Client vs Customer: What’s the Difference?
The words ‘client’ and ‘customer’ are often used interchangeably.
But in business, each word represents a unique relationship. This classification helps guide your business approach to the way these parties interact. It also helps define what is being offered and how.
So let’s dive in. Client vs customer, what is the difference?
One major difference between a client vs customer is how they are each defined.
According to the Merriam-Websters Dictionary, a client is “a person (or organization) who engages the professional services or advice of another.” A client is also described in a dependent relationship as one who is “under the protection of another”.
A customer is “one that purchases a commodity or service.”
Keep these definitions in mind as we dive further into the differences between a client and a customer.
A client relationship is different from a customer relationship. But how different are they?
A customer does business with another person or company. A basic example of this is when someone visits a grocery store to buy food or products.
In the retail business, there is an emphasis placed on “customer service”. This is the level of personalized attention or care that a patron receives from a business.
A client seeks out a specialized service from another individual or business. Some classic examples of this are with lawyers, financial advisors, or accountants.
These professionals are chosen based on their specialized skills, training and education. This often gives rise to a fiduciary relationship between the parties.
According to the Investment Funds Institute of Canada, “a ‘fiduciary duty’ is a concept used by Canadian courts to impose a duty of loyalty on a person who has been entrusted to look after the best interests of someone else. It usually arises in circumstances where one person is vulnerable to the other because of the personal nature of the relationship, or because of the broad scope of authority given to the other.”
A customer relationship does not necessarily require a fiduciary duty.
But an individual or business selling to that customer should act in an ethical manner. If they don’t, they risk losing business to their competitors.
A client vs customer is different based on what each gets from who is serving them.
A customer can receive a product, service or both. In the grocery store example, a customer is there to buy food or goods offered for sale.
Customers will vary on the service level they expect from a store. If they expect a high level of service but don’t get it, they may choose your competitor for future purchases.
But customers aren’t always seeking to buy goods.
There will be times where a customer will be seeking a service. For example, during the winter time, they may want to hire a snow removal company. In this instance, a business is selling a service, not a good.
A client, though, is not hiring a business to provide a product. A business provides a client with unique services tailored to their specific needs. This can come in the form of legal counsel, investment or tax advice focused on a client’s situation.
Longevity is a defining characteristic when considering a client vs customer.
Relationships with a customer are generally shorter than those with a client. The general nature of client and customer relationships helps illustrate this contrast.
In the grocery store example, a customer makes “low risk” decisions. The same goes for hiring a snow removal company. A customer wants safe food to eat and snow removal services to be a good value.
But when it comes to a client, these may be “high risk” decisions. This means that taking the time to build a strong relationship is often a key to earning their business.
For example, a client may use a lawyer’s services for a criminal charge, divorce or business deal. They may hire a financial advisor to make investments or an accountant to report their taxes.
But there is one important thing to remember. Whether serving a client or a customer, you should develop strong, long-lasting relationships. It is part of running a smart business model.
If the parties write up an agreement and sign it, this is another way a client vs customer can be different.
Generally, a customer does not have a written agreement in place. But there are some exceptions.
When a customer shops at a membership store like Costco, there is a member agreement in place. But their average trip to places like a grocery store or coffee shop is more casual in nature.
A customer may also have a written estimate or brief contract in place when they buy services. For example, a snow removal or tree trimming company might write up the terms of their work. This helps protect both parties if there is a disagreement when the work starts or stops.
But with a client, a longer written agreement is almost always in place. This agreement is also signed by both parties.
If there is a long-term service agreement in place, this can make for a unique situation. There may be a master service agreement (MSA) signed by both parties. During the duration of the MSA, all parties rely on it to define the general terms of future contracts.
In the lawyer example, they get authorization to act on a client’s behalf by a written agreement. They also use a fee schedule that is reviewed with the client before representation.
The focus for a person or business varies depending on whether someone is a client vs customer.
When it comes to a client, the primary emphasis is on serving. With a customer, the focus is on selling.
But these priorities are not exclusive of each other. To earn business, there must be both sales and service that comes with each relationship.
In the grocery store example, the store must offer competitive prices. But at the same time, they can’t afford to disregard customer service. Otherwise, they risk losing business. Prices may get someone through the door, but service will bring them back.
A client relationship creates the same challenges, although in the opposite order. A lawyer, financial advisor or accountant must provide quality services.
This is because the nature of their work is very specialized. A client hires these professionals to provide a service that others can’t. But if these services are not reasonably priced, they could lose business.
Regardless of the relationship, the importance of sales should not be ignored. You must become skilled at selling yourself and your product or service. This applies to whether you call your target market clients or customers.
Whether someone is defined as a client vs customer, they will have a certain level of attention required.
The general nature of the relationship with a customer is often one that calls for a lower level of attention than those established with a client.
For lawyers, financial advisors and accountants, certain events trigger the need to communicate with their client. According to Canada’s Client Service and Communication Practice Management Guide, “lawyers should discuss with their clients what constitutes timely and effective communications.” Failing to disclose important information to a client can have harsh consequences for these professionals. This can include having their licenses revoked in extreme situations.
When a customer is being offered a service or specialized product, this will probably require more attention than in a situation where a customer visits a retail store.
Part of being a successful business is being responsive to your client (or customer.) It’s also making them feel good about the product or service you are providing them.
Defining someone as a client vs customer impacts how you establish relationships. It also helps govern the way you will develop your business model and your focus.
As a business owner, you should identify the product or service you are providing to others. Think about whether or not what you offer is a specialized product or service. Then, think about how best to bring it to your target market.
You may call those you sell to clients or customers. But in all reality, they are all human beings. Because of this, the line between client and customer can become blurred.
Not losing sight of that as a business can be what keeps a client (or customer) and what doesn’t.
As an attorney or financial advisor, you may offer great services to clients. But if you aren’t able to market and sell these services, your business can fail.
As a retail store owner, your products should be competitively priced. But you also can’t afford to ignore placing an emphasis on giving your customers good service.