Customer Overview & Concept

Devon Denomme, Allison Tanner
  • Author
    Devon Denomme

    Devon has tutored for almost two years. They have a Bachelor's in Air Traffic Management from Embry-Riddle Aeronautical University and minored in Aviation Safety and Homeland Security. They also are AT-CTI certified.

  • Instructor
    Allison Tanner

    Allison has a Masters of Arts in Political Science. She has worked in the customer service and food industry since 2013.

Learn the customer definition to understand who and what a customer is. Study the three types of customers: current customer, past customer, and potential customer. Updated: 12/20/2021

Customer Definition

Customers are a vital component of any business or financial exchange between parties for a product or service. Without customers, a business would not be able to generate enough revenue to support its staff, nor would it be able to maintain the financial resources required to remain in operation. For this reason, businesses must have a concrete understanding of what a customer is, the specific type of customer or clientele their product may appeal to, and how to properly market their product to a broader range of customers on the market.

What is a customer? A customer is generally defined as a person who buys a good, product, or service. More specifically, customers are people or businesses currently purchasing, have purchased, or may be interested in purchasing a product or service from another individual or company. Each time that money is spent on a product during an exchange between two parties, the customer is the person or business paying for the product. Buying a coffee at the coffee shop, purchasing a toy at the local store, and spending money on a ticket to the zoo are all examples of exchanges where one party is the customer of a business's product or service.

A customer is a person or business who purchases, has purchased, or may potentially purchase a good or service from another individual or organization. A person is a customer of the fish market when they purchase a piece of salmon.

customer meaning

Concept of Customer vs. Consumer

While the terms customer and consumer are often used interchangeably in economics, a distinct difference exists between the two types of buyers from the perspective of marketing. The concept of a customer relates to people or businesses who shop for products and receive them from other individuals or companies following an exchange of some kind. They participate in short interactions with the seller, which end when the customer leaves with their desired product. Customers drive the economy and stimulate the revenue of businesses either as both a customer and a consumer or exclusively as a customer.

Consumers are people or businesses who use or consume the final product or service offered by another entity. Consumers are more closely examined from a marketing perspective because they drive supply and demand, influencing trends in the market while also regulating how finances are exchanged for a product or service. When a parent purchases an ice cream cone for their child at the ice cream truck, for example, they are simply a customer of the ice cream business because they have only made an exchange for the good. When the child eats the ice cream cone, the parent or child becomes the consumer of the product as they are using or consuming the good that has been purchased.

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.

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Who Is a Customer?

Who is a customer to a business, and how do customers influence the actions taken by an organization? There are three main types of customers, each who provide businesses with unique insights and influence them to take certain actions to remain continuously appealing:

  • Current customers
  • Past customers
  • Potential customers

It is important for businesses to market to a wide range of customers while also balancing their selling tactics and catering to their core clientele if they are to maintain a high volume of service to remain in operation. The ice cream truck may choose to create colorful advertisements and cheery jingles to appeal to children, appetizing them to beg their parents to purchase a treat. Likewise, a dairy company may choose to market its freshest and highest quality products to the ice cream makers and supermarkets at the same time to deliver customers the best experience possible. The following sections will explore how current, past, and potential customers impact the decisions made by companies and drive the market through their own purchasing choices.

Current Customer

A current customer is an individual or business who buys products and services from another business or entity actively over a certain period of time. Different types of businesses may measure the period of time required to be considered an active customer differently, as not all products and services are purchased or used as frequently. For instance, a restaurant may consider a customer who returns to receive a meal once every few months a current customer, while a technology company may consider current customers to be people who have purchased a product within the past year. Purchases made by current customers do not have to be immediately consumed, but the purchases must be made within a relative timeframe set by the seller.

Current customers are individuals or businesses who buy products or services actively over time. Car dealerships may consider customers to be current if they have purchased a vehicle or received service within the past two years.

concept of customer

Current customers are the most important group of clients to pay attention to in marketing because it costs less to satisfy them in comparison to new customers. Suppose current customers are repeatedly returning to a business within a given time period. In that case, the seller is marketing their product or service in a manner that makes their item more desirable. Current customers may also receive special treatment or deals on products or services to keep them satisfied and return to the business continuously. New, past or potential clients are not established as current customers because they have not returned repeatedly and are therefore less predictable from an influential marketing perspective.

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.

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Video Transcript

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.

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Frequently Asked Questions

What is the simple definition of customer?

A customer is most basically defined as a person or business who purchases a product, good, or service from another individual or organization. There are three types of customers, each of which plays an important role in influencing companies towards making certain marketing decisions and driving revenue: current customers, past customers, and potential customers.

How would you define your customer?

Customers are defined as a party who exchanges something, usually monetarily, for a good or service. Customers experience short interactions between themselves and the seller, which end once the customer leaves with their desired product. Customers differ from consumers from a marketing perspective because, unlike customers, who simply purchase a good or service, consumers use or consume the final product being purchased. A person buying a movie ticket would simply be labeled as a customer of the movie theater at first, but when they use that ticket to go see a movie, they would then also be a consumer of that product or service.

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