The Key Differences Between Customers, Users, and Buyers

4 powerful business women outside in coats

A Customer is the Individual who gets Value From Your Products or Services

Understanding the distinct roles of customers, users, and buyers.

By
Bastian Mx Moritz
Nov 2023
Update
Min

TL;DR

In traditional business language, the term 'customer' is often used interchangeably with 'buyer', the entity that completes the purchase. However, I propose that we consider the 'customer' as anyone who derives value from a product or service. This includes not only the 'buyer', who executes the transaction, but also the 'user', who uses the product or service and derives utility from it. This concept even extends to those indirectly impacted by the product or service.

The term 'buyer', in this framework, refers to the entity that carries out the transaction. This could be an individual consumer in a retail setting, a procurement officer in a business-to-business (B2B) context, or any other role that involves making purchase decisions and handling transactions.

The term 'user' refers to the individuals or entities that actively use or interact with the product or service and derive utility from it. They are the ones experiencing the product's features, interfaces, and performance, and their satisfaction is often closely tied to the quality of the user experience.

By defining 'customer' to include anyone who derives value from the product or service in a way that their job gets done, we achieve a more comprehensive understanding of our market and can better cater to its needs. In including anyone else who benefits indirectly the creation of value for all stakeholders, not just those involved in the transaction get emphasized, thereby promoting a more holistic and sustainable approach to business."

By applying these definitions and thinking in these categories, we ensure that our products or services are not just purchased, but also used effectively and create value for a wide range of stakeholders, fostering stronger relationships, better customer experiences, and ultimately, more sustainable success.

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Who are your customers?

Start a conversation about customer-centricity or your product or service or publication… with anyone, and the terms “customer” and “user” and “buyer” start to blur pretty quickly.

This inevitably leads to misunderstandings or misaligned strategies.

Yes, I do hold the strong opinion that even in professional settings the debate between Customer and User often gets convoluted. The result is unprecise statements and a unsatisfying feeling of just having had pointless small talk – before that sets in try your humor: Might be dry and awkward, but “hey, don’t we all love The Office?”

This is especially the case in businesses where the individuals who pay for a product or service are not the ones who will be using it.

When the distinction between 'Customer' and 'User' gets blurred it leads to misunderstandings or misaligned strategies.

We all know these examples too well:

  • For example, in a business-to-business (B2B) scenario, a company might purchase a software service. The company, as an entity, is the customer. It signs the contracts, pays the invoices, and has a legal and commercial relationship with the supplier. However, within that company, it's the employees who actually use the software. They don't make the purchase decision (economical buyer), but their feedback and experience with the product are crucial to its success.
  • In another example, consider a parent buying an educational app for their child. The parent is the customer, as they make the buying decision and pay for the app. However, it's the child who is the user, as they're the one using the app to learn.

This is why it's crucial for businesses to have a clear understanding of both the customer and user personas. The needs, preferences, and pain points of customers and users can be very different, and a successful product or service needs to cater to both.

In product design, for example, it's crucial to ensure a great user experience (UX), as this can drive user satisfaction, and in turn, customer retention and loyalty. However, in terms of sales and marketing, strategies need to be aimed at customers, focusing on the value proposition and ROI (return on investment), as they're the ones making the purchasing decisions.

So, to conclude, it's crucial for businesses to have a nuanced understanding of both the customer and the user, recognizing that these two groups can have very different needs and priorities. Failing to understand these differences can lead to a disconnect between the business, its customers, and the end-users of its products or services.

So, let's distinguish between these three key personas - Customer, User, and Buyer.

Customer vs User vs Buyer

The terms 'Customer', 'User', and 'Buyer' are often used interchangeably, yet they represent distinct roles in the consumer landscape. Understanding the differences between these roles is crucial for effective product development, marketing and sales strategies, and overall customer success. Let's delve into the nuances by looking at the definiiotn, its role in business and a quick example for each

1. Customer: The Value Recipient

A customer is anyone who derives value from a product or service. This broad category includes not only those who make the purchase but also those who benefit from the product indirectly.

Customers are the focal point of business operations. By targeting customers, businesses aim to create products or services that fulfill a wide range of needs and expectations.

In the case of educational software, while the school (buyer) and students (users) are direct customers, teachers and parents, who benefit indirectly from improved learning outcomes, are also considered customers.

2. User: The End-User Experience

Users are individuals or entities that actively interact with the product or service. They are directly involved in experiencing the product's features, interfaces, and performance.

Understanding users is key to enhancing the product's usability and functionality. Users' feedback is often pivotal in refining product features and improving user experience.

In a corporate setting, employees using the software tools purchased by their company are the users. Their interaction with the software greatly influences its effectiveness and reputation.

3. Buyer: The Transaction Facilitator

The buyer is the individual or entity that executes the transaction. This role involves making the purchase decision and handling the financial aspect of acquiring the product or service.

Buyers are crucial in the initial stages of the sales process. Catering to buyers involves understanding their decision-making criteria, budget constraints, and the value proposition they seek.

A procurement officer in a company who purchases software tools is the buyer. They may not use the tools but play a critical role in the selection and procurement process.

Integrating the Three Perspectives

By differentiating between customers, users, and buyers, you can adopt a more comprehensive approach. This allows for catering to the needs of each group effectively and ensures that your sales and marketing efforts are effective and appreciated.

To be successful in marketing and sales, it is essential to balance the focus on all three roles. This includes designing user-friendly products, creating compelling value propositions for buyers, and ensuring that the broader customer base finds value in the product.

Distinguishing between customers, users, and buyers is essential for a nuanced understanding of the market. This distinction aids in developing targeted strategies that cater to each group's specific needs, leading to better product design, more effective marketing, and ultimately, a more successful sales process.

Customers vs Consumers

While all consumers are customers in that they receive value from a product or service, not all customers are consumers. This nuanced distinction is further elaborated in our detailed article "Customers vs Consumers," which explores the unique roles and implications each group has in the marketplace.

FAQs

What does the term 'User' mean?

The term 'user', in the framework proposed above, refers to the individuals or entities that actively use or interact with the product or service, and derive utility from it. They are the ones experiencing the product's features, interfaces, and performance, and their satisfaction is often closely tied to the quality of the user experience. Users are customers in the sense that they gain value from the product or service, even though they might not have been the ones to make the purchase decision or transaction.

For instance, in a business scenario, a company might purchase a software solution (hence, the company or the procurement officer is the 'buyer'). However, it's the employees of the company who use the software to achieve their work objectives (hence, they are the 'users'). Even though they didn't make the purchase, they derive value from the product and are critical to its success in their organization.

By distinguishing 'users' in this way, we ensure that our products and services are not only sold but also effectively used and appreciated, leading to improved customer satisfaction and product success.

What does the term 'Buyer' mean?

In our context, the term 'buyer' refers to the individual or entity that carries out the transaction to acquire the product or service. This involves deciding to make the purchase and often includes paying for the product or service. Buyers are customers in the sense that they initiate the process through which value is obtained, but their interaction with the product or service might not extend beyond the transaction itself.

For instance, in an enterprise setting, a procurement officer might be the 'buyer' who acquires a suite of software tools for the organization. They might not use the tools themselves, but their role is essential in obtaining these resources.

By understanding and catering to the needs of 'buyers', businesses can ensure successful transactions and build relationships that might lead to future sales, referrals, and sustained business growth.

What does the term 'Customer' mean?

In the above proposed framework, the term 'customer' is broadened to include anyone who derives value from the product or service. This not only encompasses the 'buyers' who make the purchase and the 'users' who interact with the product or service but also anyone else who benefits indirectly.

For example, a school that purchases educational software is the 'buyer', the students who use the software are the 'users', but the teachers who can deliver more engaging lessons because of the software also count as 'customers', even though they neither bought nor used the software themselves.

By recognizing 'customers' in this expanded sense, businesses can focus on delivering value at multiple levels and to various stakeholders, which can lead to more holistic success and the creation of products and services that have a broad and meaningful impact.

These definitions highlight the nuanced roles of different parties in a transaction and the product or service's lifecycle. Recognizing and understanding these roles can help businesses better cater to their market's diverse needs.

Published
Jul 2023
Latest Update
2023-11-26
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