees & other stakeholders.

7. External Customer :  An external buyer is a buyer of your services and products but external to your organization. An example of your external consumer could be people buying your products in the marketplace.

8. Intermediate Customer : Those who purchases the goods for re-sale e.g. retailers


Importance of Customer

A customer is the foundation for any business. A business cannot exist without a buyer base. A buyer will pay for the offerings made by business and keep it going. It is very important for a business to manage the customer really well as the same person can become loyal and repeat translating into more business. These happy buyers would advocate and refer your business to other potential buyer bringing in more business. In short, a business cannot operate without business hence customer is of paramount importance to any business.


Customer vs Consumer

A consumer is the person who actually consumes the products or services, whereas the customer is simply the purchaser & need not be the consumer. The intermediate buyers are never consumers as they buy for re-sale. The purchaser of industrial goods & services is called industrial customers or business to business customers.


Customer Service and Support

Customer Service is an important aspect of modern day business. Once a person buys a product or uses a service, the scope of customer service starts immediately. A buyer may face some defect or may need further information to use the offering. For example, a new SIM card user after installation of card may not be able to place calls so there has t be a way to connect to SIM card provider for help. If the customer service support solves the issue, the buyer is happy and values the business but if there is no way to contact the business it can lead to loss of consumer and issues in future.

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.

Browse the definition and meaning of more similar terms. The Management Dictionary covers over 2000 business concepts from 6 categories.

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