What are internal customers and external customers?

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Main Difference

The main difference between Internal Customers and External Customers is that Internal Customers are the customers that belong to the company or a part of a company, whereas External Customers do not have any relation with the company.

Internal Customers vs. External Customers

A customer is a person that receives goods, products, services or ideas, etc. from a supplier, vendor, or seller via an exchange of money or other valuable items. A customer may be of two types, i.e., internal customer or external customer. An internal customer is a customer that has a direct relation or contact with the company or organization, whereas, an external customer is a customer that does not have any direct contact with the company.

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Before the introduction of the term internal customers, external customers were simple customers. Later, in 1988, Joseph M. Juran, which was a quality management writer, presented this concept in the fourth edition of his Quality Control Handbook.

Internal customers have more information about the product due to their direct contact with the company as compared to the external customer. Internal customers get the product at a low price from the company. On the other hand, external customers get these products at high prices. So, internal customers gain profit by the sale of the products of any organization, whereas external customers do not have any profit.

Internal customers may act as a middle man between the company and the consumer while; the external customer may itself be the consumer or the end-user. So, It means that an internal customer does not buy the product for its own use on the flip side; an external consumer buys the items for its own use.

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An increase in the number of internal customers does not have any considerable effects on the profit gain by the company. On the other hand, an increase in the number of external customers increases the profit of the company or the organization.

Internal customers bargain with the company to get the items or services at a reasonable price because they know very well about the real manufacturing cost. So, they bargain with the company to obtain the product at a reasonable price whereas, an external customer is not in contact with the company, so he is unable to bargain.

Comparison Chart

What are Internal Customers?

An internal customer is a person that is a part of the company or has direct contact with the company and purchases products from it. They may be the employ of the company such as managers etc. They may not be directly involved in the company but have a link with it and many other organizations to sale the products of the company.

These internal customers play an important role in delivering products to end-users. Mostly stakeholders, shareholders, and employees, etc. act as internal customers, but they may also be external regulators.

Moreover, an internal customer has complete details about the product due to their direct relationship with the company. They bargain with the company to get the items or services at a reasonable price because they know very well about the real manufacturing cost of the product. So, they bargain with the company to obtain the product at a reasonable price. The company provides them with products and services etc. in cheap rates.

Internal customers act as a middleman between the company and the product. They get the products from the company at a low price and provide them to the end-user or the external consumers at a high price than the company and gain profit.

Examples

• The wait staff and culinary staff in a restaurant.
• The shift team, their managers, and the other shift supervisors are considered as internal customers by the retail shift supervisors.

What are External Customers?

An external customer is a type of customer that uses and pays for the items, products, or services that a company or an organization offers. He does not have any contact with the company or the organization and acts as the end-user or consumer of a product.

Actually, an external customer is the main target of a company or an organization. A company or organization make product or services in order to fulfill the demands of the external customer according to their need. They buy products in exchange for money or other valuable items and provide profit to the company. The profit of the company increases with an increase in the number of external customers.

The external customer does not know about the pros and cons of the product because they are not connected to the company. They even do not know the manufacturing cost of the product, so they are unable to bargain and get the products at high rates. They pay the maximum price for the product and are unaware of the profit got by the company. They are the end-users of the product and do not gain any profit from their sales.

Examples

• Dinner in a restaurant
• Guests in a hotel
• Travelers buying tickets from any airlines
• Buying groceries from a supermarket
• People buying clothes from a boutique

Key Differences

1. A person that is a part of the company or has a direct contact with the company and purchases products from it is known as an internal customer whereas, a customer that uses and pays for the items, products or services that a company or an organization offers is known as an external customer.
2. An internal customer has a direct relation or contact with the company or organization while an external customer is a customer that does not have any direct contact with the organization.
3. Internal customers have more information about the product due to their direct contact with the company, on the other hand, an external customer has less detail about the product due to the absence of any relationship with the company.
4. Internal customers get the product at a low price from the company. Conversely, an external customer gets the products at high prices.
5. Internal customers may gain profit by the sale of the products of any organization on the flip side; external customers do not have any profit.
6. An internal customer does not buy the product for its own use. On the other side, an external consumer buys the items for its own use.
7. Internal customers may act as a middle man between the company and the consumer to but products. On the flip side, an external customer may itself be the consumer or the end-user.
8. Internal customers bargain with the company to get the items or services at a reasonable price because they know very well about the real manufacturing cost. So, they bargain with the company to obtain the product at a reasonable price whereas, an external customer is not in direct contact with the company, so he is unable to bargain.
9. An increase in the number of internal customers does not have any considerable effects on the profit gain by the company. On the other hand, an increase in the number of external customers increases the profit of the company or the organization.
10. The wait staff and culinary staff in a restaurant is an example of an internal customer. On the flip side, a dinner in a restaurant or guests in a hotel, etc. are examples of the external customer.

Conclusion

The above discussion summarizes that an internal customer is a part of a company or an organization or has a link with it. It acts as a middle man between the company and the consumer and gets profit. On the other side, there is no direct link between the company and the external consumer, and it buys products for its personal use.