# Customer: Definition and How to Study Their Behavior for Marketing

![Customer](https://www.investopedia.com/thmb/Ldg6f8DJ1VGuu5O-TLJ8M51YwP0=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/customer-final-9a988f70342446bdb66ebcc2cb92f4d0.jpg)

*Several fields of study explore customer behavior, such as marketing research, behavioral science, and social psychology. — Crea Taylor / Investopedia*

> **Definition**
>
> A customer is an individual or entity that buys goods or services.

## What Is a Customer?

A customer is an individual or business that purchases a company’s goods or services. Customers are important because they drive [revenues](https://www.investopedia.com/terms/r/revenue.asp). Businesses can neither survive nor thrive without them.

Businesses compete to attract customers in a variety of ways. They may advertise their products. They may lower prices. Or they may simply develop unique, high-quality products and experiences that their customers love.

### Key Takeaways

*   Customers are the individuals and businesses that purchase goods and services.
*   Some businesses closely monitor their customer relationships to identify ways to improve their service and products and to understand how to better meet customer needs.
*   The way businesses treat their customers can give them a competitive edge.

## The Importance of Customers

Businesses often honor the adage “the customer is always right” because happy customers are more likely to repeat their business with companies that meet or exceed their needs. Many companies closely monitor their customer relationships as a result, to gather information about customer behavior and solicit feedback from customers on ways to improve product lines.

Customers are categorized in many ways. They’re commonly classified as external or internal.

External customers are dissociated from business operations and are often the parties who are interested in purchasing the final goods and services produced by a company. Internal customers are individuals or businesses integrated into business operations. They often exist as employees or other functional groups within the company.

Customers differ from purchasing agents, who use corporate capital to buy wholesale goods for commercial or industrial use.

## Studying Customers

Businesses frequently study their customers’ profiles and behaviors to fine-tune their [marketing](https://www.investopedia.com/terms/m/marketing.asp) approaches and tailor their [inventory](https://www.investopedia.com/terms/i/inventory.asp) to attract more customers.

Customers are often grouped according to [demographics](https://www.investopedia.com/terms/d/demographics.asp) such as age, race, gender, ethnicity, income level, and location. All these factors can help businesses cultivate a snapshot of the “ideal customer” or “customer persona.” This information helps companies deepen existing customer relationships and reach untapped consumer populations to increase traffic.

Customers are so important to businesses that colleges and universities offer consumer behavior courses that are dedicated to the study of customer behavioral patterns, choices, and idiosyncrasies. These courses focus on why people buy and use goods and services and how those decisions impact [companies](https://www.investopedia.com/terms/c/company.asp) and [economies](https://www.investopedia.com/terms/e/economy.asp).

Understanding customers enables businesses to create effective marketing and advertising campaigns. It helps them deliver products and services that address needs and wants and retain customers for long-term repeat business.

## Customer Service

[Customer service](https://www.investopedia.com/terms/c/customer-service.asp) strives to create positive experiences for customers. It’s key to a successful seller/customer dynamic. Loyalty in the form of favorable online reviews, referrals, and future business can be won or lost based on a good or bad customer service experience.

> **Important**
>
> Customer service has evolved to include real-time interactions via instant message chats, texting, and other means of communication.

The market is saturated with businesses offering the same or similar products and services. What truly distinguishes one from the other is customer service, which has become the basis of competition for many businesses. Customer service is a key element of [Six Sigma](https://www.investopedia.com/articles/investing/102014/guide-six-sigma-black-belt.asp), a quality improvement methodology.

## Customers vs. Consumers

The terms “customer” and “consumer” are nearly synonymous and are often used interchangeably, but there’s a slight difference. [Consumers](https://www.investopedia.com/terms/e/end-user.asp) are defined as individuals or businesses that consume or use goods and services. Customers are the economy’s purchasers who buy goods and services. They can exist as consumers or simply as customers.

## What Are the Basic Types of Customers?

Customers can be broken down into 12 types: prospective, window shoppers, determined, promotion-driven, churned, new, impulse, angry, loyal, brand advocates, referred, and international. Churned customers are those on the tail end of a relationship with your company or store but have moved on.

## What Is the Best Type of Customer?

[Loyal customers](https://www.investopedia.com/terms/b/brand-loyalty.asp) are the best type of customers because they make repeat purchases over the long term. They’re likely to recommend your business to friends, social media connections, and/or business associates.

## What Do Customers Value Most?

Customers most appreciate high-quality products and services as well as low prices, good service, and the opportunity to give feedback that the company acknowledges.

## The Bottom Line

A company’s most valuable asset is its customers. It’s out of business without them. The most successful companies go to great lengths to study and understand customer behaviors and desires so they can address issues that displease buyers and promote the products and services they like.

> **Article Sources**
>
> 1.  BMC Software. “[Internal vs. External Customers: How Are They Different?](https://www.bmc.com/blogs/internal-vs-external-customers/)”
>     
> 2.  Semrush. “[The Marketing Funnel: What It Is & How It Works](https://www.semrush.com/blog/marketing-funnel/).”
>     
> 3.  The Council for Six Sigma Certification. “[What Is Six Sigma?](https://www.sixsigmacouncil.org/six-sigma-definition/)”
>     
> 4.  Zendesk. “[12 Types Of Customers + How to Support Them](https://www.zendesk.com/blog/types-of-customers/).”