Some people use the terms Customer and Stakeholder interchangeably. But I would like to argue that they are different.
So for today’s #wisdomwednesdays I will simply draw the line and differentiate the 2.
Customer
A Customer is simply the recipient of the output of your process, whether that’s a product, or a service.
Stakeholder
A Stakeholder, on the other hand, does not necessarily have to be a recipient of your goods or services.
However, a Stakeholder does have a vested interest in how well your process performs.
A Stakeholder, as the name implies, holds a stake in your process.
Let me give you some specific examples.
Examples of Customers
There are 2 types:
- Internal Customers
- External Customers
Internal Customers are your process partners. They are usually in the same company or line of business as you, but are your downstream processes or department.
You yourself are an Internal Customer of the process or department upstream of yours.
External Customers are the clients who purchase your company’s products or services.
Examples of Stakeholders
As with Customers, there are also 2 types of Stakeholders:
- Internal Stakeholders
- External Stakeholders
Examples of Internal Stakeholders are your Employees, the Management and Leadership Team, and the Owners of the Business.
Examples of External Stakeholders are the Government, Regulators, Investors and Shareholders, Suppliers and Vendors.
What about those who are both Customer and Stakeholder?
There are some instances wherein the lines are blurred. Still, it’s important to make a distinction between a Customer and a Stakeholder.
For example, Internal Customers are also Employees. Therefore they are both Stakeholder and Customer at the same time. However, as an Internal Customer, their concern is the accuracy and timeliness of the output of your process. But as an Internal Stakeholder, their stake in your business is their job security and safety.
Same line of thinking goes for Suppliers and Vendors, like if you outsource work to them.
Another example would be employees, management, and leadership who also own stocks of the company. In this scenario, you can be an Internal Customer (I need the output of my upstream process to match my process’ input requirements), Internal Stakeholder (stake in job security and safety), and External Stakeholder (stake in the company performing well such that I’ll be getting return on investment) at the same time. It’s worth noting that your mindset is different for each.
Ending note
Customers, specifically External Customers, are more powerful than Stakeholders.
This is because these Customers have the power to fire you, your boss, and everyone in your company, including the CEO and all Stakeholders, simply by taking their business elsewhere.
So take good care of your employees, because they will, in return, take good care of your customers.
Once you take care of your customers and your employees, your business process will thrive, so long as you keep improving and innovating, and your stakeholders will be happy.
I hope you learned something today.
If you want to learn more, download a copy of my book for FREE (for a limited time only) – The Business Optimization Blueprint, and learn how you can improve your business process and take it to the next level.