Internal customers are the recipients of products or services within the company that provides them. For example, the Human Resources department of the firm has all employees of the firm as their customers. They provide services like healthcare benefits options, and a retirement plan to the employees. The Human Resources department usually does not have much interaction with the external customers. External customers are the recipients of products or services outside of the company. They are typically the commercial recipients who pay for the product or service.

It is important to satisfy both internal and external customers, as they provide different essential elements to a business organization. Internal customers provide the support framework to produce the external product or service. Keeping internal customers satisfied and working to the best of their ability contributes to the efficiency of output. External customers provide the fiduciary framework for the company’s production. Without adequate financing, the employees may not be able to get or maintain the tools they need to support and produce the company’s product line.