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In
sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in ...

sales
,
commerce Commerce is the exchange of goods and services, especially on a large scale. Etymology The English-language word ''commerce'' has been derived from the Latin word ''commercium'', from ''com'' ("together") and ''merx'' ("merchandise"). History ...

commerce
, and
economics Economics () is a social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interact ...

economics
, a customer (sometimes known as a client,
buyer Procurement is the process of finding and agreeing to terms, and acquiring goods In economics Economics () is a social science Social science is the branch A branch ( or , ) or tree branch (sometimes referred to in bo ...
, or purchaser) is the recipient of a
good In most contexts, the concept of good denotes the conduct that should be preferred when posed with a choice between possible actions. Good is generally considered to be the opposite of evil Evil, in a general sense, is defined by what it ...
,
service Service may refer to: Activities :''(See the Religion section for religious activities)'' * Administrative service, a required part of the workload of university faculty * Civil service The civil service is a collective term for a sector of gove ...
, product or an
idea In common usage and in philosophy Philosophy (from , ) is the study of general and fundamental questions, such as those about Metaphysics, existence, reason, Epistemology, knowledge, Ethics, values, Philosophy of mind, mind, and Philosoph ...
- obtained from a
seller Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, completes a sale in ...

seller
,
vendor In a supply chain In commerce, a supply chain is a system of organizations, people, activities, information, and resources involved in supplying a product (business), product or service (business), service to a consumer. Supply chain activities ...

vendor
, or
supplierSupplier may refer to: *Manufacturing, Manufacturer, uses tools and labour to make things for sale *Process manufacturing, Processor (manufacturing), converts a product from one form to another *Packaging and labeling, Packager (manufacturing), encl ...
via a
financial transaction A financial transaction is an agreement Agreement may refer to: Agreements between people and organizations * Gentlemen's agreement, not enforceable by law * Trade agreement, between countries * Consensus, a decision-making process * Contract, ...
or
exchange Exchange may refer to: Places United States * Exchange, Indiana Exchange is an Unincorporated area, unincorporated community in Green Township, Morgan County, Indiana, Green Township, Morgan County, Indiana, Morgan County, in the U.S. state of In ...
for
money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The main functions of money are distinguished as: a ...

money
or some other valuable
consideration Consideration is a concept of English law, English common law and is a necessity for simple contracts but not for special contracts (contracts by deed). The concept has been adopted by other common law jurisdictions. The court in ''Currie v Mis ...
.


Etymology and terminology

Early societies relied on a
gift economy A gift economy or gift culture is a mode of exchange where Anthropological theories of value, valuables are not sold, but rather given without an explicit agreement for immediate or future rewards. Social norms and customs govern giving a gift i ...
based on favours. Later, as
commerce Commerce is the exchange of goods and services, especially on a large scale. Etymology The English-language word ''commerce'' has been derived from the Latin word ''commercium'', from ''com'' ("together") and ''merx'' ("merchandise"). History ...

commerce
developed, less permanent human relations were formed, depending more on transitory
need A need is something that is necessary Necessary or necessity may refer to: * Need A need is something that is necessary Necessary or necessity may refer to: * Need ** An action somebody may feel they must do ** An important task or essentia ...

need
s rather than enduring social
desire Desires are states of mind that are expressed by terms like "wanting", "wishing", "longing" or "craving". A great variety of features is commonly associated with desires. They are seen as propositional attitude A propositional attitude is a menta ...

desire
s. Customers are generally said to be the purchasers of goods and services, while clients are those who receive personalized advice and solutions. Although such distinctions have no contemporary semantic weight,
agencies Agency may refer to: * a governmental or other institution * the abstract principle that autonomous beings, agents, are capable of acting by themselves; see autonomy Abstract principle * Agency (law), a person acting on behalf of another person ...
such as
law firm A law firm is a business entity formed by one or more lawyers A lawyer or attorney is a person who practices law, as an advocate An advocate is a professional in the field of law. Different countries' legal systems use the term with some ...
s,
film studio A film studio (also known as movie studio or simply studio) is a major entertainment company or motion picture company that has its own privately owned studio A studio is an artist An artist is a person engaged in an activity related to cr ...
s, and
health care provider A health care provider is an individual health professional A health professional (or healthcare professional) may provide health care Health care, health-care, or healthcare is the maintenance or improvement of health via the preventive healthca ...
s tend to prefer '' client'', while
grocery store A grocery store (North America), grocery or grocery shop (UK) is a store that primarily retails a general range of food products, which may be fresh Fresh or FRESH may refer to: People *DJ Fresh Daniel Edward Stein (born 11 April 197 ...

grocery store
s,
bank A bank is a financial institution Financial institutions, otherwise known as banking institutions, are corporation A corporation is an organization—usually a group of people or a company—authorized by the State (polity), stat ...

bank
s, and
restaurant A restaurant is a business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." ...

restaurant
s tend to prefer ''
customer In sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the goods or services, comple ...
'' instead.


Clients

The term client is derived from Latin ''clientem'' or ''clinare'' meaning "to incline" or "to bend", and is related to the emotive idea of closure. It is widely believed that people only change their habits when motivated by
greed and fear Greed and fear refer to two opposing emotional states theorized as factors causing the unpredictability and volatility of the stock market A stock market, equity market, or share market is the aggregation of buyers and sellers of stoc ...
. Winning a client is, therefore, a singular event, which is why professional specialists who deal with particular problems tend to attract long-term clients rather than regular customers. Unlike regular customers, who buy merely on price and value, long-term clients buy on experience and trust.


Customers

Clients who habitually return to a seller develop
custom Custom may refer to: Sense: Customary * Convention (norm) A convention is a set of agreed, stipulated, or generally accepted standards, norms, social norms, or criteria, often taking the form of a custom. In a social context, a convention ma ...
s that allow for regular, sustained commerce that allows the seller to develop statistical models to optimize
production Production may refer to: Economics and business * Production (economics) Production is the process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (output). It is the act of ...
processes (which change the nature or form of goods or services) and
supply chain In commerce, a supply chain is a system of organizations, people, activities, information, and resources involved in supplying a product (business), product or service (business), service to a consumer. Supply chain activities involve the transfo ...

supply chain
s (which changes the location or formalizes the changes of ownership or entitlement transactions).


Customer segmentation

In the 21st century customers are generally categorized into two types: * an
entrepreneur Entrepreneurship is the creation or extraction of value. With this definition, entrepreneurship is viewed as change, generally entailing risk beyond what is normally encountered in starting a business, which may include other values than simply ...

entrepreneur
or
trade Trade involves the transfer of goods from one person or entity to another, often in exchange for money. Economists refer to a system A system is a group of Interaction, interacting or interrelated elements that act according to a set of r ...

trade
r (sometimes a commercial Intermediary) - a dealer who purchases goods for re-sale. * an
end user In product development, an end user (sometimes end-user) is a person who ultimately uses or is intended to ultimately use a product. The end user stands in contrast to users who support or maintain the product, such as sysop A sysop (; an abbre ...
or ultimate customer who does not re-sell the things bought but is the actual
consumer A consumer is a person or a group who intends to order, orders, or uses purchased goods, products, or Service (economics), services primarily for personal, social, family, household and similar needs, not directly related to entrepreneurial or bu ...
or an agent such as a Purchasing officer for the consumer. A customer may or may not also be a
consumer A consumer is a person or a group who intends to order, orders, or uses purchased goods, products, or Service (economics), services primarily for personal, social, family, household and similar needs, not directly related to entrepreneurial or bu ...
, but the two notions are distinct. A customer ''purchases'' goods; a consumer ''uses'' them. An ultimate customer ''may'' be a consumer as well, but just as equally may have purchased items for someone else to consume. An intermediate customer is not a consumer at all. The situation is somewhat complicated in that ultimate customers of so-called ''industrial'' goods and services (who are entities such as government bodies, manufacturers, and educational and medical institutions) either themselves use up the goods and services that they buy, or incorporate them into other finished products, and so are technically consumers, too. However, they are rarely called that, but are rather called industrial customers or business-to-business customers. Similarly, customers who buy services rather than goods are rarely called consumers.
Six Sigma Six Sigma (6σ) is a set of techniques and tools for process improvement. It was introduced by American engineer Bill Smith (Motorola engineer), Bill Smith while working at Motorola in 1986. A six sigma process is one in which 99.99966% of all op ...
doctrine places (active) customers in opposition to two other classes of people: ''not-''customers and ''non-''customers: * Customers of a given
business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a business name A trad ...

business
have actively dealt with that business within a particular recent period that depends on the product sold. * Not-customers are either past customers who are no longer customers or potential customers who choose to interact with the competition. * Non-customers are people who are active in a different
market segment In marketing Marketing is the process of intentionally stimulating demand for and purchases of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emphasize in advertising; ...
entirely. Geoff Tennant, a Six Sigma consultant from the United Kingdom, uses the following
analogy Analogy (from Greek#REDIRECT Greek Greek may refer to: Greece Anything of, from, or related to Greece Greece ( el, Ελλάδα, , ), officially the Hellenic Republic, is a country located in Southeast Europe. Its population is approximate ...

analogy
to explain the difference: A supermarket's customer is the person buying milk at that supermarket; a not-customer buys milk from a competing supermarket, whereas a non-customer doesn't buy milk from supermarkets at all but rather "has milk delivered to the door in the traditional British way". Tennant also categorizes customers in another way that is employed outwith the fields of
marketing Marketing is the process of intentionally stimulating demand for and purchases of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to emphasize in advertising; operation of adv ...

marketing
. While marketers, market regulation, and economists use the intermediate/ultimate categorization, the field of
customer service Customer service is the provision of Service (economics), service to customers before, during, and after a purchase. The perception of success of such interactions is dependent on employees "who can adjust themselves to the personality of the gues ...
more often categorizes customers into two classes: # An external customer of an organization is a customer who is not directly connected to that organization. # An internal customer is a customer who is directly connected to an organization, and is usually (but not necessarily) internal to the organization. Internal customers are usually
stakeholder Stakeholder may refer to: *Stakeholder (corporate), a group, corporate, organization, member, or system that affects or can be affected by an organization's actions *Project stakeholder, a person, group, or organization with an interest in a projec ...
s,
employee Employment is the relationship between two party (law), parties, usually based on a employment contract, contract where work is paid for, where one party, which may be a corporation, for profit, not-for-profit organization, co-operative or ot ...

employee
s, or
shareholder A shareholder (in the United States often referred to as stockholder) of a corporation is an individual or legal entity (such as another corporation, a body politic, a Trust law, trust or partnership) that is registered by the corporation as the ...
s, but the definition also encompasses
creditor A creditor or lender is a party 300px, '' Hip, Hip, Hurrah!'' (1888) by Peder Severin Krøyer, a painting portraying an artists' party in 19th century Denmark A party is a gathering of people who have been invited by a host A host is ...

creditor
s and external regulators. Before the introduction of the notion of an internal customer, external customers were, simply, customers. Quality-management writer Joseph M. Juran popularized the concept, introducing it in 1988 in the fourth edition of his ''Quality Control Handbook'' . The idea has since gained wide acceptance in the literature on
total quality management #REDIRECT Total quality management Total quality management (TQM) consists of organization-wide efforts to "install and make permanent climate where employees continuously improve their ability to provide on demand products and services that cus ...
and service marketing; and many organizations recognize the
customer satisfaction Customer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing Marketing is the process of intentionally stimulating demand for and purchases of goods and services; potentially including selection of a target audien ...
of internal customers as a precursor to, and a prerequisite for, external customer satisfaction, with authors such as regarding service organizations which design products for internal customer satisfaction as better able to satisfy the needs of external customers. Research on the theory and practice of managing the internal customer continues in a variety of service-sector industries.


Arguments against use of the term "internal customers"

Leading authors in management and marketing, like
Peter Drucker Peter Ferdinand Drucker (; ; November 19, 1909 – November 11, 2005) was an Austrian-American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business cor ...
,
Philip Kotler Philip Kotler (born May 27, 1931) is an American marketing author, consultant, and professor; the S. C. Johnson & Son Distinguished Professor of International marketing, International Marketing at the Kellogg School of Management at Northwestern U ...
, , etc., have not used the term "internal customer" in their works. They consider the "customer" as a very specific role in society which represents a crucial part in the relationship between the demand and the supply. Some of the most important characteristics of any customer are that: any customer is never in a subordination line with any supplier; any customer has equal positions with the supplier within negotiations, and any customer can accept or reject any offer for a service or a product. Peter Drucker wrote, "They are all people who can say no, people who have the choice to accept or reject what you offer." In opposition to the stated customer’s characteristics, relationships between colleagues in a company are always based on subordination – direct or indirect. Company employees are obliged to follow the processes of their companies. Company employees do not have the authority to choose a unit/colleague to fulfill any task. Company employees are obliged to use an existing unit/colleague by using the company’s structure and approved processes, therefore these internal relationships are not considered as an option. Many authors in
ITIL The Information Technology Infrastructure Library (ITIL) is a set of detailed practices for IT activities such as IT service management Information technology service management (ITSM) are the activities that are performed by an organization ...
and
Six Sigma Six Sigma (6σ) is a set of techniques and tools for process improvement. It was introduced by American engineer Bill Smith (Motorola engineer), Bill Smith while working at Motorola in 1986. A six sigma process is one in which 99.99966% of all op ...
methodologies define "internal customer" as an internal part of a company that uses the output of another part of a company as its own input. But actually, this definition describes better a classical internal process rather than a relationship between a customer and a supplier. Peter Drucker considers that there are no customers inside organizations. He wrote "Inside an organization, there are only cost centers. The only profit center is a customer whose check has not bounced." In addition, William Deming advises managers, in his 9th point, to "Break down barriers between departments. They must work as a team", which means that there have to be teamwork in a company rather than a supplier/customer relationship. One more argument, even the ITIL methodology admits that "the term 'colleague' may be more accurate in describing how two internal groups are related to one another.".


See also

*
Client (business) In business, commerce, and economics, a client is a person who receives advice or services from a professional, such as a lawyer or a health care provider. Clients differ from customers in that customers are thought of as "one-time buyers" while cl ...
*
Customer centricityCustomer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing. It is a measure of how products and services supplied by a company meet or surpass customer expectation. Customer satisfaction is defined as "the number of cust ...
*
Customer data integrationData integration involves combining data residing in different sources and providing users with a unified view of them. This process becomes significant in a variety of situations, which include both commercial (such as when two similar companies ne ...
*
Customer delightCustomer delight is surprising a customer by exceeding his or her expectations and thus creating a positive emotional reaction. This emotional reaction leads to word of mouth. Customer delight directly affects sales and profitability of a company as ...
*
Customer relationship management Customer relationship management (CRM) is a process in which a business or other organization administers its interactions with customers, typically using data analysis Data analysis is a process of inspecting, cleansing, transforming, and m ...
*
Early adopter An early adopter or lighthouse customer is an early customer In sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. T ...
*
Guided selling Guided selling is a process that helps potential buyers of products or services to choose the product best fulfilling their needs and hopefully guides the buyer to buy. It also helps vendors of products (e.g. brands, retailer) to actively guide the ...
*
Procurement Procurement is the process of finding and agreeing to terms, and acquiring goods, Service (economics), services, or works from an external source, often via a tendering or competitive bidding process. Procurement generally involves making buyin ...
*
Service level agreement A service-level agreement (SLA) is a commitment between a service provider A service provider (SP) provides organizations with consulting, legal, real estate, communications, storage, processing. Although a service provider can be an organization ...
* The customer is always right


Notes


References

* * * * * * * * * *


Further reading

* *
Forget Demographics. Target Communities Instead (Marketing)
{{Authority control Sales Supply chain management