What is a Customer?
A customer is a person or organization that purchases products or services from a business. Customers are the reason businesses exist and form the foundation of their revenue source.
In modern business, the concept of customer encompasses not only the person making a purchase but all parties who interact with the business in any way.
Customer Definition:
A natural or legal person who purchases products or services offered by a business in exchange for payment and establishes a commercial relationship with the business.
Customer Types
Individual Customer (B2C)
A natural person who purchases products or services for their own personal needs.
- Fast decision-making process
- Emotional purchasing decisions
- Lower-value transactions
Corporate Customer (B2B)
A company or organization that purchases products or services for business needs.
- Longer sales cycle
- Rational decision-making
- Higher-value transactions
Other Customer Classifications
Loyal Customer
A customer who regularly purchases and recommends the brand to others.
New Customer
A person making their first purchase or who has been a customer for a short time.
Lost Customer
A former customer who no longer purchases or has switched to a competitor.
What is a Potential Customer (Lead)?
A potential customer (lead) is a person or organization that has not yet made a purchase but has shown interest in your product or service. Leads are the most important input of the sales funnel.
Lead Classification
Cold Lead
In the awareness stage. Has just identified the problem.
Warm Lead
In the evaluation stage. Researching solutions.
Hot Lead
In the decision stage. Ready to purchase.
Customer Lifecycle
The customer lifecycle is the stages a customer goes through from first contact with the business to becoming a loyal customer. Understanding this cycle is critical for optimizing customer experience.
Awareness
The customer becomes aware of the problem and potential solutions. First encounter with your brand.
Evaluation
The customer researches and compares different solutions. Content marketing plays a critical role.
Purchase
The customer makes their decision and completes the purchase.
Retention
You retain the customer through improved experience, support, and relationship management.
Loyalty
The customer purchases regularly and doesn't consider competitor offers.
Advocacy
The customer actively recommends and advocates for your brand.
How to Calculate Customer Value?
Customer Lifetime Value (CLV) is the most important metric that measures a customer's total contribution to your business.
CLV Formula
Acquiring a new customer costs 5x more than retaining an existing one
A 5% increase in retention can increase profits by 25-95%
80% of revenue comes from 20% of existing customers
Customer Management with CRM
CRM (Customer Relationship Management) is a combination of strategy and technology used to manage customer relationships. Modern CRM systems collect all customer data in a single platform.
What You Can Do with CRM
Customer Tracking
Record and track all customer interactions
Sales Pipeline
Visualize and manage your sales processes
Automation
Automate repetitive tasks
Reporting
Make data-driven decisions