A customer (also known as a client, buyer, or purchaser) is usually used to refer to a current or potential buyer or user of the products of an individual or organization, called the supplier, seller, or vendor. This is typically through purchasing or renting goods or services. However, in certain contexts, the term customer also includes by extension any entity that uses or experiences the services of another. A customer may also be a viewer of the product or service that is being sold despite deciding not to buy them. The general distinction between a customer and a client is that a customer purchases products, whereas a client purchases services.
In a survey of nearly 200 senior marketing managers, 67 percent responded that they found customer metrics very useful.
Three metrics are used to count customers and track customer activity irrespective of the number of transactions (or monetary value of those transactions) made by each customer:
- Customer counts: These are the number of customers of a firm for a specified time period.
- Recency: This refers to the length of time since a customer’s last purchase. A six-month customer is someone who purchased from the firm at least once within the last six months.
- Retention rate: This is the ratio of the number of retained customers to the number at risk.
In contractual situations, it makes sense to talk about the number of customers currently under contract and the percentage retained when the contract period runs out. In non-contractual situations (such as catalogue sales), it makes less sense to talk about the current number of customers, but instead to count the number of customers of a specified recency.
The word derives from "custom," meaning "habit"; a customer was someone who frequented a particular shop, who made it a habit to purchase goods of the sort the shop sold there rather than elsewhere, and with whom the shopkeeper had to maintain a relationship to keep his or her "custom," meaning expected purchases in the future.
The slogans "the customer is king" or "the customer is god" or "the customer is always right" indicate the importance of customers to businesses – although the last expression is sometimes used ironically.
However, "customer" also has a more generalized meaning as in customer service and a less commercialized meaning in not-for-profit areas. To avoid unwanted implications in some areas such as government services, community services, and education, the term "customer" is sometimes substituted by words such as "constituent" or "stakeholder". This is done to address concerns that the word "customer" implies a narrowly commercial relationship involving the purchase of products and services. However, some managers in this environment, in which the emphasis is on being helpful to the people one is dealing with rather than on commercial sales, comfortably use the word "customer" to both internal and external customers.
Obsolete meaning: In the early 17th century customer was defined as a "common prostitute. This meaning is important for understanding historical literary works. ("I marry her! What, a customer?") Othello, or ("I think thee now a common customer") All's Well that Ends Well. Today the meaning of "customer" has been inverted in this usage.
- Customer service
- Customer centricity
- Customer relationship management
- Customer data integration
- Guided selling
- Service level agreement
- Early adopter
- ^ a b c d e Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 0137058292. The Marketing Accountability Standards Board (MASB) endorses the definitions, purposes, and constructs of classes of measures that appear in Marketing Metrics as part of its ongoing Common Language: Marketing Activities and Metrics Project.
- ^ A Glossary and Etymological dictionary of obsolete and uncommon words, William Toone, c. 1850
This business term article is a stub. You can help Wikipedia by expanding it.