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Even though most of them have only used my free apps, I technically have millions of customers No, you don't. Really. You have millions of users. "Customers"

Even though most of them have only used my free apps, I technically have millions of customers No, you don't. Really. You have millions of users. "Customers" are the people who have paid for your apps. Keep this distinction in mind.

StavrosK 16y ago
Yep, exactly. Customer = person who paid for your stuff.
jacquesm 16y ago
I'm not so sure the line is that hard. A customer is someone that you are making money of, or maybe even someone that you intend to make money of. Not someone that pays for your apps, and where would that leave services, goods and other things that people pay for? If you're in a long term relationship with a large number of people and they don't pay you but you are making money off them in a different (for instance indirect) way they are as critical to your bottom line as paying people would be. Free does not always mean you have no customers, free can mean you have customers but the price is $0. So, technically the guy has a sales funnel with 1 million people in it that need to be converted to paying customers. If that distinction did not exist we'd never have to use the word 'paying' attached to customers in that context.
- tomjen3 16y ago
  I can sort of understand why you would say that in a fremium situation every person who signed up is a customer, but if you make money via ads, your customer is whomever pay you for the ad space - not your users.
  - jacquesm 16y ago
    As soon as you stop treating your users as though they are your customers though you'll find out that the users view is a different one. Calling them (or their data) a 'product' as I've seen some people do is really not the proper way to treat people. If people pay you for ad space then they're your customers too, and will need to be treated as such. But that does not change the other side much. And plenty of companies have a freemium product and ads at the same time.
    - michael_dorfman 16y ago
      I don't think there's anything wrong with viewing the non-paying, ad-consuming users of your product as "users" or "clients"-- it doesn't mean you need to treat them poorly. But, you should remember who your customers are, and what your business model is. The original poster seemed to think he had "millions of customers". He didn't, and doesn't, and that kind of fuzzy thinking isn't going to bring him any closer to the day when he actually does have millions of customers.
      - jacquesm 16y ago
        Here's my view of the pipeline or the funnel, whichever term you prefer, for a membership / freemium site: - the world - visitors - recurring visitors - members - paying members The transition from being a transient to being a customer to me happens somewhere between the visitors and the recurring visitors stage, the point where people start to invest in the site, maybe store some content there or make some changes to the state. All the people from 'visitors' (inclusive) down I'd label as users, and the visitors themselves I'd label prospects. Fuzzy thinking isn't going to bring him closer, but rigidly defining terms in a way that is not suited to the current model (freemium services), but for instance more suited to selling cars or shoes is also not going to help. The lines are there, but the transition points are not quite as hard as they are in retail. Especially not in a subscription environment, users will deserve and demand to be treated as customers long before they fork over their cash or it isn't going to happen.
        michael_dorfman 16y ago
        All the people from 'visitors' (inclusive) down I'd label as users, and the visitors themselves I'd label prospects. I'd agree. And I'd label the "paying members" as "customers". users will deserve and demand to be treated as customers long before they fork over their cash or it isn't going to happen That's a key point. If you have to treat subscribers as if they were customers when they are not paying (i.e., put significant resources into support, etc.), your CAC is going to be high. That's not necessarily a problem in and of itself, but it's worth paying attention to.
- michael_dorfman 16y ago
  A customer is someone that you are making money of, or maybe even someone that you intend to make money of. Where I come from, we call the later a "prospect." Not someone that pays for your apps, and where would that leave services, goods and other things that people pay for? I was speaking in the context of app development. Obviously, if you are a shoe retailer, your customers are the people who buy your shoes. If you are a publisher, your customers are the people who buy your books. Note that the people who read your books in libraries are not, strictly speaking, your customers-- although the acquisition librarians are. So, technically the guy has a sales funnel with 1 million people in it that need to be converted to paying customers. If that distinction did not exist we'd never have to use the word 'paying' attached to customers in that context. I'd argue that the "paying" in "paying customers" is pleonastic-- it is used as an intensifier, as in "my personal friend".
nadam 16y ago
The issue here is not really the abstract definition of the customer. Every user has a certain value to the business regardless what the business model is. If you have a free ad-based application then maybe this is only some cents per user. In this case it does not hold that the 'first ten customers' is what is important. Maybe the first 10.000. On the other hand if you are selling dirt expensive stuff then the first 10 customers is a big deal.
- michael_dorfman 16y ago
  Every user has a certain value to the business regardless what the business model is. Sure, but in some business models, that value is negative-- take the case of a non-paying user who demands a lot of support resources, for example. If you have a free ad-based application then maybe this is only some cents per user. In this case it does not hold that the 'first ten customers' is what is important. Maybe the first 10.000. On the other hand if you are selling dirt expensive stuff then the first 10 customers is a big deal. I disagree. Having ten (paying) customers is a good milestone, regardless of the cost of the product. (Remember that in an ad-based application, ten paying customers would mean ten advertisers, not ten users.) The point of the original article is that if you haven't reached that ten-customer milestone, you haven't really validated your customer development work. "If you build it, they will come" is a cute phrase, but hope is not a strategy. If you build it, and ten people come and pay, you're on your way.

StavrosK 16y ago

Yep, exactly. Customer = person who paid for your stuff.

jacquesm 16y ago

I'm not so sure the line is that hard. A customer is someone that you are making money of, or maybe even someone that you intend to make money of. Not someone that pays for your apps, and where would that leave services, goods and other things that people pay for? If you're in a long term relationship with a large number of people and they don't pay you but you are making money off them in a different (for instance indirect) way they are as critical to your bottom line as paying people would be. Free does not always mean you have no customers, free can mean you have customers but the price is $0. So, technically the guy has a sales funnel with 1 million people in it that need to be converted to paying customers. If that distinction did not exist we'd never have to use the word 'paying' attached to customers in that context.

tomjen3 16y ago
I can sort of understand why you would say that in a fremium situation every person who signed up is a customer, but if you make money via ads, your customer is whomever pay you for the ad space - not your users.
- jacquesm 16y ago
  As soon as you stop treating your users as though they are your customers though you'll find out that the users view is a different one. Calling them (or their data) a 'product' as I've seen some people do is really not the proper way to treat people. If people pay you for ad space then they're your customers too, and will need to be treated as such. But that does not change the other side much. And plenty of companies have a freemium product and ads at the same time.
  - michael_dorfman 16y ago
    I don't think there's anything wrong with viewing the non-paying, ad-consuming users of your product as "users" or "clients"-- it doesn't mean you need to treat them poorly. But, you should remember who your customers are, and what your business model is. The original poster seemed to think he had "millions of customers". He didn't, and doesn't, and that kind of fuzzy thinking isn't going to bring him any closer to the day when he actually does have millions of customers.
    - jacquesm 16y ago
      Here's my view of the pipeline or the funnel, whichever term you prefer, for a membership / freemium site: - the world - visitors - recurring visitors - members - paying members The transition from being a transient to being a customer to me happens somewhere between the visitors and the recurring visitors stage, the point where people start to invest in the site, maybe store some content there or make some changes to the state. All the people from 'visitors' (inclusive) down I'd label as users, and the visitors themselves I'd label prospects. Fuzzy thinking isn't going to bring him closer, but rigidly defining terms in a way that is not suited to the current model (freemium services), but for instance more suited to selling cars or shoes is also not going to help. The lines are there, but the transition points are not quite as hard as they are in retail. Especially not in a subscription environment, users will deserve and demand to be treated as customers long before they fork over their cash or it isn't going to happen.
      - michael_dorfman 16y ago
        All the people from 'visitors' (inclusive) down I'd label as users, and the visitors themselves I'd label prospects. I'd agree. And I'd label the "paying members" as "customers". users will deserve and demand to be treated as customers long before they fork over their cash or it isn't going to happen That's a key point. If you have to treat subscribers as if they were customers when they are not paying (i.e., put significant resources into support, etc.), your CAC is going to be high. That's not necessarily a problem in and of itself, but it's worth paying attention to.
michael_dorfman 16y ago
A customer is someone that you are making money of, or maybe even someone that you intend to make money of. Where I come from, we call the later a "prospect." Not someone that pays for your apps, and where would that leave services, goods and other things that people pay for? I was speaking in the context of app development. Obviously, if you are a shoe retailer, your customers are the people who buy your shoes. If you are a publisher, your customers are the people who buy your books. Note that the people who read your books in libraries are not, strictly speaking, your customers-- although the acquisition librarians are. So, technically the guy has a sales funnel with 1 million people in it that need to be converted to paying customers. If that distinction did not exist we'd never have to use the word 'paying' attached to customers in that context. I'd argue that the "paying" in "paying customers" is pleonastic-- it is used as an intensifier, as in "my personal friend".

nadam 16y ago

The issue here is not really the abstract definition of the customer. Every user has a certain value to the business regardless what the business model is. If you have a free ad-based application then maybe this is only some cents per user. In this case it does not hold that the 'first ten customers' is what is important. Maybe the first 10.000. On the other hand if you are selling dirt expensive stuff then the first 10 customers is a big deal.

michael_dorfman 16y ago
Every user has a certain value to the business regardless what the business model is. Sure, but in some business models, that value is negative-- take the case of a non-paying user who demands a lot of support resources, for example. If you have a free ad-based application then maybe this is only some cents per user. In this case it does not hold that the 'first ten customers' is what is important. Maybe the first 10.000. On the other hand if you are selling dirt expensive stuff then the first 10 customers is a big deal. I disagree. Having ten (paying) customers is a good milestone, regardless of the cost of the product. (Remember that in an ad-based application, ten paying customers would mean ten advertisers, not ten users.) The point of the original article is that if you haven't reached that ten-customer milestone, you haven't really validated your customer development work. "If you build it, they will come" is a cute phrase, but hope is not a strategy. If you build it, and ten people come and pay, you're on your way.