Some companies have consumers, customers, and clients. This is why the words are often interchangeable and you might get easily confused. The word “client” can also mean “customer,” according to most dictionaries, but it has a separate definition when it comes to professional services. In business, the two terms are often applied differently based on the types of relationships. Having a clear understanding of these two words is necessary.
Definition of a customer
There is only one boss. The customer
If we go by the dictionary definition of a customer, it is a person or an organization that buys something from a shop, store, or business. Hence, we can see that customer is a word that we mostly refer to in regards to casual purchases.
It’s more about one-time transactions than long-lasting relationships. Even though customers can be loyal to brands and return to them regularly, the nature of their relations is always short-term.
In a SaaS business-like CustomerSuccessBox, anyone who buys a subscription to your product is a customer. irrespective of having monthly, quarterly or annual subscriptions. Customers pay for the product in order to get immediate value from it. If he is able to achieve his desired outcome, s/he stays, else leave after the trial period or one or two billing cycles.
Unlike traditional on-premise software companies, where the customers are bound by lengthy contracts and heavy investments, a SaaS customer only pays 5-15% of total potential Lifetime Value upfront, the rest will only come in as future revenue IF you’re able to retain that customer. There are no complicated agreements or contracts, and hence they are not bound to stay with you if not getting value. The switching cost is not very high and there are various software vendors to choose from. It gives the power to the customers aka subscribers to fire vendors at their will. This is why you need to focus on Customer success – ensuring your customers achieve their desired business outcome using your product. You have to pay emphasis to right onboarding and various other metrics to ensure customer retention
Definition of a client
Again, let’s start with a dictionary definition. A client is a person who uses the services or products of a company. We can clearly see that a client is more of a ‘formal’ form of a customer. But they maintain long-term relations.
A client is a more loyal customer. Whereas a customer will essentially purchase from you once and never return, a client will maintain an ongoing relationship with you and your product. A client is a customer with whom you build a relationship.
A client would love to develop a personalized and long-term connection with you and your company. S/he is looking for value in long run. Unlike a customer, the client stays with you for many years.
Relation with the vendor
The other key difference between the client and customer is the type of relationship that a client and customer have with the vendor. A customer engages in a one-time transaction with the company. And if the vendor is able to help the customer derive value he may eventually become a client. A client engages in a strong relationship with the seller.
Why Client vs. Customer Is Important?
The thing is, when you talk about a business, the more it grows, there are more ways to name people who are using your services or products. It’s all pretty much the same for many people – clients, customers, users, subscribers, consumers.
Turns out the ‘client vs customer’ conundrum is one of the greatest mysteries in the business world. There are numerous articles on the topic of ‘client versus customer’, people keep asking this question on Quora too, but there’s still no clarity there.
Within the SaaS industry, it is the key to your business strategy. Since clients are the ones who will drive revenue for your company, these relationships will require extra care, more time, and attention which also means more resources dedicated to customer success.
Clients are the ones who would be driving customer retention and giving you more opportunities for upsells and cross-sales.
Similarities between Customer and Client
Customers and clients both purchase and use your services. Regardless of the length of their relationship and intent to stick with you, both deserve your attention with any issues that they are facing. Both of them expect the best customer service you can offer. Both are equally important for the success of your business, but the differences between them may explain the value of your long-term success.
What is the key difference between Client and Customer ?
A customer is someone who purchases your services from you while a client is someone that seeks and uses your professional advice along with the service. In selling services to a customer, the focus is limited to only pitching the product or service and later settling for the lowest price which can hurt your profit margin.
The difference between the two is the relationship you have with the person. If you want customers to use your service, you’ll have to be continually searching for new ones. Clients, on the other hand, don’t need to be replaced unless they don’t find your service helping them to reach what they came to achieve.
In a nutshell, a customer is someone who uses and pays for here-and-now products and services. While a client buys long-term personalized assistance or support right from onboarding from the company professional.
Why is Customer Success important in SaaS?
You can focus on adoption, retention, expansion, or advocacy; or you can focus on the customers’ Desired Outcome and get all of those things.”
The success of every SaaS business is deeply related to its capability of retaining customers and creating recurring revenue. Customer success is the business methodology of ensuring customers reach their desired outcomes and are satisfied through interactions with your company while using your product.
It has to be emphasized that a business’s success relies on customers’ success. The more your customers fail using your product, the more will be the churn rate and the lesser will be the retention rate.
Suggested Reading: 7 Data Points That Drive Customer Retention For SaaS Business
Why do SaaS Businesses Need a Customer Success Strategy?
Opposite of the traditional approach, sales and marketing are not the only two teams responsible for the growth of a business. In SaaS, the customer is the boss. Spending a considerable amount of effort on customers and their success with your product is a must.
There are many ways in which companies of all types can establish closer relationships with their customers, effectively turning them into clients and ensuring customer success. Standing out from, and ahead of, the competition can depend on how important customer loyalty is to you.
Mostly, the information is quite confusing and you end up thinking: “That’s the same thing!” While the reality is much different. Hopefully, at this point, after reading this article you know which is which and have got some clarity to the client vs customer dispute.
P.S. – The main image has been taken from pexels.com