Customer vs. User: understanding the relationship

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Two things all companies have in common are customers and users. Two things successful businesses and startups have in common are a lot of customers and a lot of users. Yes, two things. Understanding the difference and dynamic between customers and users is important to the success of your startup because your marketing and sales will depend on it. Here are two simple definitions and examples to help you understand each.

  1. User: a user is a person who interacts with your product, or service solution. They use it to solve a problem directly. If your company sells handmade leather sandals, your users are wearing your shoes on their feet, perhaps every day. Sometimes, the user is the one paying for the solution, other times they don’t have the power to make that purchasing decision.
  2. Customer: the customer pays for your service or product. They are a decision maker. The definition is broadened to make understanding easy but can cause confusion. For example, let’s take an entrepreneur who sells chickens to hotels. Hotel X is a customer but it’s someone who works for the hotel who makes the buying decision – who to buy from and how much to buy. They are the decision maker. If you make websites for companies, Company X may be your customer but probably the marketing director is the one making the decision to hire your services.

Sometimes the lines are blurry between customer and user. Sometimes they are the same person but not always.

For the poultry entrepreneur, the hotel manager may be the one buying your chickens. He or she is the customer. But it’s the hotel guests who eat the chickens. They are the users. But if you have a woman who orders chickens to prepare family meals, she is a customer and a user. 

Here is another example that you can relate with easily.

If you are a Facebook user (in which case follow us @leanstartAfrica), you get to connect with friends around the world and keep them up to date on your life. All for free! Now, consider the shoe seller taking our marketing course and learns about facebook ads and would like to advertise their shoes to you. They will pay facebook so that you see their ad and potentially make a purchase. You are the user and they are the customer.

Why is it important to know the difference between a user and a customer? Because the success of your business depends on it. The customer may or may not use your service directly but they have decision making power. A user who is not a customer doesn’t have decision making power thus may not be the one who can decide if your solution is worth buying. However, some users have a large influence on how the decision maker arrives at their decision. If you are an entrepreneur who makes toys for children. If a child loves your toy and cries for it at the store, the parent, who is the customer, is much more likely to buy it.

Understanding this relationship will be crucial to make the right marketing decisions as well as build a robust sales strategy. Our training ensures entrepreneurs are able to distinguish between a user and a customer and understand their importance. As we guide you toward establishing a business with strong sales, this foundational understanding will help you scale.

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