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Definition: 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 customer who is very likely to buy the product or service offered by the business

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

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

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

5. Former Customers : The customers who were once customers of one business and became customers of a new business because of some reason. These customers 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. Internal customers are your shareholders, employees & other stakeholders.

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

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

Importance of Customer

The importance of customer cannot be explained. A customer is the foundation for any business. A business cannot exist without a customer base. A customer 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 customer can become loyal and repeat translating into more business. These happy customers would advocate and refer your business to other potential customers 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 customers 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 customer buys a product or uses a service, the scope of customer service starts immediately. A customer 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, customer is happy and values the business but if there is no way to contact the business it can lead to loss of customer and issues in future.

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

Browse the definition and meaning of more terms similar to Customer. The Management Dictionary covers over 7000 business concepts from 6 categories.

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