Good customers often behave badly

Your best customers are sometimes the ones who give you headaches. Consider this survey of music piracy in Canada:

The researchers conclude that that people who download more music actually buy more CDs. They report: “We estimate that the effect of one additional P2P download per month is to increase music purchasing by 0.44 CDs per year.”

This basically means that if someone downloads 270 songs a year via BitTorrent, he or she will buy 9 CDs more than someone who only downloads 27 songs. So, in a way illegal downloads actually convert into more CD sales.

Overall the researchers found no difference between pirates and other people in the number of CDs they buy. They did not find a positive or a negative relationship between filesharing and CD sales. So, at worst, filesharing isn’t the cause for a drop in CD sales. It might even be a boon to it.

The music industry’s spin on this issue has been that there are good people who buy their music, and bad people who steal it - and bad people, the lawyers are on their way. But it turns out that the biggest downloaders might be the biggest buyers as well. Whoops! It doesn’t seem to be that simple.

This happens in many industries. A group of customers behaves in a way that you didn’t anticipate and which causes you problems. The rub is that these “bad customers” may be telling you something important about your product or business model.

In the case of the music industry, the message from downloaders was “we hate the way you sell us music and want something that fits our needs.” The industry reaction has been elaborate technological schemes to prevent piracy (often irritating buyers along the way, until someone find a way to defeat the technology), or plain old brute force. The result? An industry that’s gone to war with its customers. It doesn’t really matter who’s legally right; that just can’t end well.

The right response, of course, was to understand why those “bad customers” were not acting according to the business plan. Because the people who push your product into new applications or insist on ignoring your distribution model and doing what they want are the ones telling you where the new opportunities are - or where you’ve missed the mark in satisfying customers.

After you finish cursing them under your breath, you need to embrace those bad customers and learn from them. They may give you a headache, but they also may be the key to your future success… or, in the case of the music industry, survival.

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