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There's Nothing Quite Like a Customer

31 Jul 2010

Ever expanding web services would lead us to believe millions of users attention is golden. Grow now, monetize later is the moto celebrated by Venture Capitalists who are looking for massive returns from a few companies. But there is nothing binding a visitor's interest to a transient web service. Like a hit movie, every site fades in popularity over time. Even juggernauts Google and Facebook will diminish in time with changing generations of technology, tools, and users unless they create new services that replace their existing offers. The decline in the value of web brands is only accelerated by network effects, and we witnessed this first hand with the bubble burst of 2000. This radical plummet in value is abated by an age old idea, the customer contract.




Price Dictates Measurable Value






While user attention can shift with the wind, customers have a deeper relationship with businesses. There's a level of reliable service expected based on months or years of value provided. If a service is truly valued it can be charged for as long as competition doesn't offer similar service for free (see Google's disruption of the GPS market).




A service paid for has a rational sense of stability built in. When customers pay for a valued experience or product, they can expect their financial support to maintain the business as long as needed. If we pick up free groceries each week at a supermarket how long can we expect that store to remain open?



The exchange of money for goods and services is deeply tied to our sense of social value. Just last year I witnessed the disconnect between attention and value when friendfeed was purchased by Facebook and then left to rot without needed technical resources. A small self sufficient business can grow organically based on the economics of scale and financially measured customer value. I would have paid a buck a month to support friendfeed and if this was true for most users they could have picked up half their selling price in under a year of revenue. The lack of stability for social networks is a serious detriment to their ongoing development.




Time, our most precious but least treasured resource






When it comes to saving cash we're apt to discount the value of our own time. We'll wait on hold for hours with customer service to save a few dollars incorrectly charged on a bill. It's the principle we tell ourselves and others. But that principle won't get us back our lost time.