November 6, 2012
The Combined Value User Customer Model

I recently read Jack Dorsey's blog post, Let's reconsider our "users".  It is a great post and it reminded me of a post I wrote a few years back and was advised (for whatever reason) not to post.  I held onto it for my own use, but I'll post it publicly now as I feel it provides lots of value to many companies who are dealing with this same issue.  Enjoy!

Many of us enjoy great products but never stop to think if we are a customer or only a user. And many of us don't know the difference.  So what's the difference between a customer and a user?

To put is simply, a customer takes money out of their wallet and hands over their hard earned cash. A user, simply uses the product.

So why does this matter? Well, it matters because as a lot is created based on the way the business differentiate users from customers. It effects how businesses shape their products and how they manage their customer support. The entire user experience will be effected by how they create view their user and customers.  Product features, price, customer support, marketing, everything about this experience of a product is shaped by this model.  For the sake of giving this model a name, lets call it the business's User Customer Model (UCM). There might already be a name in some MBA textbook, but I only skimmed the chapter summaries of mine. :)

First, lets discuss the two typical types of UCMs commonly found on the web, The User Vs Customer UCM and The User Conversion UCM.

The User Vs Customer UCM: Users are not the valueble customer

When a business structures themselves this way their product and services will over time aim to benefit their customers at a sacrifice of their users.  If you find that a website throws a lot of popup ads at you or requires you to take steps to enter in information about yourself that never adds value to your experience on the site, then guess what? You are only a user.  If a website requires you to enter in your personal information for no reason, then it is mostly-likely because they need it for the lead generation. What it lead generation? Selling customer contact information to 3rd party companies (the customer) based on the user's personal demographics. These UCMs eventually leads to business who's websites with lots of popup ads that degrades the user experience. This is because their customers (the advertisers) benefit from it. In the extreme case of The User Vs Customer UCM, using a product leads to your inbox getting filled with spam.  With The User Vs Customer UCM, users are only valuable to the company's customer not the business itself. Also, try getting getting satisfactory customer support from businesses that use The User Vs Customer UCM, to them customer support is only for "customers".

The User Conversion UCM: Convert users into customers

This model aims at converting each and every user into a customer. Users who are not paying customers are only seen to have value for a short period of time.  The theory here is if a user doesn't convert to a paying customer by some defined period of time, then they are only an expense and non-valuable expenses need to be cut.  Businesses that use The User Conversion UCM sometimes offer their products  with an introduction phase and then you need to pay or stop using the product. Other businesses that use this UCM just try to make users' life hell until they either leave of convert to a customer. Does a product degrade over time? does the "free" version become outdated, stale or never updated? The business behind the product is using The User Conversion UCM.  Wost cases of The User Conversion UCM, businesses try to use trickery to get you to pay. Ever get a charge on your Credit card because you didn't read the fine print? These types of businesses will convert their users at any cost.

We aim to create our own UCM that we feel solves the obvious issues with the other two models. We call it, The Combined Value UCM.

The Combined Value UCM: Recognize the value in both users and paying customers

I'm referring to this as being "new" but in the grand view of things, The Combined Value UCM is not new. In fact, the old small town mom and pop stores were once all like this. Small business owners who give more to their community than they take. Tradesmen who would offer their services without ever asking for something in return. Or the milk delivery man who would pour out some milk for a neighborhood cat.  These businesses recognized the non-monetize-able value in the community and world around them. Weather it is karma, good will, or just being nice, these businesses didn't see the world in terms of cash-flow. In our day an age, this model is becoming all but lost.  We hope to bring this model back.

So how are trying to create this UCM in a day in age where profits matter? How can we do this while also having investors, and highly visible employees who are constantly getting job offers elsewhere?  It is two-fold.

1st, we recognizing the true value in both users and paying customers. User feedback is what shapes our business and product. Not customer feedback, but user feedback. We don't differentiate. Users and customers' input is equally valuable. A good idea, or a valid complaint helps build our offering no mater if the user has paid or not. We are also building our product so that each user gains value from other users in the community. Paying users gain value from free users who join their Street Team, who share their activities on twitter and/or facebook. We gains value from both. This keeps us from becoming a business who is using The User Conversion model (UCM).

2nd, we are making sure that users can become paying customers.  The important work there is "can". We don't force them to convert, we don't trick them to convert. But we do need to make sure that our revenues come from our users. This keeps us from becoming like business who uses The User Vs Customer model (UCM). As we build out the core the product we don't want to build "features" that add value to any other entry other than our users. Features are built because they help you track, measure, and improve your fitness PERIOD! Not track, measure, and improve your fitness in a way that gets the most hits for our customers' ads. Not track, measure, and improve your fitness so that we can sell your data to another company. Plain and simply, by using The Combined Value UCM, we can build a system that can track, measure, and improve your fitness. Both users and paying customers are hugely valuable to us AND paying customers have the same objectives as non-paying users. Everyone simply want our product to track, measure, and improve your fitness.

Michael Sheeley is a Co-Founder of Kickscount.  You can find this post, as well as additional content on his blog called Make Great Software.  You can also follow Michael (@MichaelSheeley) on Twitter by clicking here.