We need to clearly define the word customer. The definition I’d propose is pretty simple: Those who pay you. This very basic view of a customer seems to have been lost somewhere in the depths of Silicon Valley culture and nomenclature.

Free, as in marketing
At SproutBox, I see a fair amount of Freemium model business plans. Most have 2 categories outlined: ‘customers’ and ‘paying customers. I call bullshit. If a customer isn’t paying you, they aren’t a customer—they are a prospect. You have to understand that your free version is a marketing vehicle, not a sale. You may have a great way of marketing your product, but just like a sales guy working his prospects, you aren’t done yet.

Attention factories
Ad revenue based models have been getting a lot of crap lately and for good reason. But an ad model isn’t all bad, as long is you understand what and to whom you are selling. Most of what would be thought of as Facebook’s customers aren’t their customers at all; they are their product. Facebook is an attention factory. They build and sell attention. That is their product and advertisers are their customers. They are judged by the quality (relevancy) of their product, and live or die based on the margins on units (clicks, impressions) sold. This isn’t new. Ask an ad sales manager at NBC who his customers are. You’ll get a quick answer and it won’t be the millions tuning in nightly.

Don’t get me wrong, if you’re an attention factory, you have to to play close attention to your users. They are your product. They must be tended to and cultivated, just like a farmer cares for his crops. But once you make the distinction between your product and your customers, you’d be surprised how that positively effects decisions from that point forward.

Early adopters
What about these jokers that have no customers at all. Nobody pays Twitter a thing so they can’t have any customers, right? But somehow the doors stay open and @ev takes home a check. That’s because Twitter does have customers and lots of them: Ron Conway, Marc Anderseen, Kevin Rose, Charles River, Union Square, Benchmark and all the other Twitter Investors. In the end you are beholden to where your paycheck comes from and Twitter is no exception. Eventually they may turn their users into prospects for an enhanced version or capitalize on their attention factory. But for now investors are Twitters only customers.

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