Unpacking Customers and Users: the new typology
Updated: Jul 17, 2020
Many companies struggle with clearly identifying the real customers for their products and services. Sometimes there is an undue focus on the product or service; more often the emphasis is on the overall market and estimates of its commercial value based on bullish estimates produced by market research or consulting companies.
Tackling this challenge requires a more precise way of defining customers and their behaviour. The Triple Chasm Model has developed a more explicit data-driven customer typology which extends conventional thinking to define four different types of customers, some of which are already familiar to us:
Consumers are individuals who buy and use a product in different ways; their buying behaviour is shaped by behaviour, psychographics, and socio-demographics (with the balance between these changing as sustainability issues become more important for consumers)
Business Customers are firms or businesses who buy and use products either for use internally, or to integrate into their offerings to other customers.
Governments and other related organisations typically buy products for use in their own activities. Their buying behaviour can be characterised by a large disconnect between those making a buying decision and the actual users of the product or service.
Members of Knowledge or Affinity-centric Groups or Communities represent a new and important type of customer, particularly given the impact of digital technologies. Knowledge or affinity-based customers may act as individuals but their behaviour is shaped by a group affinity or a need to access specific knowledge (for example a clinician in a hospital is a knowledge-based user or customer; members of a tennis club or music fans are good examples of affinity-based customers)
The difference between Customers & Users
There is still not enough attention paid to the difference between Customers and Users. Customers are typically those who pay for a product or service, based on some kind of business model; they typically engage in assessing the commercial value of a product, paying for it and monitoring its value in use, even though they may not actually be using it. Users, in contrast, may not be involved in assessing, paying for, and monitoring the value of a product, but will always be involved in actually using the product. In most cases the number of users will typically be a multiple of the number of customers. This led us to explicitly define the User-Customer Ratio, N-ucr, which is calculated by dividing the total number of users by the total number of customers.
User-Customer Ratios, N-ucr
The user-customer ratio, N-ucr, can vary between 1 and much larger numbers based on the type of customer and the market space. For consumers, N-ucr may be in the range of 1-10 (for example the head of a household may purchase a consumer electronics product which is then used by others in the family). For Business customers, this ratio may be in the range of 100-1000; for Government customers, this ratio can be very large (for example the purchase of millions of doses of a vaccine)’ for knowledge and affinity workers, the ratio can have a very wide range.
In all cases, understanding the difference between the numbers of customers and users is critical when formulating strategic and tactical priorities.