07 May Client vs Customer | The Difference & Why It Matters
Posted at 01:11hin Customer ExperiencebyCXTraining
Do you have customers or clients? Traditionally, professionals have been keen on emphasising that they have ‘clients’, not ‘customers’, and with good reason. In terms of a client vs customer definition, the term ‘client’ implies that the service being provided is professional and tailored, there is loyalty involved, and it will cost more money. The professional relationship is much deeper than that of a shop and a customer. A customer also typically buys products or services from a company, while a client is a specific type of customer who purchases professional services from a business. Generally, customers buy products, while clients buy advice and solutions.
It is frequently assumed that the ‘client’ relationship is inherently superior to the ‘customer’ relationship, and you can still find books, blogs and seminars telling professionals how they can turn customers into clients by demonstrating trusted advisor behaviours and the like. But does this still apply? Should all professionals still strive for a ‘client’ relationship and be distancing themselves from mere ‘customers’? Here, we look at the differences between a client vs customer and how adapting your business model and marketing practices can better appeal to customers.
Customer vs client businesses
Client-based
Some common client-based businesses include:
- Law firms
- Design studios
- Insurance agencies
- Accounting firms
- Real estate agencies
- Marketing and advertising agencies
Customer-based
Some common customer-based businesses include:
- Retail stores
- Subscription-based companies
- Banks
- Food and beverage establishments
- Hotels
- Hairdressers
- Supermarkets
Client service vs customer service
While both clients and customers are important sources of revenue for businesses, there are differences between them in terms of their requirements and behaviours. Clients will generally receive more personalised attention. For example, if you have customers, you’ll provide customer support. If you have clients, you’ll generally offer specific client-centric strategies to help them achieve greater success. In terms of the client vs customer difference with services, others include:
Services & motivation
Clients typically receive professional services and personalised solutions and are motivated by reputation. Customers usually buy generic goods or services from a business and are motivated by price and value offerings.
Level of personalisation
Businesses serving clients can often differentiate their services according to the client’s requirements. For example, an HR firm may offer a wide range of services. If a client requires professional recruitment and payroll processing services, the business will customise its offerings to target these two areas. Customers’ level of personalisation is lower, as they usually purchase ready-made products or services without customisation.
Level of exclusivity
Clients typically seek professional services from a single provider. For example, clients may rely exclusively on a private bank for both banking and investment needs. With customers, there is typically a lower level of exclusivity. For example, a restaurant’s customers are likely to visit other restaurants too.
Expectations of service support
Businesses that manage clients are expected to provide higher levels of service support. For example, a company’s law consultancy firm may receive frequent support requests relating to legal aspects of the company’s affairs. Customers may also require service support, like requesting product refunds or exchanges from retail stores. However, the support is usually only for that purchase, and the engagement typically ends after customer service resolves the issue
Marketing and sales strategies
Companies may adopt different marketing and sales strategies for clients vs customers according to who they work with. Client-based companies may have a smaller target market but focus on the retention of their clients. For example, a law firm may rely on a small base of key long-term clients who provide revenue for an extended period. Companies that depend on customers may use marketing strategies to attract a broader range of customers and encourage them to spend more. They typically aim to generate a more extensive base of transactional customers, as they require more purchases to achieve revenue targets.
Duration of the sales process
It often takes longer to sell to clients than to customers. Client-based businesses usually involve more extensive financial commitments, and the sales cycle may be longer as clients spend more time selecting the best provider that suits their requirements. The sales process starts with the initial client contact and continues through to closing the deal and follow-ups. Customers may have shorter sales cycles as they perform quick transactions that usually involve a single purchase
Presence of contractual obligations
In terms of client vs customer contractual obligations, clients will often sign a formal contract that outlines fees, scope of service and withdrawal clauses. There are usually no contractual obligations for customers, as the value of products and services is usually lower.
Style and depth of relationship
In terms of loyalty, with clients, it is generally assumed, whereas with customers, it is minimal. Relationships with clients are usually longer term as opposed to customers’ discrete transactions. Client-centric companies typically provide more personal attention to their clients, invest more resources, and develop stronger relationships. Customers will normally base their purchasing decisions on location, price, and convenience rather than a relationship with a particular business
Do customers want to become clients?
Increasingly, no. Why? Because:
- They don’t want to be loyal to one provider and will choose different advisors for different issues on a case-by-case basis.
- Loyalty (in terms of either a vague obligation to or blind trust in one professional) is fading fast as customers shop around. Customer ‘stickiness’ is a new aim — retaining customers based on the offering of genuinely superior value.
- They don’t see the need for ‘tailored’ services and see more and more services as commodities that can be purchased as such.
- They don’t want long-term relationships and increasingly don’t want any relationship. The thought of a professional wasting an hour of their time so they can ‘understand their needs’ fills them with dread — they want a quick, simple ‘transaction’.
How to better appeal to customers
The above doesn’t apply to all customers/clients, but it is the trend and one which professionals need to do more to respond to. Some organisations will hold out and target the (shrinking) market that genuinely values deeper relationships. In terms of client success vs customer success, most practices, however, can benefit by adapting their business model and marketing practices to better appeal to customers rather than clients. This involves:
- Developing more direct, specific value propositions based on real deliverables that customers will value.
- Investing in product development so that core offerings are differentiated from those of competitors.
- Developing more flexibility and creativity in engagement and delivery models to make the customer experience as quick and easy as possible.
- Offering pricing certainty by moving to fixed fees and value pricing.
- Genuinely investing in the customer experience in terms of experience design and process standardisation and moving beyond an approach that over-relies on the inconsistent relationship-building abilities of individuals.
- Developing marketing and business development strategies based on lower assumptions of repeat customers or clients.
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