Who Are Your Customers?

A customer handing over his credit card

Let’s play a game – a short brain exercise called ‘identify the customer’. I will describe a business and we’ll try to properly identify who is the customer of this business. We will see what can be learned from it at the end.

 

So first – what is the definition of a ‘Customer’? Here are a couple of definitions I gathered from the web:

 

Oxford

A person or organization that buys goods or services from a store or business.

 

Invetopedia

A customer is an individual or business that purchases another company’s goods or services.

 

Pretty straightforward, right? Great! 

So let’s start easy:

You are a product manager in a company that manufactures GPS chips for mobile phones. Who are your customers?

Answer: Mobile devices manufacturers. Easy.

 

Next – You are the product manager of the famous Google Search engine. Who are your customers?

Answer: The consumers. You and I who are using Google for search. Still easy..

 

Wait. Are you sure about this?

 

I mean… according to the definitions above – we are not. We don’t buy or purchase anything from Google. Still… Google IS making money from its search engine. Then who are their customers? Well – who is paying Google for its search engine? 

 

Answer: The advertisers, of course, who bid for keywords using Google Adwords.

 

Mmm… So who are WE to Google? 

We are the users, and also part of the external stakeholders group who are not the customers.

 

The same goes for every business which is ads-based – all the digital publishers who don’t offer subscriptions, all the news aggregators and other apps that are ads based and so forth..

 

Does it mean that those businesses care less about the end users because we are not their customers? Well, ‘caring less’ is too severe, but generally speaking – I’d say carefully that most often the money wins. Meaning, users who are not customers are more likely to be treated as second-degree citizens in terms of product design & roadmap.

Most of the time, though, for most product aspects – the interests of your customers and your users will be aligned (otherwise, it’d be very hard to run this type of business). In the case of advertisers – they also want a happy & engaged audience at the end of the day. So, that’s great. However, from time to time – a misalignment in the interests may arise and this will impose a challenge.

 

For example, let’s say you are a product manager in a video streaming business which is ads supported. And let’s say that one day several big advertisers who spend a lot of money on your platform come to you and ask you to increase the pre-roll length of their ad videos from 5 second to 10 seconds (the ad clips which are shown before the real video starts playing). Clearly, such a decision will have a direct negative impact on your users, but turning down these big advertisers may result in them spending their huge advertising budgets elsewhere. What would you do?

I won’t discuss now how you should address such conflicts (we’ll leave it to some future posts). I’m just trying to raise your awareness of the conflict.

 

Fine. Back to our game – let’s take a non-advertising businesses:

 

This one is taken from a real life example I stumbled upon recently: 

You are a product manager in a company X which produces the ‘brain’ of the modern elevators.

You know those smart elevators where there are no controls within the elevator itself and you need to choose the floor you want to go to using a control panel which is located outside of the elevator? This is common in modern office buildings where there are multiple elevators available, but also in some big residential buildings. I happen to have such a system installed in the building I’m living in.

Anyway – the theory is that by telling the elevator in advance the floor you want to go it should optimize the traffic of the elevators.

 

Who are the customers of X?

This company is a B2B2C business, and hence the customer who is paying X for the license to embed its brain within the elevators are the elevators manufacturers.

You are not their customer. You are their user.

Ok, but why is this interesting?

So I had the time to observe the operation of these elevators in my building and other office buildings where they exist. There was something very weird going on there – the elevators are not really trying to minimize your waiting time as you would expect. Sometimes you could clearly see that out of 3 elevators – there is one which is sitting just one floor away from you, but instead you will be asked to wait for an elevator coming 10 floors above you.

At first I was positive the engineering or the data science team of this company is not the brightest one. But then, I had the chance to discuss with one of the technicians of the manufacturer of the elevators and asked him about this. He smiled and said – “The elevators are first and foremost optimizing the traffic to minimize the maintenance costs of the elevators. Only secondary is the waiting time of the passengers. Sending an elevator which is already ‘in motion’ and ‘warm’ is better in terms of maintenance then putting a ‘cold’ elevator into motion”.

Immediately it all became clear. It also became clear how the interests of the customer are first in line, before the interests of the users.

 

Cool. What about Uber, Ebay, AirBnB and their similars? 

Those are all marketplaces. The main revenue stream of all of them is taking a commission out of the transaction. Therefore, this one is tricky, as I see it, as there is no clear customer. Most of the time it works in our benefit, the users, since marketplaces tend to favor the demand side, rather than the supply side under the assumption that the supply side (shops in ebay, drivers in Uber, apartment offerings in AirBnb) is easier to grow.

 

Stepping up our game – let’s take a look at the case where people working in the same organization are treated differently by the company which sells the product: 

Company X is now selling a system that facilitates the whole process of planning a business trip. If you ever had to plan a business trip you know it can be a pain in the a%$#S, even if you have someone from the administration who should be helping you (emphasis on ‘should’). So now your organization informs you that they have purchased a license to this cool new system where you can easily book tickets and hotels and plan your trip. Great!

You sign in to the system (pre-COVID or post-COVID of course – depending on when you are reading this :-)) – but then you see that you can only book these lame hotels and worst airlines to choose from. Why is that? This happens because you are a user and not the customer. The customer is the management team or the administrative team of your organization and as customers they were given the power to set up policies and restrictions. Hence, you may not be getting the shortest flight or the closest hotel to your destination if the rates exceed what the policy allows.

 

Last use case before we move on to why you should care – Sometimes, the internal stakeholders are your true customers. Imagine you are a product manager in a company which develops mobile games. The business model is IAP (in-app purchases). You are responsible for the game design and mechanics and you are focusing on designing the most amazing mobile game ever. But then – your monetization department comes to you and tells you that they are unhappy with where the game design is currently heading. They complain the game doesn’t offer enough opportunities for users to purchase stuff within the game. You try to object. You try to explain that adding more of those will severely impact the way users experience the game. It doesn’t help you, because they are the customers. You are forced to make the necessary adjustments.

 

That concludes our game. 

Ok. It’s all very interesting – but why should you care about this?

 

Well, first and foremost – I believe it’s crucial for any product manager to know their business. One of the basic steps in knowing your business is properly identifying your customers, your users and your other internal & external stakeholders. This will help you tremendously moving forward on many aspects.

Second – the best way to tackle a problem is to avoid its creation in the first place. If you are looking for a job and consider several companies OR if you are being offered to move to another department – examine the business and properly identify who are their customers and who are their users. It will greatly assist you in predicting where the conflicts may lie down the road, and whether those are the challenges you are looking for. Personally I tend to favor businesses where the users ARE the customers as it allows me to focus purely on making a great experience for my direct users, without having to sacrifice part of the roadmap to serve other interests. However, those may be hard to come by, and hence you might need to make conscious sacrifices on some level.

Lastly – being aware of who you need to serve will greatly reduce any potential frustration you may experience on your day-2-day job, because your expectations are properly set. Identifying the map of interests in advance will help you design more solid roadmaps that will be less challenged. You will also see that your deep understanding will affect how you design features that will keep both your customers and users content (as much as possible).

 

So, that’s it for today. 

If you liked the post – be kind and hit the ‘share’ button below and share it with anyone who may benefit from it. Thank you!

 

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