So far you may have thought that customers and clients are the same. Where the only difference is a mere matter of semantics.
Even though in business terms the two are very different. So, so that you don’t make any more mistakes, let’s pay attention to the meaning and differences in this article, your Profit Friend!
What is a Client?
A client is a company, organization or individual who is involved in a long-term and ongoing relationship with a business or service provider to receive customized services or advice based on specific needs and goals.
Here are some examples of industries and businesses that work with clients:
- Law firm
- Digital agencies
- Accounting firm
- Insurance company
- Real estate agent
What is a Customer?
A customer is a company, organization or individual who purchases goods or services from a business in exchange for payment, without an ongoing relationship or commitment.
Here are some examples of businesses that deal with customers:
- Retail store
- Restaurants and cafes
- Hotel
- Salon
- Motorcycle workshop
Difference between Client and Customer
Even though both are sources of income for businesses, there are quite specific differences between clients and customers. Here are some of them.
1. Demand Volume
Customers have very diverse needs and preferences so businesses need to adapt products and services to meet their needs. Apart from that, the volume of demand is relatively higher but the profit margin is lower because customers usually only make occasional purchases.
On the other hand, clients have very specific needs and goals so the volume of requests tends to be limited and focused on one aspect only.
2. Level of Personalization
Clients usually require more personal attention and support than customers.
Therefore, businesses need to develop more specific and personalized services to meet clients’ unique needs as well as build long-term relationships and increase satisfaction.
3. Level of Exclusivity
Clients usually seek professional services from one provider. Therefore, clients usually have a higher level of exclusivity than regular customers.
For example, in banking services for priority customers and regular customers, of course the two are different, right?
4. Service Support Expectations
Even though customers also expect adequate customer support, clients tend to expect higher service support.
If support for customers will end after customer service resolves the problem, support for clients even needs to be followed up periodically.
5. Marketing and Sales Strategy
Client-based companies have a smaller target market, but focus on client retention to develop long-term relationships.
On the other hand, customer-based companies must implement effective marketing strategies to attract more customers and encourage them to spend more. The reason is to generate greater transactional profits to achieve revenue targets.
6. Fees or Tariffs Charged
Because clients get personalized attention and service, businesses typically charge more. Clients will not mind because they appreciate the expertise and attention provided.
Instead, businesses will offer more affordable prices to attract more customers. Moreover, customers will “scream” if they are charged a large fee to get the product or service they need.
7. Duration of the Sales Process
Because client-based businesses involve a greater financial commitment, it often takes longer to sell or deliver products/services to clients than to customers.
That’s because clients need more time to choose the best provider that suits their needs. While customers have shorter sales cycles because they make transactions quickly and usually only involve one purchase.
8. Presence of Contract
Transactional relationships with clients generally involve signing a formal contract before entering a sales relationship.
But not with customers, there are no contractual obligations for customers because the value of the products and services sold is relatively lower.
9. Relationship Style and Depth
Client-based companies pay more attention and even invest more resources to develop strong relationships with their clients.
While customers make purchasing decisions based on convenience, location, and price, a “deep” relationship may not be an important factor for them.
What is the Importance of Understanding the Difference between Clients and Customers for Business?
Understanding the differences between clients and customers is very important for business because it can influence the efforts and strategies implemented. Here’s a summary for you to understand!
- Able to customize the services and support provided. Generally clients require more personal attention considering their needs are very specific and the target is to build a satisfying long-term relationship.
- Setting the right pricing strategy. The more personal the form of support and attention provided, the greater the costs charged by the company. That’s why companies usually charge clients higher fees or rates.
- Understand customer needs. It is important for businesses to identify and respond well to the needs of each group so that they can adjust marketing, advertising and sales efforts according to their needs and preferences.
- Develop targeted marketing campaigns. Because the characteristics and preferences of both are different, companies can create more effective and targeted marketing strategies to increase revenue.
- Build loyalty. Providing the right type and intensity of service can help a company build loyalty and create a positive reputation for the business. After all, satisfied customers and clients are more likely to recommend the business.
Now you understand that customer and client are two different terms, right? But whatever the basis of your business, you can use the Labamu application to store and document all transaction and administration records of the business you are starting. Hurry up and download the application on Google Play or the App Store and take advantage of its best features!
