Customer

What is a 'Customer'

A customer is an individual or business that purchases the goods or services produced by a business. Attracting customers is the primary goal of most public-facing businesses, because it is the customer who creates demand for goods and services. Businesses often compete through advertisements or lowered prices to attract an ever-larger customer base.

BREAKING DOWN 'Customer'

Businesses often follow the adage "the customer is always right" because happy customers are expected to continue buying goods and services from companies that meet their needs. Many companies closely monitor the relationships they have with customers, often asking for feedback to learn whether new products should be created or adjustments made to what is currently offered. Virtually everybody in a modern economy buys products or services from companies, and so almost everybody at least occasionally acts as a customer. Several traits mark a customer as opposed to a client or vendor.

Customers Are Consumers

The terms "customer" and "consumer" are almost synonymous. Customers are defined by their purchase of goods, or their contracting for services, as the consumer, or end user. As the term is commonly used, a customer is the end consumer of a product. This distinguishes true customers from resellers and vendors, who usually make purchases to sell later.

Customers Spend Their Own Money

Customers are also likely to make purchases with their own money, or the money given to them by others who know them personally. Unlike a purchasing agent, who may be buying goods wholesale for use in a commercial or industrial setting, true customers are almost always individuals who buy products with cash or credit that belongs to them, rather than to a corporate entity employing them.

Customers Can Be Studied

Businesses frequently take a keen interest in knowing the sort of person who buys their products as an aid to focusing their marketing approach and tailoring their inventory to appeal to the most lucrative possible customer base. Customers are often grouped according to their demographics. Age, race, sex, ethnicity, income level and geographic location all go into a customer's demographic profile. Knowing these things about the people who shop with a business builds up a picture of the "ideal customer," or "customer persona." This information helps companies approach the demographics where they are already strong and deepen ties with loyal customers, as well as reach out to wholly new demographics to cultivate a public where sales are weak, thus creating a new base of customers for further expansion.

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