Customer, User, & Product đ
Hi There,
Welcome to the 4th issue of Tap to Unlock, a weekly newsletter, where I write on economics, products, platforms, & finance. In this issue, I talk about whether youâre a customer or a user and if youâre neither you must be a product. So, let's dive in
Customer vs User
Customers always pay, either with time, effort, attention, or money. Typically, only companies that sell products and services for money call their customers âcustomersâ.
But every company is selling a product/service, the only difference being how they charge for it.
During a Square Board Meeting, Howard Schultz asked Jack Dorsey âWhy do you all call your customers âusersâ?â
âI donât know. Weâve always called them that.â Jack Dorsey replied
After that meeting he gave a thought on this and found that the word âuserâ came from the hacker culture.
In the hacker culture a user is a person who isnât technical or creative, just uses resources and isnât able to make or produce anything (often called a âluserâ). And it was made concrete by Internet companies whose business models depended on paying and ads.
A paying customer and a non-paying consumer who is generally subsidized by viewing the ads.
He asked his employees to start calling its customers, well, "customers"âor, specifically, "buyers" and "Sellers." If he slips up, Square employees who catch him can charge him $140.
Why?
Well, he felt the word customer, given its history, immediately sets a high bar on the level of service a company must provide, or risk losing customer's attention or business.
Points from his letter to his team đ
Long way ahead đ
He encourages everyone in the technology industry to reconsider the word âuserâ and what you call the people who love what youâve created. Jack: "Below is a letter I sent the team after that Board meeting explaining why. Itâs a start (weâre not done yet)."
Itâs time for our industry and discipline to reconsider the word âuser.â We speak about âuser-centric designâ, âuser benefitâ, âuser experienceâ, âactive usersâ, and even âusernames.â While the intent is to consider people first, the result is a massive abstraction away from real problems people feel on a daily basis. An abstraction away from simply building something you would love to see in the world, and the hope that others desire the same.
âUserâ
The word âuserâ is passive and abstract. It abstracts the actual individual. No one wants to be called a âuserâ (or âconsumerâ for that matter). Jack: "I certainly donât. And I wouldnât consider my mom a âuserâ either, sheâs my mom."
âCustomerâ
The word âcustomerâ is not only much more active and bolder but also itâs honest and direct. It immediately suggests the relationship between a company and a customer. Jack: "And our customers think of their customers in the same way."
He further says "we have two types of customers: sellers and buyers. So when we need to be more specific, weâll use one of those two words."
Work Culture đ¨âđźđŠâđź
He also suggested changing how we meetings, goals, and reviews are conducted. He brought customer obsession to meetings and reviews. "We must feel our customerâs issues every day."
"From this moment forward, letâs stop distancing ourselves from the people that choose our products over our competitors. We donât have users, we have customers we earn. They deserve our utmost respect, focus, and service. Because thatâs who we are."
You can see the full letter here
Letter
If youâre neither a customer nor a user, you might be a product
This newsletter is free in monetary terms. I don't pay a fee to anybody; readers don't pay a fee to me. The costs are mainly in terms of time: that is I spend time writing the blogs, and readers spend time looking them over.
The quote has been developed from the advertiser's perspective. From the advertiserâs perspective users or userâs attention is a product, they are paying for. And Facebook is the seller.
Similarly, services like YouTube, Maps, Facebook, etc are free for users. But while it's comforting and even partially true to think that this newsletter or even YouTube is a public service provided to users, the software is provided and the hosting is done by Google. And youâre paying to Google by providing your attention.
Meaning you are not a consumer, instead, youâre a product.
The cliche is generally used in a bad way, for instance, Facebook and Google have become monopolies by collecting tons of data and letting advertisers offer targeted ads.
But still, the quote has always come around now and then. So letâs dive in and see both the aspects
1) Why it is misleading?
2) If it is misleading, why it still exists?
Why it is misleading?
Yes, Google is a monopoly in the search market. When Google was founded in September 1998, it was serving 10,000 search queries per day. One year after launch, Google was already answering 3.5 million search queries daily. Google has almost 86.02 percent market share as of April 2020 as per website Statista.
Even back then we all were products đ
To see how the statement is misleading we need to see how monopolies are formed today and back then.
In the early days when there was no internet or online or offline world. Companies gain monopolistic power by controlling distribution â think AT&T, or a utility company, or a government-owned company aka public sector enterprise.
There was no incentive for them to treat end customers well, since customers had no choice.
By controlling the distribution, I mean controlling the supply of a good or aggregating the supply.
Companies built on the Internet like Google and Facebook have become monopolistic because they aggregated the demand or users.
And when a company has monopolistic power by aggregating the demand, the company has a huge incentive to keep users satisfied.
Why?
Though the internet makes it easier to scale the product to millions and millions of users, it also makes it easier for users to switch to a different product. We all have Uber app installed on our phones but we also have one additional ride-hailing app installed on our phones, in the US itâs Lyft in other markets its Ola, Grab, or Careem.
Thus, these monopolies or platforms are highly motivated to keep users satisfied by giving what they want. Users are more an obsession than a product for these companies.
âWhy it still exists?"
Simple answer: thereâs some truth in the statement because from an advertiser's point of view users are a product or to be precise userâs attention.
Facebook collects data through various ways like
Users provide Facebook with data directly, both through information and media they upload and also through their actions like joining a particular group or following a band on Facebook.
Content is not data for Facebook but acts as a medium for generating user data like comments and likes.
Advertisers upload huge amounts of data directly to better target prospective customers.
Advertisers are also content producers. Posts by advertisers itself act as a medium for generating user data.
Facebook also has deals with third-party data collection companies for gathering everything from web traffic to offline store receipts.
Data can also be collected when you use sign-in with Facebook option while signing up on other websites or apps.
Data comes in from anywhere and everywhere.
All this data is used to form a detailed profile of every user. The GDPR requires google and Facebook to show what data users have entered in and not how detailed the profile of the user is after processing all the data from various channels. What they should disclose?
Two-factor authentication
They found that when a user gives Facebook a phone number for two-factor authentication or in order to receive alerts about new log-ins to a userâs account, that phone number became targetable by an advertiser within a couple of weeks. So users who want their accounts to be more secure are forced to make a privacy trade-off and allow advertisers to more easily find them on the social network. ( link )
The most important thing that regulators can do is to force Facebook and Google and other third-party data collectors to disclose what they make up with that data
Bottom Line
Users have to take care of their privacy. Facebookâs ultimate threat can never come from advertisers even after the press release of a lot of companies pausing their Facebook and Instagram ad campaigns.
The real danger for them is users â users actively rejecting the app. And the only way users would do that in large numbers if they believe that Facebook is acting badly for them.
Frankly, I do like personalized ads and personalized content recommendations on Netflix or song recommendations on Spotify. And what Facebook, google, amazon, or Netflix do is immensely valuable.
Instead of saying If itâs free, youâre a product. It is better to say
Users are an obsession, whether it is free or not
But what is wrong is the lack of transparency
The final decision-making power should be in the hands of the users. Users should be able to see what these companies have made up by combining all their data from different sources and then make a decision regarding what they want to delete or keep or continue the service etc.
For this Regulators need to establish clear laws that users be able to view not only the information they uploaded but their entire detailed profile â the processed output of the Big Data.