Clients or Customers? The distinction makes a difference

Clients or Customers? The distinction makes a difference
We’re all engaged in commercial relationships; sometimes we buy, sometimes we sell. But what roles do the buyers and sellers play? At a host of conference and briefings over the last several weeks, I’ve been struck by the number of times that software and hardware providers (most often “vendors” in analyst-speak) have referred to their buyers as “customers” rather than “clients.” This thought, neither unique nor new (and perhaps pedantic), takes on particular relevance as 1) the bank technology space is being reshaped by a host of new forces, and 2) technology providers enter into new sorts of relationships with their bank buyers. In its purest form, the customer – vendor relationship is transactional, impersonal and zero-sum. It’s built on a series of one-off, individually negotiated exchanges of value. The seller doesn’t take account of the individual buyer’s needs, and could indeed be selling to anyone. And because there’s little give and take, except on price, one party’s loss is the other’s gain – the definition of zero-sum. Selling shrink-wrapped software in the past, or apps today, exemplifies a customer – vendor relationship. At the other end of the spectrum is the client – advisor association. It’s relationship-based, contextual and positive sum. The seller is not in this game to make a single high-margin sale, but instead wants to build a lasting rapport that will generate an on-going stream of revenue in return for a fair provision of value. The advisor develops an understanding of the client’s needs and provides tailored advice or products suited to the situation; there’s no such thing as one size fits all. And finally, when the client wins, the adviser wins; they both do well together. Strategy consulting and legal advice are classic examples of client-advisor relationships. Celent serves two main sorts of clients: financial institutions and technology providers. Depending on what they’re selling, they fall somewhere on the spectrum between the two pure-plays I’ve described. I’d suggest, though, that both types of firms can do a better job serving their “customers” if they start thinking of them as “clients” instead.
Dan Latimore About Dan Latimore

Daniel W. Latimore, CFA, is the Senior Vice President of Celent’s Banking practice and is based in the firm’s Boston office. With a wide range of experience in industry and as a consultant, he brings examples from outside financial services to help banks improve their customer relationships, with a particular emphasis on the importance of technology and culture.

Dan's coverage areas include the banking ecosystem, digital and omnichannel banking, and innovation. He has a passionate interest in behavioral economics and exploring why consumers and humans make the decisions they make, and what the implications are for banks.

Dan has been widely quoted in the press, including the Wall Street Journal, American Banker, Boston Globe, CNBC, and CNBC Europe. He is also a frequent speaker at industry conferences and client gatherings, having addressed audiences ranging from intimate meetings with CEOs and central banks to keynote conference speeches in more than a dozen countries.

Prior to Celent, Dan led research groups at Deloitte and IBM, worked in industry at Merrill Lynch (where he lived in New York, Tokyo and London) and Liberty Mutual, and was a consultant at McKinsey & Co.

Dan received a Masters in Public Administration from the John F. Kennedy School of Government at Harvard, and an undergraduate degree from Dartmouth College. He holds the Chartered Financial Analyst designation from the CFA institute.


  1. I agree with your distinction between customers and clients. Ideally, banks bring in new customers and create long term clients. Using the right terminology helps front line employees understand the importance of establishing value for the client, leading to an overall better customer service experience. It’s a small detail that makes a huge difference.

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