Do you know whether you have clients or customers?

It’s an age old discussion, what do you have, is it clients or customers? I guess this really depends on the type of business you’re in. If you’re an accountant, solicitor or any of the professions then I would be really disappointed if you said that you have customers, however if you’re a plumber, builder or electrician then I’d expect the answer to be less definitive but probably coming down on the side of customer. If you’re running a cafe, shop or other retail establishment I’d definitely expect you to say customer.  

But why does the distinction matter. Let’s start by defining what we mean by customers and clients.

Strictly defined, a customer is someone who buys goods or services from a store or business. They have what I call a transactional relationship with you. They come into your shop and give you money for whatever goods or services you provide. It’s like when I go to buy a pint of milk in the morning, I will walk into the shop grab the milk, exchange a few pleasantries with the shop proprietor and hand over my money, there won’t be any other elements to the transactions than this.  

The word “client” can also mean “customer,” according to most dictionaries, but it has a separate definition as someone who receives professional services. I prefer to define a client as someone who is ‘under the protection’ of the service provider (a trusted advisor). So unlike my previous example, let’s say I’m a client of an accountant and there is a change in the tax laws that impact me one way or another then I expect the accountant to be a trusted advisor and ‘protect’ my interest by advising me on the correct actions I should take.

So In business, the two terms are often applied differently based on the types of relationships built. Customers are generally people who come to you mainly to buy products or services you supply. Clients buy your advice and solutions personalised to their particular needs.

Customers can be one-time or repeat patrons, but in general lack loyalty to the business providing the products or services. Businesses such as retail stores, restaurants, service stations, supermarkets, banks and amusement parks typically consider their patrons as customers. Patrons needs are met by the fixed-form goods and services priced to sell.

Where products or services require a lot of personalisation and customisation, patrons are often thought of as clients. In theory closer professional relationships are built with the patrons over time so that they become clients, however a common complaint I hear from my clients is that their accountant never calls them, this jeopardises the client relationship model as the client doesn’t feel protected, they feel that it is more of a transactional relationship i.e. they’re just a customer.

If you look at the table above this highlights the problem that a lot of ‘professional businesses’ face in that they treat their clients as customers, and for a time they can get away with it as the switching costs are high (think about utilities and banks), however as the frustration increases in the psyche of the consumer the switching costs becomes less of a barrier to change. Accountants and other professional service providers do well to remember this.

How does the difference between customers and clients impact on your marketing? If you’ve read my blog on the ‘understanding the buyer’s journey’ (Click here to read) then you’ll know that when a person purchases something they go on a journey and this journey can vary depending on the type of purchase and how fast they travel along the buying path. This is not really different whether you treat them as customers or clients. However think of buying a car, you will still go on that buyer’s journey, starting out as a ‘future buyer’ looking for the benefits of ownership, changing into a ‘soon to buy buyer’ and looking at the objections to ownership and finally a now buyer (all about vendor selection). Now most car purchasers are treated as customers and the relationship between them and the dealer is best described as loose at best.

This leads to a situation where significant incentives are required to ensure the buyers complete the purchase. If car dealers were to look at the example of Joe Girard (the world’s greatest car salesman) who sold 13001 cars in 15 years or about 4 for every working day, through relationship building leading to referrals, they would realise that treating their prospects as clients builds a lot more profitable relationship than treating them as customers. To do this they need to take the prospective client on the buyer’s journey and recognising that they have the clients best interest at heart in getting them to buy the right vehicle which works for them just as well as it works for the dealership. Unfortunately, I can’t see this happening in the near future.

So think about the journey your prospect takes when deciding to purchase from you, are you treating them as a client and protecting their interests and ensuring that they buy the right product from you. Or are you treating them as a customer and having to use incentives to get them to purchase.