Customer: Definition and How to Study Their Behavior for Marketing

What Is a Customer?

A customer is an individual or business that purchases another company's goods or services. Customers are important because they drive revenues. Businesses can neither survive nor thrive without them.

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, and Google.

Understanding Customers

Businesses often honor the adage "the customer is always right" because happy customers are more likely to repeat their business with companies that meet or exceed their needs. Many companies closely monitor their customer relationships as a result to gather information about customer behavior and solicit feedback from customers on ways to improve product lines.

Customers are categorized in many ways. They're commonly classified as external or internal.

External customers are dissociated from business operations and are often the parties who are interested in purchasing the final goods and services produced by a company. Internal customers are individuals or businesses integrated into business operations. They often exist as employees or other functional groups within the company.

Customers differ from purchasing agents, who use corporate capital to buy wholesale goods for commercial or industrial use.

Studying Customers

Businesses frequently study their customers' profiles and behaviors to finetune their marketing approaches and tailor their inventory to attract more customers.

Customers are often grouped according to demographics such as age, race, gender, ethnicity, income level, and geographic location. All these factors can help businesses cultivate a snapshot of the "ideal customer" or "customer persona." This information helps companies deepen existing customer relationships and reach untapped consumer populations to increase traffic.

Customers are so important to businesses that colleges and universities offer consumer behavior courses that are dedicated to the study of customer behavioral patterns, choices, and idiosyncrasies. These courses focus on why people buy and use goods and services and how those decisions impact companies and economies.

Understanding customers enables businesses to create effective marketing and advertising campaigns. It helps them deliver products and services that address needs and wants and retain customers for long-term repeat business.

Customer Service

Customer service strives to ensure positive experiences. It's 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 a good or bad customer service experience.

The market is saturated with businesses offering the same or similar products and services. What truly distinguishes one from the other 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 vs. Consumers

The terms "customer" and "consumer" are nearly synonymous and are often used interchangeably but there's a slight difference. Consumers are defined as individuals or businesses that consume or use goods and services. Customers are the economy's purchasers who buy goods and services. They can exist as consumers or simply as customers.

The Bottom Line

A company's most valuable asset is its customers. They're out of business without them. The most successful companies go to great lengths to study and understand customer behaviors and desires so they can address issues that displease buyers and promote the products and services they like.