In recent times, it’s become fashionable to talk about ‘internal customers’.

The thinking is that everyone in our organisation is a customer service person. If we don’t serve direct customers, we serve internal customers, where these internal customers might be other divisions, co-workers, management, channel
partners etc.

While this reasoning may form the basis of a harmless pep talk, the concept of the ‘internal customer’ seriously distorts the reality of the organisational system. Accordingly, the concept does not belong in an intelligent manager’s tool box.

The problem with the concept of the ‘internal customer’ is that it encourages sub-optimisation (when you optimise the parts of a system, at the expense of the performance of the whole).

The organisation only has *one* customer. The person who ultimately purchases your product or service.

All ‘customer service’ decisions should be subordinated to this ultimate customer, not to your co-workers, and not even to channel partners.

An action that pleases your co-workers (or channel partners) but that compromises the integrity of your relationship with the customer is not good for your organisation.

The concept of the ‘internal customer’ is another example of cost thinking: the erroneous assumption that the efficiency of a system is the sum of local efficiencies.