Customer

From CEOpedia | Management online

Customer is a party that receives or consumes products. Several definitions narrow the meaning of customer to buyer, however, in case of theory of management it's wrong. E.g. In public administration customer doesn't pay for the services (some people pay taxes, but not everyone pays them). In case of enterprise we can distinguish:

The idea of internal customer was created by Joseph M. Juran and presented in Quality Control Handbook. It was widely implemented in Total Quality Management and later also in other management concepts.

Importance of customer

We live in era of overproduction. There is more goods and services available than customers who want to buy them. Therefore, attracting and keeping customer is essential for each company. To attract customer organization needs good marketing, to keep him/her - also quality product is required.

10 Rules for customer attraction

  1. Everyone in company must be devoted to creating positive experience for the customer.
  2. Employees must know product they sell.
  3. Company must know their customers (e.g. through market research)
  4. Treat people with courtesy. All people.
  5. Never argue with a customer.
  6. Communicate to the customer what do you plan to do - inform about next steps in process.
  7. Always provide what you promise.
  8. Assume that customer tells the truth. When in doubts: customer is right.
  9. Focus on customers, not sales. Sales are the effect of you focus on customer.
  10. Create selling process that is easy for customer, eliminate paperwork, clicking through web-pages and waiting.

7 Rules for keeping customer

  1. Follow rules for customer attraction (see above).
  2. Keep the contact after selling the product.
  3. If there is a problem, inform the customer about it and about what you plan to do with it.
  4. Speak in customer's language, not technical.
  5. Know your customer and personalize communication, use customer relationship management (CRM) software.
  6. Let customer contact with you. Use social networking, customer forums, etc.
  7. Create a loyalty program.

Types customer relations

The two main types of relations are:

  • B2B - business-to-business - refers to situation when one company makes transaction with another.
  • B2C - business-to-customer - enterprise sells products to individual consumers.

It is important, that in most countries different legislation rules apply to those types. Usually individual customer is protected by law more than business entity. It is important difference for micro enterprises, where owner can choose between acting as business or as individual.

Other relations are:

  • B2G - business-to-government (sometimes known as B2A - business-to-administration) - different from B2B because of public sector regulations, e.g. bidding requirements.
  • C2C - customer-to-customer - two individuals, that don't run business, serve each other. This type gets more popular thanks to e-commerce that enables people to easily contact with each other. Before e-commerce this type of relations was limited mainly to neighbourhood. It should be noted, that in some countries extensive C2C contacts can be treated by law as B2C due to tax rules and manufacturer responsibility.

See also

Examples of Customer

  1. Buyer: A buyer is an individual or entity that purchases goods or services from another company. Examples of buyers include consumers, retailers, wholesalers, distributors, and manufacturers.
  2. User: A user is an individual or entity that makes use of a product or service. Examples of users include customers, employees, customers' customers, partners, and suppliers.
  3. Service Provider: A service provider is an individual or entity that provides a service to another individual or entity. Examples of service providers include consultants, contractors, vendors, and suppliers.
  4. Partner: A partner is an individual or entity that works with another individual or entity to achieve a common goal. Examples of partners include service providers, suppliers, distributors, and customers.
  5. Investor: An investor is an individual or entity that provides capital in exchange for a financial return. Examples of investors include venture capitalists, private equity firms, and angel investors.

Advantages of Customer

Having customers is beneficial for any business and there are many advantages to having customers:

  • Customers provide a source of revenue which helps a business to grow and expand. Customers are essential for any business to be successful.
  • Customers provide valuable feedback about products and services. Listening to customer feedback can help a business identify areas for improvement and create better customer experiences.
  • Customers help to spread a business’s message. Through word of mouth, customers can share their experience with their friends, family and networks.
  • Customers can also help to increase brand awareness. If customers have a positive experience with a business, they are more likely to recommend it to others.
  • Having customers is essential for the growth of any business. Without customers, a business would not be able to generate revenue and would not be able to sustain itself.

Limitations of Customer

The limitations of customer are:

  • Geographic limitations - Customers may be limited to a certain geographical area, preventing them from accessing certain products or services.
  • Socio-economic limitations - Customers may be limited by their income level, preventing them from accessing certain products or services.
  • Language limitations - Customers may be limited by their language proficiency, preventing them from accessing certain products or services.
  • Cultural limitations - Customers may be limited by their cultural beliefs, preventing them from accessing certain products or services.
  • Educational limitations - Customers may be limited by their level of education, preventing them from accessing certain products or services.
  • Regulatory limitations - Governments may impose certain regulations, such as age restrictions, which can limit customers from accessing certain products or services.
  • Accessibility limitations - Customers may be limited by their physical or cognitive abilities, preventing them from accessing certain products or services.
  • Time limitations - Customers may be limited by the amount of time available to them, preventing them from accessing certain products or services.

Other approaches related to Customer

One possible list of other approaches related to Customer could include:

  • The Customer as a User - The user approach looks at customers in terms of how they use a product or service. This approach focuses on how customers experience and interact with the product or service.
  • The Customer as a Partner - The partner approach looks at customers as potential partners in the business. This approach focuses on how customers can help create value and solve problems together.
  • The Customer as a Community - The community approach looks at customers as part of a larger network. This approach focuses on how customers interact with each other and share their experiences.
  • The Customer as a Voice - The voice approach looks at customers as advocates of the business. This approach focuses on how customers can help spread the message of the business and create brand loyalty.

In summary, there are several different approaches to understanding customers, each of which can provide valuable insights into how customers interact with a product or service. By understanding customers from multiple perspectives, businesses can better serve their customers and create a more successful business.


Customer — recommended articles
Local agent — Consumer sovereignty — Holistic marketing — Types of stakeholders — Service — Warm Calling — Mercantile agent — Advertising agency — Turnkey business

References

Author: Slawomir Wawak

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