A contact is an individual you interact with, however, they are separate from customers. A contact is different from the customer it is associated with.
Below is a view from Method's Contacts App showing a contact and the customer she is associated with:
So, what is the difference between a contact and a customer?
In practical terms:
A customer is assigned to transactions: estimates, invoices, sales orders, etc. and it will be the legal entity that shows up on a transaction. They are synced with QuickBooks.
A customer can have multiple contacts, a person whom you will have an actual human interaction with. A contact is assigned to CRM interactions: activities, cases, etc.
What is a Customer?
A customer is a QuickBooks Entity. A QuickBooks Entity is the formal term given to customers, employees, vendors, and other names within QuickBooks.
Any transactions you create (e.g. an estimate or invoice) is with an entity, and the entity will have a monetary balance.
For further clarification on entity:
Customer (syncs with QuickBooks): the individual or organization your company is billing. A customer could be:
A company (e.g. McDonalds)
An outlet of a company (e.g. McDonalds Store #22 in Houston)
An individual client (e.g. Bob Crenshaw)
Customer Lead (does not sync with QuickBooks): a potential customer. They have not synced to QuickBooks and they have no transactions within QuickBooks.
Vendor (syncs with QuickBooks): a company or individual from whom your company purchases goods or services.
Employee (syncs with QuickBooks): an individual who works for your company.
What is a Contact?
A contact is associated with a customer and is the person you interact with.
In fact, there can be multiple contacts for one customer. For example, if the customer is a company, it can have multiple employees as contacts.
However, it does not work the other way. You cannot have multiple customers for one contact.
Contacts are used when you have an interaction with one of your clients. For example, if you have a meeting with one of your clients and you enter in the activity, the activity is associated with the contact of the customer, not the customer.