A customer (sometimes known as a client, buyer, or purchaser) is the recipient of a good, service, product, or idea, obtained from a seller, vendor, or supplier for a monetary or other valuable consideration.

Customers are generally categorized into two types: An intermediate customer or trade customer (more informally: “the trade”) who is a dealer that purchases goods for re-sale. An ultimate customer who does not in turn re-sell the things bought but either passes them to the consumer or actually is the consumer.

A customer may or may not also be a consumer, but the two notions are distinct, even though the terms are commonly confused. A customer purchases goods; a consumer uses them. An ultimate customer may be a consumer as well, but just as equally may have purchased items for someone else to consume.

An intermediate customer is not a consumer at all. The situation is somewhat complicated in that the ultimate customer of so-called industrial goods and services (who are entities such as government bodies, manufacturers, and educational and medical institutions) either use up the goods and services that they buy, or incorporate them into other finished products, and so are technically consumers, too.

However, they are rarely called that but are rather called industrial customers or business-to-business customers. Similarly, customers who buy services rather than goods are rarely called consumers. Six Sigma doctrine places (active) customers in opposition to two other classes of people: not-customers and non-customers.

Whilst customers have actively dealt with a business within a particular recent period that depends on the product sold, not-customers are either past customers who are no longer customers or potential customers who choose to do business with the competition, and non-customers are people who are active in a different market segment entirely.

Geoff Tennant, a Six Sigma consultant from the United Kingdom, uses the following analogy to explain the difference: A supermarket’s customer is the person buying milk at that supermarket; a not-customer is buying milk from a competing supermarket, whereas a non-customer doesn’t buy milk from supermarkets at all but rather “has milk delivered to the door in the traditional British way”. Tennant also categorizes customers in another way, which is employed in the field of marketing.

Whilst the intermediate/ultimate categorization is used by marketers, market regulation, and economists, in the world of customer service customers are categorized more often into two classes: An external customer of an organization is a customer who is not directly connected to that organization.

An internal customer is a customer who is directly connected to an organization and is usually (but not necessarily) internal to the organization. Internal customers are usually stakeholders, employees, or shareholders, but the definition also encompasses creditors and external regulators. The notion of an internal customer — before the introduction of which external customers were, simply, customers — was popularized by quality management writer Joseph M. Juran, who introduced it in the fourth edition of his Handbook.

It has since gained wide acceptance in the literature on total quality management and service marketing; and the customer satisfaction of internal customers is nowadays recognized by many organizations as a precursor to, and prerequisite for, external customer satisfaction, with authors such as arguing that service organizations that design products for internal customer satisfaction are better able to satisfy the needs of external customers.

Research on the theory and practice of managing the internal customer continues today in a variety of service sector industries.