Customer vs. Consumer: Know Who’s Who in Your Business

“Customers Vs. Consumers”

What sets them apart? At times, very little; at times, quite a lot. Customers refer to those who buy your product or service, while consumers are the individuals who actually use or ‘consume’ it. These two groups may coincide, but when they don’t, it presents a unique marketing challenge. Identifying whether your customer and consumer are distinct can greatly streamline your efforts in crafting an effective marketing strategy, choosing the right channels, and delivering impactful messages.”

Gaining insights into individuals who purchase products or engage with a business is crucial in shaping a comprehensive business strategy. Most businesses classify these individuals into two distinct groups: consumers and customers.

Acquiring knowledge about the distinctions between these two categories of individuals enables you to assess your business’s performance and comprehend how to tailor your approach to a particular audience. In this article, I shall provide an overview of consumers and customers, defining each term, elucidating their differences, and emphasizing the significance of understanding these dissimilarities.

Key Takeaways

• A customer is the person or organization that buys a product or service.
• A consumer is the person or group that actually uses or benefits from that product or service.
• A person can be both a customer and a consumer when they buy something for personal use.
• Businesses need to understand both groups because customers influence revenue, while consumers influence product experience, satisfaction, feedback, and long-term demand.
• When customers and consumers are different, your marketing, sales, product, and support strategies should speak to both audiences separately.

Who is the Customer?

A customer refers to an individual who voluntarily acquires a product or service by spending money. Although they are the ones making the purchase, they may not always be the ultimate user of the acquired goods. For example, when a person buys a birthday gift for a friend. When a customer buys something for personal use, he also takes on the role of a consumer. Below are various types of customers one might come across:

Resell Customers

Resell customers, commonly referred to as trade customers, are individuals or businesses who purchase products with the intention of reselling them to others. Their primary goal is to make a profit by reselling the goods, often at a higher price. 

These customers can include wholesalers, retailers, and other intermediaries. It’s important to note that resell customers do not use the products themselves, and as such, they do not transition into consumers of the items they resell.

End Customers

End customers, also known as final customers, are individuals who purchase products with the intention of using them for their personal needs. As the ultimate consumers, they are the ones who will use the products themselves. Unlike resell customers, final customers do not intend to resell the items they buy. Typically, these customers rarely return or resell the products they’ve purchased since they are acquiring them for their own direct use.

Discount Chasing Customers

Such customers favor purchasing from companies that provide discounted prices. Compared to other customer segments, they are more inclined to invest additional time and effort in visiting various stores or locations solely to take advantage of lower prices. As they often base their buying decisions on discounts and price reductions, brands can entice them by providing special deals and offers.

The Happy and Loyal Customers

Loyal customers, also known as repeat customers, demonstrate a consistent preference for purchasing from a particular company over time. For your company, cultivating customer loyalty is a significant objective. To achieve this, you may implement loyalty programs that provide customers with loyalty cards to accumulate points, which can be redeemed for various products or rewards.

The Needy Customers

Need customers are individuals who prioritize purchases based on necessity rather than mere desire. They are unlikely to buy something solely because they want it; instead, they carefully evaluate if it’s essential. Such customers typically focus their daily spending on basic necessities such as food, essential clothing, and household products.

Impulsive Customers

Impulse customers are driven by their emotions and feelings when making purchasing decisions. They typically do not plan their purchases in advance but rather decide to purchase things on the spot. Brands often cater to impulse buyers by making it convenient for them to make a purchase. 

For instance, e-commerce brands may strategically place their call-to-action (CTA) buttons at the top of emails or newsletters, eliminating the need for customers to scroll to the bottom before making a purchase.

Potential Customers

Potential customers refer to individuals or companies who possess some knowledge about your product or service but need additional information to make a definitive purchasing decision. Brands employ diverse outbound techniques, such as cold calling or PPC advertising, to reach out to them. 

Moreover, potential customers can be attracted through several inbound techniques, like adding email pop-ups on the website or establishing a compelling online brand that captures their attention.

Seasonal Customers

Certain customers limit their usage of particular products or services to specific seasons, waiting until situations change or their requirements arise again before utilizing them. For instance, people residing in temperate climates with distinct weather seasons might only utilize pool accessories for three to four months in a year. 

This seasonal usage pattern poses challenges for brands seeking consistent cash flow. To manage their financial stability, many businesses opt to prioritize everyday items as their main revenue source, while offering seasonal products as a smaller percentage of their overall product lineup.

Who is the Consumer?

A consumer is the ultimate user of a product or service, whether they purchase it for themselves or receive it from others. As long as they continue to use the product, they are considered consumers. Brands, when segmenting target audiences, can view consumers as either individuals or a group of people. While designing their offerings or products, strategies, or different campaigns, they take into consideration various types of consumers, such as:

Extrovert Consumers

Extrovert consumers are inclined to display the goods they purchase to their network, believing it is essential to do so. They enthusiastically embrace new products and are eager to express their opinions as well. Brands can leverage their desire for social attention to their benefit. For instance, you can actively seek new product suggestions from such consumers through different online platforms.

The Introvert Ones

Introvert consumers tend to be more reserved in their behavior. They often appreciate it when companies use formal language in their product advertisements. Many introvert consumers are motivated by idealistic thoughts and the chance to establish a genuine, meaningful connection with brands. To captivate and engage them effectively, you can focus on asking them several thought-provoking questions that resonate with their introspective nature.

Budget-Friendly Consumers

Such consumers prioritize the price of a product as one of the critical factors in their purchase decisions. They are more inclined to spend their money on essential items from lesser-known brands and seldom indulge in luxury products. This type of consumer typically includes individuals with lower budgets, such as school or college students.

Commercial Consumers

Commercial consumers predominantly consist of businesses or organized groups of individuals who frequently purchase goods in large quantities. Additionally, an individual may transition into a commercial consumer when he begins buying larger quantities of goods together, often to take advantage of cost savings or bulk discounts.

Customer vs Consumer: Quick Comparison Table

In many cases, the customer and consumer are the same person. For example, when someone buys a mobile phone for personal use, they are both the customer and the consumer. But when a company buys software for its employees, the company is the customer and the employees are the consumers.

Customer vs. Consumer – Understanding the Key Differences

Gaining insights into the distinctions between consumer behavior and customer actions can significantly enhance your communication strategies with your target audience. Below are some key differences between a customer and a consumer:

The Definition

While a consumer encompasses anyone who utilizes a product or service, a customer specifically refers to the person who actually pays for it. Consumers can also be customers and are often the end-users of the products or services, making them equally important for businesses to consider. Children, for instance, are typically the consumers but not customers, as they utilize various products and services without actually paying for those by themselves. 

Factors Influencing the Decision to Buy

The primary distinction between customers and consumers lies in their motivation for purchasing a product or service. Reselling is a prevalent practice among customers, and it’s not unusual for brands to buy products or services from other companies. They might incorporate the product into a larger component, add specific enhancements, or even perform upgrades to make it more costly, and then resell it to other customers.

In contrast, consumers are usually the end-users of products and services, and they rarely engage in reselling a product themselves. Their main focus is on using the product or service for their personal needs or enjoyment.

Characteristics of the Target Audience

Yet another significant distinction between a customer and a consumer pertains to their demographics. A customer is generally an individual person or a company acting like a trade customer. In contrast, a consumer can encompass a much broader spectrum. 

For instance, consumers can be individuals, organizations, families, or even specific demographic groups. You have to collect the consumer data because it represents the end user, and this information often reveals purchasing behaviors among people with diverse attributes.

Pricing

Customers typically prioritize the pricing of products when making purchasing decisions. On the other hand, consumers may not be as conscious of the price, especially if they receive a product as a gift or without spending a single penny. Consequently, a company that decides to decrease its product costs is more likely to attract a larger number of customers, even if the overall number of consumers remains the same.

Marketing

Brands frequently tailor their marketing strategies to cater to the preferences of both customer and consumer segments. Customers, who focus on the buying process, may be targeted with personalized advertisements featuring multiple call-to-action (CTA) elements to encourage immediate purchases. 

On the other hand, consumers often place importance on brand loyalty, which companies can leverage when introducing new products and promoting them. For instance, a homeware company specializing in kettles might catch the attention of consumers by introducing a line of cups that complements the design of the kettles.

Payment

When engaging with customers, brands aim to achieve a successful sale. However, since consumers may not always make monetary transactions, companies have multiple objectives when designing various ads and campaigns. These goals encompass more than just sales; they also include increasing brand awareness, loyalty, and converting the one-time consumers into repeat customers.

Customer vs Consumer vs Client

The terms customer, consumer, and client are often used together, but they do not always mean the same thing.

A customer buys a product or service. A consumer uses it. A client, on the other hand, usually receives a professional, personalized, or ongoing service from a business or individual.

For example, someone who buys a pair of shoes from an online store is a customer. The person who wears the shoes is the consumer. But a business that hires a consultant, lawyer, designer, or agency is usually called a client because the relationship is more service-based and often continues over time.

How They Differ

Understanding this difference is especially important for B2B and SaaS companies. A business may sell to a customer, onboard multiple users as consumers, and manage the buyer as a client-like account over time.

Importance of Understanding the Differences between Consumers and Customers

Understanding the difference between a consumer and a customer is like having a secret weapon for your business. It helps you to make smart choices in your marketing, sales, and overall business strategy. 

Let’s break it down: imagine a business discovers that a lot of kids love their stuff – those kids are the consumers. Armed with this insight, the business can design cool things that appeal to youngsters and, at the same time, convince the real buyers (the parents) to make the purchase. This savvy approach is like the superhero move in today’s world of marketing and sales, essential for any business looking to keep the money flowing steadily.

Customer Vs Consumer Support

Every business has customers, but not all have consumers. Knowing the difference helps greatly because it guides you in providing the right support for your unique clientele.

Take a textile wholesaler, for instance. They sell to other businesses (customers) that use the textiles to make clothing for consumers. Here’s the trick: the wholesaler needs a support team to assist the businesses buying textiles, not one handling questions from consumers about delivery delays. It’s all about tailoring your support to the right crowd.

In a business with both customers and consumers, it’s crucial to have support practices tailored to each group. Let’s see this example: an enterprise business is buying software for its employees. You must be thinking which individual is acting most like a consumer? Here it’s both customers and consumers. To handle it right, there might be a customer success manager dealing with big-picture stuff like payments, while a regular support team tackles the nitty-gritty, answering employee (consumer) questions on using the products. Here the end user vs consumer is very simple. It’s like having a superhero duo – one for the business, one for the individual users!

Customer Problems vs Consumer Problems

Customers and consumers may interact with the same business, but they often face different problems. If you treat both groups the same, you may solve the wrong issue for the wrong audience.

Common Customer Problems

Customer problems usually happen during the buying journey. These issues can stop someone from completing a purchase or returning to your business.

Examples include:

• Difficulty making payments
• Confusing pricing or hidden charges
• Poor checkout experience
• Slow delivery updates
• Lack of product availability
• Weak customer service during the buying process
• Complicated refund, return, or cancellation policies
• Lack of trust in the brand or website

To solve customer problems, businesses should focus on clear pricing, simple checkout, fast support, transparent policies, and personalized purchase assistance.

Common Consumer Problems

Consumer problems usually happen after the product or service is received. These issues affect satisfaction, usage, loyalty, and word-of-mouth recommendations.

Examples include:

• Product is difficult to use
• Product quality does not match expectations
• Poor onboarding or setup guidance
• Lack of helpful documentation
• Accessibility issues
• Product does not solve the intended problem
• Slow support after purchase
• The product experience feels different from what was promised

To solve consumer problems, businesses should improve product education, onboarding, self-service support, live chat support, tutorials, product quality, and post-purchase engagement.

Problems Faced by Both Customers and Consumers

Some issues affect both groups, especially when the buyer and user are involved in the same journey.

Examples include:

• Misleading advertising
• Poor brand communication
• Lack of value for money
• Inconsistent support experience
• Confusing product information
• Delayed response from the support team

The best approach is to map the full journey: who buys, who uses, who influences the decision, and who needs support after the sale.

How to Turn Consumers into Customers and Customers into Consumers

The ideal situation for many businesses is when customers and consumers overlap. When someone both buys and uses your product, you can build stronger loyalty, collect better feedback, and increase repeat purchases.

But when the customer and consumer are different, you need a strategy to connect both sides.

Turning Consumers into Customers

A consumer may use your product without paying for it directly. For example, someone may receive a free sample, use a free trial, get access through their company, or receive a product as a gift. If the experience is positive, that consumer may later become a paying customer.

Ways to turn consumers into customers:

• Offer free trials or product samples
• Make the product experience easy and valuable
• Use in-product messages to show premium benefits
• Collect feedback from users and personalize follow-ups
• Offer referral or upgrade incentives
• Educate users with helpful guides, tutorials, and support
• Make it simple for users to purchase, renew, or recommend the product

For example, in SaaS, employees may use a tool purchased by their company. If they find it useful, they may recommend renewal, expansion, or upgrades to the decision-maker.

Turning Customers into Consumers

Sometimes a customer buys a product for someone else but does not use it personally. In this case, the goal is to encourage the buyer to experience the product too.

Ways to turn customers into consumers:

• Offer a personal trial for the buyer
• Show use cases that apply to the buyer’s own needs
• Provide bundle offers or family/team plans
• Share success stories from similar buyers
• Encourage product demos or hands-on onboarding
• Highlight features that benefit both buyer and end user

For example, a manager may buy software for a support team. If the manager also uses the dashboard, reports, or analytics features, they become both a customer and a consumer of the product.

Real Examples: How to Differentiate Customers from Consumers

Basically, a customer is the person or entity that makes a purchase, pays for the product or service, and is involved in the transaction. The consumer, on the other hand, is the individual or entity who ultimately uses or benefits from the product or service. While in many cases, the customer and the consumer may be the same person, there are also instances where they can be different, as demonstrated by these examples.

Movie Theater Scenario:

Customer: The person who buys the movie tickets for a specific screening.

Consumer: The person who actually experiences the movie by watching it in the theater.

Software Company Scenario:

Customer: A company or person who actually buys a software license.

Consumer: The end-user who actually use the software for specific requirements.

Online Business scenario:

Customer: The person who explores the online store, adds items to her shopping cart, and does the payment.

Consumer: The end-user who receives and utilizes the purchased items.

Wrapping Up!

Your business probably offers products or services to individuals or entities, but the recipient of your offerings may not necessarily be the end user. Understanding this distinction is crucial for effective customer support, as it allows you to tailor your support practices to the appropriate audience.

By comprehending the roles of customers and consumers, you can build stronger relationships with your clients and deliver experiences that resonate with the end-users, fostering loyalty and driving growth in the competitive business landscape.

Frequently Asked Questions