Internal Customer: Misgivings about a Brilliant Idea in Customer Experience Thinking

Vikas Joshi
September 27, 2017

Unless you are a company of one, your firm has at least a few internal customers. Quite simply, internal customers are people in your company to whom you provide some kind of service. In a restaurant, the chef and the culinary staff might think of the waiters as their internal customers, who in turn serve patrons, the real customers. In a software services company, the HR department may consider project implementation teams to be their customers, who in turn may think of solution architects as their customers, and

so forth up to the real customer.

As the idea of the internal customer has gained currency in modern customer experience thinking, the discourse around its benefits has grown louder. Proponents of the idea of internal customers argue that it can transform culture, minimize friction, and enhance operational efficiency.

When a company’s travel desk thinks of every traveling employee as a customer, it changes the cultural underpinnings of their interactions: The courtesy, service-orientation, and professionalism implicit in such relationship is palpable in those interactions.

When everyone agrees that salespeople and account managers are ‘customers’ of the services staff, there is no room for friction. Sales people can rest assured that their important accounts will get due service attention.

And of course, when The IT people treat finance execs as their customers, all those budget reports get churned out at lightning speed, right?

I’m not so sure. Although I find the idea of internal customer empowering, maybe I should lay out a few caveats. Call them my misgivings about a brilliant idea.

Shouldn’t the Entire Organization Focus on One Customer?

Customer-centric organizations tweak their policies, processes, and structures to meet the needs of their primary customer. An airline can either orient itself to meet the needs of business travelers or go after bargain hunters on vacation – but rarely both. That choice will determine the class of service, pricing, staffing, training, and a host of other decisions. Every employee needs to know who their airline’s primary customer is. Only then will they understand why they do what other airlines don’t do, and vice versa. Simply telling the flight chef his internal customer is the catering supervisor does not help here.

Your primary customer is your organization’s raison d’etre. Knowing whom you really serve guides behaviors, and is therefore a determinant of culture.

Over Time, Won’t Internal Customers Develop a Sense of Entitlement?

When organizations take the idea of internal customer too far, it breeds a sense of entitlement. This is insidious, because unlike real customers, internal customers do not have to seek services in outside markets. They instead get to seek services within their organizational hierarchies. Again, unlike real vendors, internal vendors cannot opt out if no profit would result from services. Over time, this is a vicious circle: Treated like customers, some people go on demanding services with entitlement; whereas not free to compete for other customers, other people continue serving with resentment.

Efficiency is Fine, But What if the Firm Needs Agility Instead?

When the market environment is uncertain, technology is changing, or there are other uncertainties, the organization must look beyond efficiency. In rapidly changing environments, it’s not just about how efficiently you produce something – it is also about how flexible you are when the market needs you to produce a variety. Agility combines the twin constructs of speed and variety into one capability. For example, in going from iPhone 4 to 5, Apple took 11 months (vs Samsung’s 15) to add a variety of killer features.

Organizational silos undermine agility. By getting people to focus on the next immediate (internal) customer, we inadvertently restrict their thinking to a tiny box of their responsibilities, missing larger insights that can only come from thinking about the ultimate customer or end-user. For example, if a project manager asks a recruiter to go hire three expensive experts in artificial intelligence, why wouldn’t you want the recruiter to think creatively of other options such as outsourcing, or acqui-hiring? Wouldn’t such creativity be easier in collegial co-working situations rather than in simulated I’m-your-customer situations?


Management thinking is replete with brilliant ideas that are grounded in research and that work in practice. Unfortunately, some people expect the world out of every such idea, and won’t acknowledge its limitations. Although I have tried to illustrate some of my misgivings about the idea of an internal customer, I have found it useful when used with care. I’d love to hear your thoughts.