Identifying your customer is fairly straightforward in some businesses.

Let’s say you own a restaurant. Your guests would be your customer. You might also include vendors and employees as customers under part two of the definition. But there’s no confusion that guests are your ultimate customer.

It gets more complicated in other organizations.

The nonprofit Goodwill has three major customers. The people who donate clothing and other items, the people who shop in their thrift stores, and the people who receive jobs and job training.

Organizations like this have to decide how to manage the needs of their different customers. This is especially true when there's an apparent conflict or limited resources. 

There could be trouble if you choose poorly.

Who is a customer?

The definition of a customer is broad. Here’s the traditional definition from Dictionary.com:

Customer (noun)

1. a person who purchases goods or services from another.

2. Informal. a person one has to deal with.

I prefer an even broader definition:

A customer is anyone you serve.

This could represent a wide range of people you encounter in your job.

• People who purchases goods or services from your company.

• Coworkers who depend on you to do their jobs.

• Vendors who rely on you to serve your customers.

For example, imagine you work in customer service department for a furniture store. The people who buy furniture are clearly customers. Some customers elect to pick up their purchases from your company’s warehouse, which makes the warehouse employees your customer since they depend on you to properly inform customers on pickup procedures and availability. Other customers opt to have their furniture delivered, which makes the third-party delivery company your customers as well since they depend on you to accurately schedule deliveries and set reasonable expectations on the service they provide.

Franchisees are forgotten customers

Companies in fast food, retail, and other industries that sell franchises have a customer who is often overlooked, but extremely important: the franchise owner.

McDonald’s has long had a reputation for poor customer service. I once wrote a post detailing how their problems boil down to three areas:

• Lack of focus

• Lack of quality

• Lack of control

It’s that last part that’s starting to bite them.

Franchisees operate over 90 percent of McDonald’s locations. That means most of McDonald’s customers aren’t actually served by a McDonald’s employee. 

The franchisees aren’t too happy. A recent article on Slate described McDonald’s relationship with its franchise owners as “the bleakest it’s been.”

Rent has increased an average of 26 percent over the past five years. Meanwhile, year over year same store sales are down 4.2 percent.

Now McDonald’s wants its franchise owners to invest an estimated $120,000 to $160,000 in it’s new Create Your Taste initiative. The Create Your Taste program is designed to allow people to customize the burger they order using an interactive kiosk.

Many franchise owners resent the additional investment. It will take a significant chunk out of short-term profits while making operations even more complicated.

McDonald’s can’t turn around it’s fortunes unless it improves it’s relationship with franchisees.

 

Customer definitions are tricky

Many industries have complicated customer relationships.

Hotels are a good example. In a typical hotel, one company owns the building, another company owns the brand, and a third company manages the hotel. 

Let’s say the property is getting a bit old and needs some upgrades. The brand might dictate the type of upgrades that need to be made. The building owner has to find a way to pay for the upgrades. And the management company has to keep guests happy until they all can sort things out. 

That’s are a lot of interests to manage.

Insurance is another example. Many companies have independent brokers who sell and service their policies. They must keep these brokers happy to ensure policy holders receive great service. At the same time, insurance companies must keep tabs on their brokers to ensure they’re representing the company fairly and accurately.

It’s enough to give you a headache if you aren’t paying careful attention.

 

Take Action

Here are two exercises to help you identify your customers, and improve your customer focus. The first is to make a list of the groups of people you serve, and the service you provide to each one.

This short training video will walk you through the process.

The second exercise is to create a customer-focused mission or vision. This could be your organization’s mission or vision statement, or a separate statement that clearly identifies your primary customer and the service you provide.

Take a look at Goodwill’s mission as an example:

Goodwill works to enhance the dignity and quality of life of individuals and families by strengthening communities, eliminating barriers to opportunity, and helping people in need reach their full potential through learning and the power of work.

Donors are important customer, but only to the extent that they help fulfill the mission. If a donation isn’t ultimately helping people reach their full potential through learning and the power of work, Goodwill doesn’t want it.

Let’s look at State Farm’s mission for a for-profit example:

The State Farm mission is to help people manage the risks of everyday life, recover from the unexpected, and realize their dreams.

I can tell you from experience that State Farm and their independent agents are aligned around the same mission. In 2001, I traveled to Houston to help my in-laws recover from a flood. My father-in-law's truck had been completely submerged in water and was totaled. His State Farm agent showed up the next day with a check in hand so my father-in-law could buy a replacement.

It required coordination between State Farm and it’s agents to make the same thing happen for hundreds if not thousands of customers who were similarly affected.

Meanwhile, people in the neighborhood who had other insurance companies waited days for their insurance company to lend a hand.