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Who is your customer? Why customers are different to consumers

January 16, 2014 Articles, Customer Service 1 Comment

To any savvy business manager, that may seem a simple or even silly question.  “Of course I know who my customers are, I wouldn’t be in business otherwise” might be the natural response.  However, one organisation who got this drastically (and what could have been tragically) wrong, and which almost crippled an entire country (well at least for a couple of weeks), was the US Federal Aviation Administration.

It was reported in the US press that  ”When a federal agency refers to the industry it oversees as its ‘customers’ a boundary has been dangerously crossed.  As representative James Oberstar, the chairman of the House Transportation and Infrastructure Committee rightly said, ‘The FAA’s only customer is the air-travelling public.”

This press report highlights two important issues.  The reporter was right when saying “a boundary has been dangerously crossed”.  James Oberstar was wrong when saying “The FAA’s only customer is the air-travelling public.”

Before looking further at the FAA and it’s “boundary” and “customer” issues, let’s start at the beginning.  As any experienced Organisation Development person will tell you, getting the answer to “Who is my customer?” correct is the foundation stone for any successful business.

Take two examples.

In the first, the manufacturers of popular brand name soap powders such as Persil (which by the way has been around since 1903 – now, that’s success!), have clearly identified you and I as their customer.  We are also the consumer.  Although they sell to shops and chain stores, all their marketing is aimed at getting you and I, their customers, to select their product when we enter the store, not someone else’s.

The second case is the manufacturer of high quality furniture.  Unlike soap powder where most people (well at least those who do their own washing) can name three or four brands, you and I would be hard pressed to name one brand of high quality furniture.  In this case we are still the consumer, but we are not the manufacturer’s customer – the furniture store is their customer.  The manufacturer’s sole aim is to market to the high-end retail stores to stock their furniture and not someone else’s.  Until we see and feel the furniture (and possibly not even then) do we know what brand we are about to consume.

How does the correct identification of “customers” relate to the FAA’s problems?  Perhaps similar to the FAA, in the 1980s the Australian Taxation Office (inland revenue) was faced with mounting criticism over the service it was providing to the tax paying public.  After much soul searching (and probably the services of a good OD consultant), they decided their only customer was Treasury (the government).  But they still had their poor service image to fix.  Cleverly, they decided to call the tax paying public their “clients”.  The critical point here was that they kept clearly in mind that the one and only true customer they had, whose needs, expectations and requirements must be met at all times, was Treasury.

If the FAA had identified that the Government (through the appropriate Senate Committee) was their one and only customer, they would not be in the situation they are today.

With the deregulation of the airline industry in 1978, someone probably well intentioned, but customer-naïve within the FAA, decided that they needed to give better service to the people they deal with most regularly, the airlines.  And that service should be “customer service”.  And so by default, the airlines became their “customers”.  Now we all know that “customers are always right”.  When an organisation starts to think erroneously of a key stakeholder as a customer, their entire mode of operation changes.  No longer do they meet the real needs, expectations and requirements of their real customer.

You and I are customers.  Not of the FAA, but of the airlines.  The FAA has only one customer – the government.  It is the FAA’s sole responsibility to ensure that it is meeting all of its customer’s very high standards.  As customers of the airlines and consumers of the product, you and I put our faith in the fact that the airlines have been regulated by an organisation that is at all times meeting its customers needs, expectations and requirements.

And that’s why it is so important to be clear about how any business handles the perennial statement “The customer is always right”.  First, one has to know, “Who is the customer?”


About the Author -

Bob Selden is the author of the best-selling “What To Do When You Become The Boss” – a self-help book for new managers – see details at He’s also coached at one of the world’s premier business schools, the Institute for Management Development in Lausanne, Switzerland and regularly advises managers around the globe on their current challenges. Please add your comments to this article or contact Bob via if you would like some free advice on your current management challenge.

One comment

  1. Dennis Pratt on said:

    An interesting analysis of the FAA’s problems, Bob, demonstrating the critical need to correctly identify the Customer, who may or may not be the consumer, or may or may not be the client, etc. It’s not always obvious, but making the right decision can be the difference between success and disaster for any organisation.

    A hot one at the moment is ‘our’ ABC. “Who is our Customer” is a relatively easy question for a commercial TV or radio station to answer – the Customer is the advertiser. It’s not the audience – the audience is a product provided to the advertiser. That product is measured for its quantity and quality by ratings, and the advertiser Customer is charged a price determined by those ratings.

    But what about ‘our’ ABC? I believe that as the national broadcaster, the nation is the ABC’s Customer. It’s not the audience and it’s not the government (even though the government funds the ABC). It’s the nation as a whole and the ABC’s success is measured by national surveys of its value and the trust in which it is held by the population. Something like 80% say that the ABC is valuable and trusted, although many of that 80% probably rarely if ever watch, listen or log on to the ABC. That’s why I reckon the Customer is the nation rather than the audience or any other body.

    So does the ABC have a product like Channel 7? “Who is our Customer?” is a critical first question, but “what do we provide that Customer?” is an almost as critical second question. “What we provide” can be a product (as with Unilever’s Persil), or a service which is a here-and-now interaction between the organisation and its Customer, or it can be a complex package which is often intangible (such as the feeling of security provided by a fire insurance policy, where we hope we won’t ever have to use the service or claim the product).

    I reckon that Our ABC provides the nation with a complex package, but as an outsider I don’t really know what it is. I just hope that somebody inside the ABC has thought it through and that chief executive Mark Scott does know what it is. (His grandfather was WD Scott, one of Australia’s pioneer management consultants, so he should be genetically equipped for answering difficult strategic questions.)

    Anyhow. whatever that complex package is that the ABC provides, most of us feel pretty good about it and want the ABC to keep doing it. (Maybe George Brandis doesn’t, but lots of others do.)

    As with the FAA example, whatever the real answers, they aren’t always the obvious ones – not the answer to “who is our Customer?” and not the answer to “what do we provide to that Customer?” But they are questions that demand a lot of thinking through and a clearly defined answer.

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