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Get insights into the main difference between Client vs Customer in the Software as a Service (SaaS) Business and why it is important.
Often, ‘client’ and ‘customer’ are words that are used interchangeably. If you are guilty of using these two words identically, you are not alone. In fact, the difference between client and customer has mystified many in the business world, particularly in the SaaS industry. However, there are distinct differences between clients and customers.
You may want to shift your business strategy once you have finished reading this article to account for these differences, but we guarantee you’ll at least learn a great deal about the definitions and why they matter. We’re going to explore the client vs. customer difference and why it is important, but first, we will define them separately. Here are the sub-topics we will be exploring today.
Upon completing this article, you will be able to understand the difference between client vs. customer and set your company up to increase revenue and reduce customer churn.
First and foremost, you should understand that if you have a SaaS business, anyone that buys a subscription to your product is customer. This goes for every tier you offer, up to and including Enterprise tiers.
A customer will choose the kind of service they want to pay for right away. They want an immediate exchange of value for their money. All SaaS clients are customers, but not all SaaS customers are clients.
Customers pay money for precisely the SaaS product they need in order to immediately gain value from it. They may get what they were looking for and leave after a trial period or perhaps a billing cycle or two. Sometimes, customers’ needs were short-lived so they will no longer find using your product advantageous.
SaaS businesses can have customers. These are people who decide on which one of your services and subscription levels they want, based on what they need, how much they are willing to pay, and what value they will receive.
There are no complicated agreements or contracts, and all services are generally standardized. The only difference lies in the subscription level chosen. Everyone who pays for a particular subscription level to your product receives the same service, functions, and features. There is no customizable toolset design for each individual customer.
You always want to frame everything you do in terms of having customers. This is why you focus on customer success, customer service, and customer support. You ultimately want to satisfy the needs of your customers. This will require you to keep track of various metrics and indicators, to ensure you minimize customer churn and maximize customer retention.
Just because those who buy your product are considered customers doesn’t mean they cannot receive personalized service in some way. For example, you can provide them with onboarding assistance, as well as helpful customer support, no matter what.
This personal touch blurs the line between customer and client. However, as long as they are purchasing a subscription that offers the same features to everyone, you have customers.
A client is a more loyal customer. Whereas a customer essentially purchased from you once and never returned, a client will maintain an ongoing relationship with you and your product. A client is a customer with whom you build a relationship.
This is not to say that customers don’t feel like they have any sort of relationship with a SaaS product or company. However, by definition, the relationship will be short-lived, if anything.
A client, on the other hand, will invest in your product for the long-term. They want to develop a personalized and long-term connection with your product and your company, to gain value for the long run. A client may remain with you for years, while a customer may only stick around for a month.
Furthermore, a client is someone who does not focus on the immediate exchange of money for services. They are more interested in the big picture and how your product can help them continuously achieve success for the foreseeable future.
With money left in the background, the relationship feels more like a partnership, which can increase the satisfaction and dedication of both the client and your business.
Within the SaaS industry, the client vs customer dichotomy is key to your business strategy. Since clients will pay for your product for a much longer time, these relationships will usually require more time and attention, which means more resources dedicated to customer success.
Clients will be your most loyal customers, so it makes sense that you should strive for maximum customer retention of your clients. Customer retention usually costs five times less than customer acquisition, which emphasizes just how important it is to provide high personalization and quality service and support to your clients.
You may even decide to provide more tailored support to your clients. This is especially true for “Enterprise,” or top-tier package subscribers.
These clients will not only get cloud-hosted subscription software but will also receive more attention and dedication to their needs, for them to achieve the greatest success possible.
So, now that you understand why it is important, let’s take a closer look at the similarities and the key differences between customers and clients so you can have a greater appreciation for each.
Customers and clients both purchase from you, regardless of the length of their relationship and intent to stick with you. Both require and deserve your attention with any issues that arise and the best customer service you can offer. Both are valuable to the success of your business, but the differences between them may explain the value of your long-term success.
The good news is that you do have some control over who is ultimately considered a customer that comes and goes and those that continue with you and transition to clients. By proactively investing in the success of your customer, you are increasing the likelihood that they will renew or upgrade their services with you.
Customer success is a tried-and-true methodology that allows organizations to focus on long-term customer relationships, which, of course, defines them as your clients. The key is the ability of customer success-focused organizations to proactively determine solutions to any potential issues, which will reduce churn and increase upsell opportunities.
“You can focus on adoption, retention, expansion, or advocacy; or you can focus on the customers’ Desired Outcome and get all of those things.”-Lincoln Murphy, Customer Success Author
Beyond customer service or customer support, which are reactive approaches to dealing with customers, the proactive approach of customer success creates a strong bond between your product and your brand and your client increasing both retention and profits.
The following graphics show the popularity and usage of each term and the frequency of use in online and printed media.
The client vs. customer enigma is hopefully clearing up for you now. At the end of the day, as long as you are providing software-as-a-service with a multi-tiered subscription model, you have customers.
When you have dedicated customers, who stay with you for years and likely purchase the Enterprise Level or top-tier of your offerings, your customers become clients. At this point, you can offer them their own customer success manager, to ensure you can keep your most loyal customers retained for as long as possible. 29
When considering the client vs customer difference, you can improve your business strategy, focusing your efforts on keeping your highest value customers for longer, ultimately helping you and your customer achieve greater success and increase your revenues.
Anshi has over 12 years of experience in demand generation, digital marketing, and managing global teams. In her prior role as head of marketing operations for a high growth US healthcare tech organization she transformed marketing from cost to revenue center.
Published 17 Jun 2020, Updated 24 Aug 2022
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