Who is a customer?

A customer is an individual or entity that acquires and/ or consumes goods and services from
another individual or entity. Customers are the most important component of a business because
they bring in revenue to grow and sustain business. As a result, businesses compete to win over
and maintain their customer base, failure to which business becomes unsustainable leading to
closure. Businesses compete for customers using various methods that include advertising,
lowering prices, presenting unique products.
Importance of customers
a) Reason for doing business – customers demand for goods and services. If there is no
demand, there is no reason for the business.
b) Revenue generation – customers pay for goods and services thus generate revenue for
business to cover costs and make profit.
c) Achieve set objectives – most businesses are operational for purposes of making profits.
Other entities may be operational for varying reasons that may not include profit. All
require customers to achieve set goals.
d) Growth – customers enable entities to grow and attract more customers.
e) Identifying market needs – through feedback from customers, entities are able to identify
market requirements and offer such products and services
f) Customers as marketers – many customers act as informal marketers of business products
thus aid in growth and expansion of customer base.
Identifying potential customers
For a business to remain relevant, it must deliberately understand and study customers so as to
know what products to continue offering, what products to discontinue, what products to repackage
and what new products to introduce to the market. Customers can be identified using the following
ways;
Segmentation - Segmenting your customers is the first step in identifying and understanding your
potential customer base. Customer segmentation means segmenting your customers into groups
on the basis of demographic (age, gender, marital status etc.), geographic (country, county,
climate, rural/ urban etc.), behavioristic traits (number of times customer buys a product, amount
purchased etc.) and due diligence. From the information, entity can create customer profile of
potential target and derive mechanisms to approach and recruit the customer.
Competitor research – researching on competitor can provide useful information of segments the
competitor has captures, customer purchase behaviour, and nature of conversations customers are
having about product. After identifying the basics, business can check on potential weaknesses
and exploit them for new opportunities to develop products and marketing plans.
Effective marketing strategy – with knowledge on customer, a business can craft a suitable
marketing strategy to target different segments e.g. emails, display ads, social media influencers
depending on the segment.
Constant monitoring – to check on customer trends of shifts in consumption etc. and adjust
accordingly.
What customers look for before buying a product
1) Price – each customer spends within own budget unless there is extraordinary issue.
2) Experience – today customers want to acquire products that are easily available and also want
variety/ alternatives of similar products. Thus need for high quality and convenience of access.
3) Design – design and packaging of the product should be attractive.
4) Functionality – product should be able to meet all requirements of customer.
6) Reliability - product should be reliable and able to meet the customer’s needs every time.
7) Compatibility - product should be compatible with the other products the customer is already
using.
Types of customers
1) Need-based customers – they acquire only specific products. Approaching them to offer other
products requires initiating personal interaction so that they are not put off. Proper customer
service can turn them to loyal customers.
2) Loyal customers – they are the most important segment of customer base as they are not only
loyal to entity products but also aid to market them through word of mouth. They are responsible
for generating highest level of stable revenue. The entity should keep them satisfied and often-
times recognize them e.g. through gifts, social media posts.
3) Discount customers – they always negotiate prices for products. They have little loyalty and
buy from entities offering best deals. However they help to ensure clarity of products on offer as
they are very inquisitive.
4) Impulsive customers – they shop based on the mood of the time and hence least reliable. They
rely on quick recommendations of the time. They can be attracted through offers.
5) Potential customers – they are yet to be customers and require convincing to make purchases.
Therefore they require information and be shown value for acquiring a certain product.
6) New customers – they have just acquired the products but are not conversant with how to use
them. As a result the aim should be to approach them and assist them with knowledge of how to
use the product while trying to convert them to loyal customers. They should be approached
cautiously since first impressions last.
7) Wandering customers – they approach a business to view what is on offer, ask questions about
the products but have little interest in acquiring the products. Providing useful information can
convert them to loyal customers but less time should be spent on them since they are usually out
to pass time.
8) Relationship customers – they only acquire products after they have formed a relationship of
trust with the seller. They are usually looking for relationships where they can depend on each
other.
9) Value customers – they acquire products that they feel add value to them e.g. efficiency, lower
costs, quality. They must be convinced there is value for the product compared to those of
competitors.
10) Regular Customer – acquire products often and are well versed with the products. They act as
good marketers of the products.