A consumer is a person who uses the products and services provided by a business. A customer is a person who purchases products or services from a business. In other words, a customer makes a payment. A consumer isn’t always the person who pays for the item purchased, while a customer always makes a transaction themselves.
While a person can be both a customer and a consumer—for example, if they purchase a product for personal use—the overlap is not always present. If David buys a handbag for his wife Kara, then David is the customer, but Kara is the consumer.
Key Differences Between Consumers & Customers
Although both consumers and customers obtain products and services from businesses, some subtle differences exist—such as why each category obtains the products and services and what they do with them. Here’s a quick breakdown of the nuances of both consumers and customers.
What Is a Consumer?
The distinguishing characteristic of a consumer is simply that they use these products and services themselves. They might have bought the products and services themselves (in which case they would also be customers of the business), or the products and services might have been purchased by others and given to them.
Types of Consumers
Here are a few different types of consumers and their mindsets when using products and services, plus the best way for a business to make use of them.
Extroverted Consumers
These are consumers who not only are loyal to a particular brand, but also like to show off both their loyalty and the items they’ve bought. An extroverted consumer might wear branded clothing, display branded accessories, and talk about or publicly use items they’ve bought from their favorite business—anything from appliances, to gadgets, to vehicles.
Extroverted consumers will take the initiative to show off the branded products they buy; this makes them a great source of free advertising. (Source: Pexels)
Extroverted consumers act as a form of free advertising for a business, so their existing brand loyalty should be encouraged and nurtured as much as possible.
Conscientious Consumers
Conscientious or ethical consumers view the products they choose based on not only how useful or pleasant they are, but also the impact they have on other people and on the world.
These consumers primarily care about environmental, social, and political issues; price and personal gain don’t matter as much to them. They may choose to use more expensive products if they are convinced that these serve a greater good, cause little harm to people or the environment, or display any one of various forms of sustainability. If you can create environmentally friendly products or donate part of your profits to advocacies or social causes, you can attract ethical consumers.
Need-based Consumers
The defining characteristic of a need-based consumer is their sense of practicality. This type of consumer will buy and use particular products and services simply because they need them.
As such, these consumers search for the best option to fulfill their specific needs (though they don’t do as much research as, say, discount customers). They ask questions and examine products before making a decision. They don’t necessarily look for the cheapest or most convenient option, but rather the one that most effectively addresses their needs at the time.
Need-based consumers present a good opportunity for your business. While they can be drawn to competitors if they feel that your business does not offer the most practical solutions for their needs, they can also become repeat customers if they consistently receive value from doing business with you.
Open Consumers
When searching for products and services, open consumers prioritize innovation, creativity, and originality. They do not buy things based on familiarity or tradition; instead, they embrace new products and ideas, as long as these are useful or interesting. Open consumers want to improve their lives and routines, and they search for unique products and services that can cater to this need in a specialized and effective way.
You can widen your base of open consumers by doing intensive market research to learn exactly what these consumers need and want. You’ll also want to keep innovation, curiosity, and creativity top of mind when marketing and designing for open consumers; nothing turns them off faster than the idea of, “We’ll just keep doing it this way because we’ve always done it this way.”
What Is a Customer?
The distinguishing characteristic of a customer is that they buy products and services—they make a payment to the business that provides these things. They might then use the products and services themselves (which would make them consumers as well as customers), or they might give these products and services to others for them to use.
Types of Customers
Here are a few different types of customers and their mindset when purchasing products and services, plus the best way for a business to appeal to them.
Repeat Customers
Similar to an extroverted consumer, repeat customers feel loyalty toward a particular brand or product and willingly buy it regularly. However, they don’t necessarily feel the need to display their purchases. That said, repeat customers are one of the most valuable customer types for a business, as they will reliably buy your products again and again.
To take advantage of repeat customers’ purchasing consistency, first calculate your business’ retention rate. Then, keep your repeat customers coming back by keeping prices reasonable, maintaining a well-stocked inventory, and offering loyalty incentives.
Final Customers
A final customer is one who purchases a product not to resell it but to consume or use it themselves. They may or may not also be repeat customers. While they use the product and are satisfied with it, they’re not necessarily excited about purchases or loyal to a brand.
Businesses can increase the engagement and loyalty of these customers by offering loyalty programs or designing specific marketing campaigns.
Discount Customers
A discount customer’s highest priority is to find the lowest price possible for the products or services they need. These customers will spend time doing research to find the lowest prices and the best deals possible before they buy. They are not necessarily repeat customers, unless they find that they can get consistently low prices by buying from a particular brand.
It can be tricky to gain loyalty from discount customers, as they’ll always be ready to move to a competitor if they find a lower price there. But a business can still appeal to these customers by offering discounts and low prices whenever possible, as part of a broader pricing strategy. Whenever you offer a new product or service, you can also experiment with setting low initial prices, which will help you capture discount customers in the early stages of your business.
Trade Customers
Unlike a final customer, a trade customer intends to resell the products they buy rather than consume them. Usually, trade customers seek to increase the product value somehow (for example, by improving or modifying it), thus justifying an increased resell price that leads to a profit.
As a retailer, if you want to focus on trade customers, sell them items that can be improved upon or used to craft more valuable final products. You can sell them parts, components, craft supplies, basic items, or ingredients.
Trade customers can be retailers who plan to resell the products they buy from you; for example, a clothing store that adds screen printing or embroidery to plain shirts. (Source: Pixabay)
A variant of trade customers is customers who buy items that they intend to give as gifts to others. In this case, there is no reselling, and the item will not necessarily be improved upon or modified before being passed on, but you can follow the same guidelines for selling high-quality parts, ingredients, or basic items. If the gift recipient is happy with the item, then the gift buyer will likely come back for more purchases in the future.
If you want to design your products and offerings to appeal to gift-giving customers, here are some helpful resources:
Impulsive/Spontaneous Customers
These customers tend to buy things that catch their attention in the moment or indulge a certain emotion or craving within them. They may buy things that seem interesting, fun, or appealing, rather than planning purchases carefully. A marketing campaign that focuses on various emotions and feelings rather than practicality works well for attracting these customers. You can also set up your store to promote impulse buying.
Why You Should Understand the Difference
Understanding the difference between consumer and customer will help a small business clearly define its target audience and create a targeted and effective marketing strategy. Here are a few benefits of being able to distinguish between consumers and customers:
Targeted Marketing
Knowing that the people who visit your store aren’t always the same people who will be using your products can help you craft more specific, targeted marketing to attract buyers.
As an example, think of a jewelry brand that sells pieces made for women. Part of their marketing strategy could be to target women who want to buy themselves something nice. But since jewelry is also frequently given as a gift, the business’ marketing could also target people who want to buy jewelry for the important women in their lives—husbands and boyfriends being the primary examples.
Improved Sales Conversions
More specific and personalized marketing can ultimately lead to more sales conversions. If people who walk into your store can relate to or feel a connection with your targeted marketing materials—regardless of whether they initially planned to buy anything and who they’d be buying for—they are much more likely to end up buying. Any feedback you can get from these buyers, even if it’s just chatting with them as you ring up their purchases, can also provide valuable information about what kinds of people are attracted to your offerings.
Better Customer Interactions
If you’re familiar with what kind of customers frequently buy from your store and what kinds of consumers ultimately use your products, you’ll be better able to prepare your support staff to assist with customers’ questions and concerns, leading to improved customer satisfaction.
For example, if you know that your store gets a lot of conscientious consumers, you can train your staff to answer questions about sustainability and ethical production. If you get lots of need-based consumers, you can train your staff to be able to explain why your products are the best on the market.
Appealing to Consumers & Customers: Factors to Consider
More than knowing the difference between consumers and customers, you need to understand how to appeal to both if you want your brand to be as memorable and effective as possible. If you’re aiming to target specific types of consumers and customers, here are some factors to keep in mind when crafting your business plan or marketing campaigns.
Reason for Purchasing
Different customer types have varying reasons for buying your products and services: familiarity and routine, identification with your brand, plans to resell for profit, emotional or impulsive indulgence, and more.
While it’s tempting to come up with a marketing strategy that caters equally to all customer types, this will be difficult to pull off and yield mediocre results. Instead, when writing a business plan and crafting a customer persona, decide what kind of customers you’ll primarily be targeting and focus most of your marketing efforts on appealing to them.
Buying Habits & Behaviors
Aside from why people purchase your products and services, consider how people purchase them. What patterns or habits do your customers and customers display? How can you encourage these habits to continue or make adjustments as needed? Here are some guide questions to ask when making these assessments or crafting metrics for your business performance:
- What do buyers do with your products after they purchase them?
- What are the standout characteristics of your most popular products and services?
- How important is innovation to most of your customers? How important is familiarity?
- How many of your buyers are final customers? How many are resellers or retailers?
- How important is price to your customers? What factors are more or less important to them than price?
When you’ve answered these questions, you’ll be more familiar with how your customers buy from your business—which means you’ll have a better understanding of how to adjust marketing and product design to get more people interested in your offerings.
Demographics
When starting a retail business or devising a marketing plan, you’ll need to consider your buyer demographics. This means consumer and customer information such as age, gender, income level, occupation, and educational attainment. If you can gather data about the preferences and habits of existing customers, you’ll have even more information at your fingertips.
The more detailed you can get with all this information, the more specific, targeted, and effective your marketing efforts will be. Naturally, this will lead to more sales and greater profits down the line.
Frequently Asked Questions (FAQs)
Click through the following sections to learn more about the difference between customer vs consumer as well as different buyer types and marketing strategies.
A consumer uses a product or service purchased from a business, whether or not they purchased it themselves. A customer is the person who pays for the product or service, whether or not they will be the ones who actually use it. A consumer and a customer can be the same person, but not necessarily.
There are many different possible reasons why people buy and use products and services: brand loyalty, desire to resell, devotion to social or environmental causes, price concerns, or even emotional and impulsive behavior. A good marketing strategy will specify who the desired customers are and will market specifically toward them.
Consider your buyer demographics and draw up a customer persona. If you have a clear idea of what your ideal customer looks like, it’ll be easier for you to fine-tune your marketing tactics as well as offer the products and services that people are most likely to buy.
Bottom Line
The difference between consumers and customers is a simple one, but understanding it will help you improve your marketing and advertising, boost your sales and profits, and build a brand that buyers turn to time and time again.
