Are Free Customers Better Than Captive Ones?

Doc Searls talked about two wrong things and one right thing.

Wrong Thing #1

A random startup founder: “Sales are great! We just closed our second round of financing for 25 million dollars”

Every business has two markets:

  1. For goods and services (to your customers)
  2. For itself (to investors)

During the tech boom number 2 was more important than 1. According to Searls we are in a tech boom now. The conceit of big data today is that the system understands better what you want than you do yourself. Searls deconstructed the concept of the loyalty card which started as a concept in the early nineties:

Google NGram on Loyalty Card (1950 - now)
Google NGram on Loyalty Card (1950 - now)

His main point: they don’t work are a bad idea and are just a retail fad. Read more here

Wrong Thing #2

Avoiding customers and treating them like cattle or worse. It is now standard practice to talk about “acquiring,” “capturing,” “locking in,” “owning” and “managing” customers. On the net we use the client/server metaphor a lot (that was chosen because slave/master didn’t sound good). The cookie is the main tool for the server to keep track what is happening with the client. Searls tells us how Phil Windley writes up the history of ecommerce:

1995: Invention of the Cookie.

The End.

The one right thing

Loving your customers and letting them leave. He uses Trader Joes as a an example:

  • No gimmicks
  • No advertising
  • No loyalty cards
  • No discounts
  • Don’t do retail trade shows
  • Never say “consumer” (always say “customer”)
  • Marketing = talking to customers

Vendor Relationship Management (VRM) Movement

Project VRM started in 1996. Its goal is to provide tools that make customers independent of vendors and better able to engage with vendors. Basically to create instruments of personal intentions. With VRM the customer drives. A couple of examples:

  • Run your own personal cloud. Examples include Mydex, Azigo and Trustfabric
  • Program the way your cloud interacts on the live web. An example is kynetx.
  • Set your own terms of service. It should be possible to say things like: “don’t track me outside your site or service”, “give me my data in a usable form that I specify”, “wipe my data when I say so”, “here is my fourth party who represents me” or “here is my trust network”.
  • Get full value from your digital assets. See
  • Personal Request for Proposals (RFP): “I have 200 dollars and need x and y”


Free customers will always create more value than captive ones. His new book The Intention Economy will be out in May 2012 and more information will soon be available on the Customer Commons website.