Own the customer relationship.
Many small software businesses sell through someone else’s platform. That can be a fast start. Over time, the business that knows and bills its own customers is the stronger one.
Contents2.1Renting an audience.1 / 4
§ 2.1
Renting an audience.Fast to start, hard to keep.
An app store, a marketplace or a social platform can bring customers quickly. It handles discovery, payment and often support. In exchange, it owns the relationship.
When the platform owns the relationship, it decides who sees your product, what you can say to customers and how much of each payment you keep. Those decisions can change without your agreement.
This is not a reason to avoid platforms. It is a reason to know what you rent and what you own.
§ 2.2
What owning means.Four tests.
- Test 1
You can reach them
You have a direct and permitted way to contact your customers, such as email.
- Test 2
You bill them
Payments go through your own billing account, under your own terms.
- Test 3
They have an account
Customers sign in to your product, not only to the platform.
- Test 4
They would follow you
If the platform changed, a large share of customers would still find and use your product.
§ 2.3
Why it matters to a buyer.And to the product.
A buyer pays for future cash. Future cash is more certain when the business can reach its customers, hear from them and serve them directly.
Direct relationships also make a product better. You see why people cancel. You can ask what they need. You can help a new customer who is stuck.
When we review a business, we ask which relationships it owns and which it rents. Both can be fine. The answer changes the risk.
§ 2.4
How to move toward ownership.Small steps, within the rules.
Offer a direct account and a reason to create one, such as sync, history or support. Ask for permission to send useful email. Offer a direct plan where the platform’s rules allow it.
Do it within each platform’s rules. Breaking a platform’s terms to own a relationship creates a different and larger risk.
End of essay 2