7 Jun
min to read

External and Internal Customers: Mastering the Service Mindset

Process Efficiency
Customer Experience
Table of contents

We all know that customer satisfaction is key. No secrets here, right?

Recent McKinsey research shows that more than 160 industry leaders and experts prioritize customer service as an instrument for success and make it a strategic focus for their businesses.

The spotlight often shines on external customers, the audience, whose applause or critique can make or break a performance. In fact, 83% of consumers cite good customer service as the most important factor determining company loyalty.

But what about the often-overlooked internal customers—company employees, owners, or representatives? They are often the unsung heroes, the "internal customers" or employees, who not only perform but also consume the product backstage.

In reality, both these groups of customers equally matter. It's time to shift the focus and recognize the importance of balancing attention between external and internal customers.

By understanding the crucial differences and intersections between these two types, you can foster stronger relationships, enhance customer experiences and service quality, and ultimately drive customer loyalty.

Without further ado, let's begin!

Differences Between External vs. Internal Customers

First of all, let’s delve deeper into their distinct roles and functions, shedding light on their unique characteristics and requirements. It will help to dissect the complexity and unveil the nuanced dynamics of external versus internal customers.

Definition: What Each Customer Category Represents

External customers stand as the most familiar and iconic face of a business. These end-users or clients, who actively engage with a company's products or services, often hold the company's reputation and success in their hands. Their experience doesn't just influence public perception; it often becomes the decisive factor that charts the company's path to triumph.

Internal customers, whether they are individual employees or entire departments within an organization, consume the efforts of their colleagues, integrating these contributions into their own work. Their role is just as pivotal, forming a vital cog in the machinery of the organization, emphasizing that their significance is in no way lesser than that of their external counterparts.

Imagine a company

as a crowded town. External customers are like tourists who visit the town. They buy souvenirs or enjoy experiences at local attractions. The money they spend helps the town grow and prosper. Internal customers, on the other hand, are like the townsfolk. They live and work there, keeping the town running smoothly day after day. They are the backbone that keeps the town thriving.

Main Functions in a Business

Richard Branson, founder of Virgin Group, aptly stated, "Internal customer service is just as important as external customer service. If you don't have happy employees, you don't have happy customers."

The functions and roles of external customers are often on the surface—they drive the core revenue for a business. Their unbiased feedback based on their experiences with the company's products or services helps shape product development and customer service strategies.

However, internal customers are also pivotal figures. They provide constructive feedback based on their day-to-day experiences and interactions. Their feedback is invaluable for improving internal processes, enhancing collaboration, and fostering a positive work culture. They also contribute to product development, service delivery, and overall operational efficiency. Just to prove the fact with the statistics—disengaged employees cost companies $3,400 for every $10,000 they make each year.

And, what’s even more important, they shape the output that your external customers consume.

Essential Components of Customer Satisfaction

Now, let’s review the building blocks of high customer satisfaction for both groups.

Building Blocks of External Customer Satisfaction

  1. High product quality: High service quality to external customers manifests in customer satisfaction, which in turn drives customer loyalty.
  2. High service quality: The quality of interactions between the company and the customer is the second core component. Clear, consistent, and respectful communication can not only resolve issues but also contribute to an improved customer experience, promoting customer retention and loyalty.
  3. Competitive Pricing: Think of this as the price of the meal at the restaurant. You expect it to match the quality of the food and the service you receive. If the price is too high for what's offered, you might feel unsatisfied and choose a different restaurant next time. Similarly, customers want a product or service that's worth the cost, and competitive pricing can be a key driver of customer satisfaction.
  4. Personalization: Imagine you're a regular at the restaurant, and the staff remembers your favorite dish or how you like your coffee. This personalized customer service makes you feel special and appreciated, increasing your satisfaction. Similarly, personalization in services, like remembering customer preferences or providing tailored recommendations, can significantly enhance customer satisfaction.
  5. Proactive Customer Service: Think of it as if the restaurant staff notices that your glass is nearly empty or if they see you looking around, perhaps searching for something. They don't wait for you to ask for a refill or for assistance—they approach you and offer it proactively. Such a proactive approach can greatly enhance customer satisfaction, as it demonstrates the company's commitment to its customers' happiness.
  6. After-Sales Support: Imagine you bought a fancy gadget from the restaurant (like a coffee machine), but you're struggling to use it at home. If the restaurant offers assistance or has a helpline you can call for support, it would greatly improve your post-purchase experience. In the same vein, providing support after a sale, such as a customer service or warranty, is crucial for maintaining high customer satisfaction.

  1. Timely and effective delivery: This resembles a stagehand ensuring props are in their right place at the right time, so the actors can perform seamlessly. Departments within a company need to deliver their work efficiently to allow others to do their jobs effectively. If props aren't ready when actors need them, the performance can't go on smoothly.
  2. Clear communication: This is similar to the director giving clear instructions to the crew and cast, making sure everyone knows their role. In a company, clear communication between departments is essential to avoid misunderstandings and make sure everyone's on the same page. If the director's instructions aren't clear, the crew and cast might get confused, disrupting the performance.
  3. Mutual respect and support: It's like the camaraderie and respect between the cast and crew. Everyone's role is important for the show to go on, and acknowledging this promotes a positive work environment. Similarly, every department in a company plays a crucial role in its success, and appreciating this helps foster a more collaborative and productive work culture. If the crew doesn't respect the cast (or vice versa), tensions might rise, hindering the performance.

Bottom Line: Embracing Service Mindset

So, remember—the true strength of a company springs from its ability to effectively serve its customers. No matter if these customers are external or internal, understanding their needs and desires and tirelessly working to meet them is the magic formula for long-lasting success and sustainability.

And the secret sauce that propels some organizations to the top lies in having a service mindset. This means eagerly looking out for and reacting to the needs of customers, both inside and outside the organization. This approach doesn't just boost efficiency and productivity. It also creates an environment where respect and collaboration flourish, setting your business on an express elevator to success.


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