Client vs. Customer: What’s the Difference?

You might have heard the terms “client” and “customer” used interchangeably in the past. That’s fair. They both refer to a buyer of goods or services, so it’s not surprising that some people conflate the terms. But that’s a mistake that small business owners should avoid. Treating them as synonyms can lead to flawed marketing strategies, inefficient resource allocation, and a misunderstanding of your business model.

The critical difference of client vs. customer lies in the depth of the relationship and the type of transaction. Here, we’ll define both terms, outline the key differences in how businesses serve them, and explain why mastering this distinction is critical for business success.

What is a Client?

A client is an individual or organization that engages a professional or service provider for specialized services, expertise, or guidance, usually through a long-term, contractual relationship. For clients, the focus is on the expertise and advice of the provider. It’s an ongoing, highly personalized relationship.

There are many examples of businesses that cater to clients rather than customers. Some of these may include:

• Attorneys
• Marketing agencies
• B2B SaaS tools
• Financial advisors
• Freelance writers
• Life coaches
• Accountants
• Consultants

Really, that’s just scratching the tip of the iceberg, too. Any long-term relationship built on trust and collaboration is likely a client-business rather than customer-business relationship.

What Is a Customer?

A customer is an individual or organization that purchases goods or services from a business, usually on a transactional basis. Most of the time when you make a purchase in your life, you’re doing so as a customer rather than a client. Customers patronize a business for its product or commodity, and the relationship is often short-term and intermittent, with standardized interactions.

There are countless examples of customers, from someone buying groceries at a supermarket or parts at a hardware store, to someone purchasing a streaming subscription service. The interaction is typically brief and based on the exchange of a specific item for a specific price.

Key Differences

There are a number of important differences between clients and customers. At its core, the biggest difference is that clients have a more relational model with businesses while customers have a strictly transactional one.

A client relationship requires a deeper level of mutual trust, shared information, and continuous involvement. The buyer is engaging an expert to solve a complex, often unique, problem. Service is customized, bespoke, and adaptive as the service provider custom tailors their expertise based on the client’s business needs.

A customer relationship is typically business to individual, where the connection often ends when the sale is complete. The buyer is consuming a product and service is generally standardized and scalable. For example, every user of a standard software subscription receives the same core product.

Organizations may have both clients and customers. For instance, Amazon has millions of customers utilizing its online marketplace, but it also has thousands of clients utilizing Amazon Web Services (AWS) and other higher-touch technology services.

We highlight some of the key differences in the table below:

Why the Distinction Matters

There are a few significant reasons why it’s important to understand the distinctions between customer and client.

Marketing Strategy

Marketing to customers and clients just isn’t the same. Client marketing should focus on authority, thought leadership, and reputation. You might lean on high-value content like white papers and webinars, networking, case studies, and building credibility in the industry to attract partners who want long-term expertise. Customer marketing, on the other hand, focuses on volume, price, and immediate conversion. You may lean more into mass media and easily measurable channels like paid search (PPC), email marketing, and social media advertising.

Sales and Pricing

Your pricing models will likely differ depending on whether you’re targeting clients or customers. While the customer sales process is designed to be low-friction and fast, client sales often require consultative selling, in which you diagnose a problem before presenting a solution. Customer sales typically have fixed, non-negotiable pricing while client sales have a longer runway, requiring building trust and creating variable or negotiated prices based on the scope of work. (For client sales, it’s very useful to leverage a CRM.)

Retention and Success Metrics

Retention is one of the most important metrics for any business as acquiring a new customer can be between 5 and 25 times more expensive than keeping an existing one. Retention rates are different in client- and customer-focused businesses.

Client success metrics are determined by contract renewals, the length of partnerships, and the volume of referrals. Your goal should be to maximize the lifetime value (LTV) of a relationship, which is usually much higher than a customer’s LTV. Customer success is marked by repeat purchases, low churn rate, and maximizing the average order value (AOV) per transaction.