Who Is The Customer?

Well, LJ has made another change to their interface, and the community is complaining left and right about it. As for me, it got me thinking about the customer.

We all know businesses are in business to serve their customers. But we often forget to think about who the business perceives their customer to be, and then mistakenly assume it is us, the consumer. Often, we couldn’t be more wrong.

Take Livejournal. Perhaps in the beginning their customer was their user. Certainly that was the case in Brad’s day, when their only income was paid accounts. The minute LJ added advertising, the customer changed. The new customer—the one that pays the bills—is the advertiser. LJ moved from having a more usable site to wanting a site that attracted the most eyeballs that were the most sticky. When SUP bought LJ, the customer shifted slightly to the Russian advertiser, for the Russian market for LJ is so much bigger than the remainder. This explains quite a bit. It explains why LJ doesn’t care about its paid users anymore. It explains the growth of “Oh No, They Didn’t” and its clones: these bring outside viewers to the site. It explains the design changes and connections to Facebook and Twitter: bring in more eyeballs and bring in people from outside. LJ isn’t about its users or communities anymore. LJ can get away with this because the users are stickey: either the others in their community are here, or it is too much trouble to change. That’s why people often stay with services that suck. Just ask any bank. As for Dreamwidth… it is where LJ was in the beginning, focussing on the user. I can’t answer whether it will stay that way, but it is not going to gain the critical mass of users it needs unless LJ drives them away. DW will always be a niche player: it’s users will primarily be LJ refugees or the small corner that is fandom. It doesn’t have the mass market attraction.

But this post isn’t just about LJ. Look at banks and the banking system. Who is their customer? Who pays their bills? More often then not, their customer is not the individual account holder, but the institutional investor and the shareholders. Banks exist to make profits for their shareholders and other investors, not to return funds back to the account holders. This is why fees go up and service gets economized. This is why banks and financial institutions go after the risky investments: to bring in more profits, and return more to the preferred investors.

Let’s look at politicians. Who are their customers? Who pays their bills? Two answers here: lobbyists and the people that elected them. The lobbyists are a customer because they pay the bills: they make the donations, they fund activities, they funnel the dollars. As for the people that elected them, it is important to note that this is not their district as a whole or the country as a whole. Most politicians do not really care about their entire district or what is good for the country as a whole. They want to talk to their solid base that will re-elect them, so the lobbyist money can continue to flow in. This is why redistricting and number crunching has destroyed this country. Districts give politicians majorities in a particular party, and thus they can appeal to the party faithful to get them elected in the primaries (i.e., the majority within their party within the district). This is what the Tea Party and Conservatives are doing, to put it bluntly. Once having passed the primary, they only need to be less worse than their opponent. Republicans are more likely to vote for a Republican who is bad than a Democrat who is good (and the same for the Dems).

Understanding the customer explains a lot. Of course, over-understanding is equally bad. I alluded to that problem in the last paragraph, and perhaps I’ll do another entry on that in the future.