What's the Difference Between Customers and Clients? [Client versus Customer]

When it comes to doing business, you usually deal with 3 different groups: businesses, clients and customers.

It's easy to tell the difference between businesses and clients, but it can be easy to confuse customer vs client.

They sound similar, and both refer to a person (or organization) who engages with your business, but really, what's the difference between customer vs client?

In this post we'll cover what's the difference and why it's important.

Let's get right into it by defining exactly what both a customer and client are.

What is a Client?

A client is a person or organization a business provides an on-going service to, or continuously sells a product to.

The key distinction here is that the service or product is provided over a long period of time.

Clients are valuable to businesses because they provide:

• Long-term Relationships: Clients often engage in ongoing relationships with a business, seeking professional services, advice, or solutions tailored to their needs over time.
• Lifetime Value: Due to the nature of these relationships, clients can provide a higher lifetime value through repeat business and potentially higher transaction values.
• Referral Potential: Satisfied clients are likely to refer other potential clients, expanding the business's reach through trusted networks.
• Feedback and Improvement: Long-term clients can offer valuable feedback for improving services or products, fostering innovation and growth.

As you can tell, the value a client has to a business goes beyond just one sale, but includes the on-going lifetime value of the client, as well as referrals, and feedback they can provide.

Think of it more as building a relationship or friendship than someone who's just looking for a one-time purchase.

Examples of Clients in Different Industries

While the general idea of a "client" is the same across all industries (i.e., someone who you do business with over the long-term), it could be helpful to look at some examples from specific industries (like law, marketing, IT, and healthcare).

Associating the word with some real world examples is a great way to remember.

1. Legal Industry: An individual seeking representation in a court case from a law firm.
2. Consulting Industry: A corporation hiring a consulting firm for advice on business strategies or operations improvement.
3. Advertising Industry: A brand engaging an advertising agency to create and execute a marketing campaign.
4. Accounting Industry: A small business owner who employs an accounting firm for tax preparation and financial planning services.
5. Real Estate Industry: A family working with a real estate agent to find and purchase a new home.
6. IT and Technology Services Industry: A company contracting an IT firm for software development or technology infrastructure management.
7. Healthcare Industry: A patient receiving ongoing treatment or consultation from a private healthcare provider or clinic.
8. Architecture and Construction Industry: A developer commissioning an architecture firm to design and oversee the construction of a new building.
9. Banking and Financial Services Industry: An investor using the services of a financial advisor for wealth management and investment advice.

What is a Customer?

A customer is a person or organization that buys a product or service from a business for one-time use or short-term consumption. Unlike clients, the interaction with customers is often transactional and might not involve a long-term commitment or relationship.

Customers are crucial to businesses because they provide:

• Volume: Businesses that focus on customers, especially in retail or consumer goods, often rely on high volume sales. Each purchase might be lower in value than a typical client transaction, but the sheer number of customers can compensate for this.
• Market Reach: A broad customer base can help in quickly spreading brand awareness and adoption of new products or services.
• Flexibility: Businesses serving customers can rapidly respond to market trends and consumer preferences, potentially leading to quicker growth in emerging markets.
• Simpler Transactions: Transactions with customers are often straightforward, requiring less customization and thus lower costs in service or production.

The significance of customers to a business is evident not just in the immediate revenue they bring, but also in the potential for market expansion, scalability, and the quick feedback loop they provide on products or services.

Customers, in this sense, represent the broader market's response to a business's offerings, providing insights into consumer preferences and trends. This feedback can be pivotal in steering the direction of product development and marketing strategies.

Examples of Customers in Different Industries

The concept of a "customer" is universal across industries, but let's see some concrete examples to make it easier to remember how customers differ from clients:

• Retail Industry: An individual purchasing clothing from a retail store.
• Food and Beverage Industry: A family dining at a restaurant or buying groceries.
• E-commerce Industry: Someone ordering a book from an online marketplace.
• Automotive Industry: A person buying a new car from a dealership.
• Entertainment Industry: Attendees purchasing tickets for a movie or concert.
• Consumer Electronics Industry: Consumers buying smartphones or laptops for personal use.
• Travel and Tourism Industry: Tourists booking flights and hotel stays for a vacation.
• Publishing Industry: Readers buying novels or magazines either in stores or online.
• Fitness and Wellness Industry: Individuals signing up for a gym membership or wellness retreat.
• Education Industry: Students enrolling in online courses or buying textbooks.

Client versus Customer: What's the Difference?

So what's the difference between client versus customer? The main difference is that clients are long-lasting relationships while customers are typically one-time purchasers.

When we talk about customers, we're looking at people who walk into a store or visit a website to buy something they need or want. This could be anything from a cup of coffee to a new pair of shoes. They make their purchase, enjoy what they bought, and the transaction is complete. Their decision to buy is often driven by price, product, or convenience.

On the other hand, clients are about building a relationship over time. Think of someone hiring a lawyer for their legal needs or a business working with an advertising agency to craft a marketing campaign. These relationships are built on trust and the understanding that the professional will provide specialized services tailored to the client's needs over a period. Here, the emphasis is more on the service and the value it brings rather than on the price.

For example, a customer might go to a salon to get a haircut. They pay for the service, and that's the end of the transaction. However, if the salon owner takes the time to know their preferences, suggests styles, and the customer keeps returning, they become a client. The salon owner knows their hair history, what they like, and even when they're likely to come in next.

While both customers and clients are crucial for business, they serve different roles.

Customers help with immediate sales and can contribute to word-of-mouth marketing if they're satisfied.

Clients, however, are integral for sustained growth, offering a steady stream of business and the opportunity for referrals based on deep-seated trust and satisfaction.

Still Not Sure? Try Our Customer vs. Client Questionnaire

If you're still not sure if you're dealing with a customer vs client relationship, we created this simple questionnaire you can fill out.

Just answer these questions with a "Yes" or "No".

At the end, you can count up the "yes"s and "no"s and you can be pretty sure if you're dealing with clients versus customers.

1. Does this individual or entity make regular purchases or engage with services on a recurring basis?
2. Is there an ongoing relationship between the individual or entity and the business?
3. Does the individual or entity require customized solutions or advice from the business?
4. Do the transactions typically involve in-depth discussions or consultations prior to purchase?
5. Is the business's understanding of the individual or entity's needs essential for the transactions?
6. Does the individual or entity expect the business to keep track of their preferences or history?
7. Are follow-ups, check-ins, or ongoing support part of the services offered to the individual or entity?
8. Does the individual or entity have a direct point of contact within the business, such as an account manager or a service provider?
9. Is there a formal agreement or contract in place between the individual or entity and the business?

If the majority of your answers are "Yes":

• It's likely that you're dealing with a Client. Clients tend to have a deeper, ongoing relationship with a business, requiring tailored services and expecting a higher level of interaction.

If the majority of your answers are "No":

• You're likely dealing with a Customer. Customers generally have a transactional relationship with a business, focusing on one-off purchases with less need for customization or personal interaction.

Conclusion

Knowing the difference between customer vs client is vital to a business's success.

Customers bring quick sales and help spread the word while clients support growth over time with their trust and steady business. Knowing how to serve both well is key for any company's future.

As a business, you should remember what you can leverage from customers and clients. With satisfied clients, you'll naturally get referrals, and feedback on your services (which, of course, means you'll find even more clients). When you've got customers, you'll be able to focus more on volume and with that comes analyzing data and adjusting your products or services based on customer trends.

I hope that clears up the difference between customers vs clients. If you have any questions, please send a comment below! Thanks for reading.