Monday, March 22, 2010

Who are the customers of Twitter and Foursquare?

I'd like to throw this idea out to the general population. I've beta tested it with lackluster results, but I'm going ahead anyway.

Obeying the maxim "follow the money," I'm going to state that your customers are the ones who actually pay you. Regardless of who actually uses your product, the true customers are the ones who are actually willing to pony up money to your company. Not that you should ignore the non-paying folks - especially as their behavior influences the paying folks - but you certainly need to be aware of the paying folks, since they're paying your bills.

Over several years and in several blogs, I got verbose about Twitter's monetization plan, or lack thereof. In reality, though, Twitter has had two sets of paying customers over the years - the first being the venture capitalists who invested in the service at the beginning, and the second being Google and Microsoft (Bing) who gave Twitter some actual revenue in the last year.

So now let's look at a newer media darling - Foursquare. On one level, Foursquare activities (and those of Foursquare's competitors) seem rather silly - Steven Hodson wrote a cranky post entitled Say, do they have a badge for “Duh I am such a sucker”? Hodson:

Really, if your only solution to try and convince people (and VCs as well as some sucker company) that your product is worth coming back to because of some stupid badge then I would suggest that you deadpool yourself and get a real job.

Hodson quotes from Alex Wilhelm:

If you turn to a game to make your application sticky, the application itself might not be....If your mayorship was not on the line, would you really check in every time you went to your favorite Starbucks? I bet not.

But do the badges help Foursquare with their REAL customers - namely, the businesses who could potentially pay Foursquare real money? Perhaps, but there's still a challenge to work out the "how." Adam Erlebacher:

Whether it be mayorships, scavenger hunts, coupons, or other marketing or promotional offers, there seem to be a number of ways that Foursquare can begin to experiment with monetization. The problem with most of these monetization schemes is that they’re a little klugey and require too much work for either the user and/or the business.

For example:

Now, consider what happens when a hypothetical FS coupon is redeemed at a small business (not a Best Buy which has sophisticated POS systems). You’re at a packed bar and you show the bartender your coupon for a free beer. The bartender (who is usually not the owner and has less incentive to keep track of these things) will need to somehow process the coupon so that you can’t reuse it. Let’s say there’s a simple code he types into your phone (that’s awkward and slow) or maybe he just swipes a finger across the screen to process it. The problem actually isn’t the processing, it’s that unlike in the supermarket example, there is no third party that will repay the business owner for the coupon. If the bar pays FS directly for each coupon redeemed, the bartender has little incentive to process the coupon. If the bar is paying for each coupon that gets redeemed, a less-than-honest business is not going to process (and pay for) the coupon once it’s already acquired the customer.

Erlebacher's suggestion is for Foursquare to partner with a company such as Blippy who actually tracks purchases. (If you haven't heard of Blippy, Louis Gray provided an introduction in January, and has revisited the service at least twice.)

Regardless of how (or whether) Foursquare figures out a good way to monetize its service, the point is that we as users often have a particular perspective on a service such as Foursquare or Twitter. And while the heads of those companies certainly try to cater to our needs, we need to remember that we are not their first priority - the paying customers are.

And if you don't like that, then find a "pay per tweet" service and sign up for that.
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