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What is a Customer? - Definition & Overview

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  • 0:04 Defining Customers
  • 0:40 Current Customers
  • 1:59 Past Customers
  • 3:11 Potential Customers
  • 3:51 Lesson Summary
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Lesson Transcript
Instructor: Allison Tanner
Knowing who your customers are is extremely important to any business. This lesson defines a customer and describes three general types of customers that every business will encounter.

Defining Customers

You experience being a customer every time you buy food from a store, pay a cell phone bill, grab a cup of coffee from a local shop, or think about purchasing a new computer. A customer is any person or organization who might have interest in buying, or has bought, products or services from a company. Each time you pay a bill or buy something from a store you are acting as their customer.

In general, there are three basic types of customers.

  1. Current customers
  2. Past customers
  3. Potential customers

Each customer type influences a company differently.

Current Customers

Imagine that you want to eat at your favorite restaurant. Because you are currently buying something from this restaurant, you are a current customer. A current customer is someone who purchases goods or services from a particular company over a period of time.

Not all products or services are equal. Thus, how a company determines a current customer from a past customer also varies. For example, you are not going to purchase a new computer as often as you go to eat at your favorite restaurant. How your favorite spot to grab a bite to eat determines whether you are a current customer or not is going to be different then how a computer store measures whether or not you are a current customer.

Keep thinking about that favorite restaurant. How often do you go? Do the employees recognize you? In some cases, a current customer will get extra special treatment because they buy more products or services.

This special treatment often occurs because current customers are the most important customer for any company. You see, it is much cheaper for a company to keep you happy and coming back than it is for them to market to new customers. Not to mention, most of the time a happy customer markets for the company. Have you ever tried to get your friends to go to your favorite restaurant? Bringing new business is just one way current customers serve as critical customers to any company.

Past Customers

Have you ever changed Internet or cable providers? If you used a specific cable provider for the past three years and suddenly decide to leave them for another provider, then you become a past customer of the initial provider.

Oftentimes you become a past customer because a different company provides a better offer. A past customer is someone who purchased goods or services from a particular company sometime in the past. Imagine that the new TV provider offers you the same TV channels for half the price of your bill from your previous provider. Chances are, you would be inclined to change companies.

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