Month: January 2009

A little understanding goes a short way

It’s kind of hard to debunk something before it exists, but that’s what Graham Hill attempts with Four Fallacies of Vendor Relationship Management. Says Graham,

VRM is Doc’s response to the problems of customers getting the rough end of the stick in their dealings with companies. Rather than companies owning huge databases of customer transaction data which they can mine for their own advantage, customers should take control of their own transaction data and selectively release it to companies when they want something from them. Sounds simple enough doesn’t it.

Hard to know where to begin here. But I’ll try.

  1. VRM is not just my response. Many are involved in thinking about VRM and developing code and products to make it happen. It’s also still early. There is no code out there to critique yet.
  2. VRM is not just about “the problems of customers getting the rough end of the stick in their dealings with companies”. That’s just one corner of a much large set of problems VRM will work to reduce. Another is poor and not very granular vendor intelligence about what customers actually want. Another is a lack of a uniform and consistent way for customers to manage relationships with multiple vendors. Another is the blindered way that vendors look at “the customer” as a template rather than as an individual, denying vendors much information that might be useful. Another is money left on the table because there is no good way for customers with money to spend to notify whole markets of their wants, in ways that protect the customer’s privacy at the same time. Shall I go on? I can, but I’m not sure it’s worth it.
  3. Where did I, or anybody, say “Customers should take control of their own transaction data and selectively release it to companies when they want something from them”? Yes, VRM will give customers ways to control their own data, to serve as the point of integration for that data, and to share that data in selective and cooperative ways with vendors. “Take control” makes VRM sound like it’s a way for customers to storm the walls of Fort Business. That’s not the idea. Instead the idea is locating data where it makes the most sense, and giving those controlling customer data better ways of applying it. Data about who we are, what we want, where we live, how we do business … Much of this should live on both sides of the relationship system.  Data “ownership” is a sticky and complicated issue. For VRM’s purposes, however, “owning” does not mean wrestling data away from vendors.

Bottom line: VRM is about providing customers with tools that make them both independent actors in the marketplace and better equipped to engage with vendors. Those tools are in development. We need to get some of them out there before we can even begin to have arguments about whether or not they’ll work. Fact is, they will or they won’t. But they deserve a chance before we go salting the soils in which they need to grow.

Graham goes on to list “four fallacies”:

  1. The Fallacy of Ceding Control
    Fallacy One: Companies are just not going to cede control over customers’ data.
  2. The Fallacy of Wanting Control
    Fallacy Two: Customers way want more control over the marketing which is sent to them, but not their actual transaction data.
  3. The Fallacy of Managed Markets
    Fallacy Three: The customer-managed market upon which VRM is built is not viable.
  4. The Fallacy of the Economic Model
    Fallacy Four: There is not a viable economic model underneath VRM.

First, we’re not asking companies to give up data they control. We’re creating ways to share data that will be tood both sides of the relationship. This will take time. It will also probably follow the same realization and adoption curve as open source code acceptance has followed in enterprises.

Second, customers should want control over their sides of relationships with others. Those relationships should include vendors. VRM is not just about controlling (or restricting) marketing stuff that vendors send out, nor is it just about transaction data. Both are relatively small potatoes. What matters are actual customer wants and needs, along with seemingly trivial yet important stuff, such as having a way of gang-notifying many organizations (inluding vendors) that one’s address has changed, instead of notifying one at a time.

Third, we need to get stratight what “free market” we’re talking about  here. Graham writes, “VRM seems to rest on the assumption that it offers a superior way of deciding what products, services and expeiences to offer to customers than the current free market system.” That’s not correct. VRM rests on a number of assumptions, none of which is that. One of them, however, is that it’s good for vendors to know what customers actually want rather than just guessing about it. Huge amounts of money are wasted by vendors on guesswork. Reducing that would be a nice payoff, wouldn’t it? I think Graham believes we’re a bunch of socialists or something. Far from it. Many of us are free-market advocates of the first order. Not that it should matter. Good ideas should stand in their own proven pudding. We don’t have that yet. Just wait.

Fourth, there is no new economic model underlying VRM. Graham writes, “The free market system has driven unprecedented prosperity in those allowed to participate in it too. I don’t see many people queueing up to enter into planned market economies these days? Why throw all that away for a transaction cost heavy model whose economics hasn’t even worked out, let alone tested and proven?” Two problems here. One is that Graham assumes that VRM opposes the free market system, or that it advocates a planned market economy. It does neither. In fact, we look forward to taking advantage of the free market system by getting better information into it. The other is that Graham seems to assume that the free market and the mass market are the same thing. They are not. The free market encompasses the mass market but is not reducible to it. VRM will improve both the mass market and the market for more individuated products and services.

At the end Graham adds,

Whilst I agree in principle that customers need to be given much more control over how they are managed by the companies they transact with, there are already partial solutions in existence such as customer managed relationships, multi-sided markets and even infomediaries, that enable this. VRM is an extreme solution that no-one is really looking for. Not Customers, not companies, not markets, no-one.

Well, as it said here years ago, CMR wasn’t getting traction (at least as a name). Frederick Newell’s Why CRM Doesn’t Work was one of the first places CMR was put forth (and very well too). But it’s a non-starter as long as it’s coming from the sell side and trying to lock in the customer. Adriana Cronin-Lukas unpacks that problem very well.

Multi-sided markets are very well aligned with VRM. Thanks to Graham for reminding me to contact Andre Hagiu here at Harvard to talk about that.

I’m also a fan of John Hagel and infomediaries as a concept, and I think both are well-aligned with VRM as a concept.

Will VRM succeed where those other ideas are languishing, or support them in some ways? I dunno. Hope so. Meanwhile, I want to offer an olive branch.

Graham is a veteran of the CRM business. It is essential that CRM folks know that VRM is not opposed to CRM. VRM gives CRM systems more to relate to. It gives customers means for bearing some of the relationship weight — ways that work in consistent ways across many vendors, for the conveniences of both sides. So it’s VRM + CRM, not VRM vs. CRM. Unless we make it the former, it won’t work. And it is essential right now to make clear that VRM is a CRM-friendly movement.

Finally, this whole exchange illustrates why I’ve been reluctant to publicize VRM in the absence of working code, working products and working services. It’s impossible not to talk about it, of course, because VRM is a movement with a growing number of people who need to be able to think and talk about it. So here we are. I hope Graham and others will look more carefully, and with more open minds, at what we are actually doing, and cut us a bit of slack while we talk about it in the meantime.

What’s completely screwed about this picture

So I got an email today from Forbes, with the subject “You are Important to Us”. It says this:

Dear Subscriber:

Forbes values you as a customer and your opinions are very important to us.  We are conducting a study and would like to include your opinions.

The survey will take about 10 minutes to complete and we think you’ll find it interesting and enjoyable. Your responses will be used for research purposes only and will be held in the strictest confidence.

Simply click on the link below to visit our survey.

Click here to take the survey [The link goes to a long address that begins http://forbes.puresendmail.com/print.]

Again, we thank you so much for participation.

Sincerely,

Bruce Rogers, Chief Brand Officer – Forbes

You are receiving this email because you registered at Forbes.com LLC. and signed up to receive third party emails To manage your preferences or change your delivery address, please click here.

You may also email your opt-out request to  privacy at forbes.net or send your request in the mail directly to:

 click here.

Copyright 2008 Forbes.com LLC TM

I thought, “Hey, I’m busy, but I like Forbes, and I’m inclined to cooperate, even if I hate most surveys and would rather relate to Forbes in a less one-sided and impersonal way. So I punched on “Click here to take the survey”.

The first step was one that asked me what my title was. I have several, but none of them are from the lexicon of corporate hierarchies. So, next to “other” I wrote “fellow”. Because that’s what I am, here at the Berkman Center. (I’m also Senior Editor of Linux Journal and President of my own small company, but I went with “fellow” because I get Forbes where I live near Berkman and not at my home office in California.)

The first survey page told me the thing would take about ten minutes. That’s a lot, but I thought, “Okay, I’m still game. Let’s see how fast we can make this.”

It was over in one second. Or however long it took for the survey server to send me to a page with the title “Thank You - InsightExpress.com“. Its entire contents were this:

Return to Your Originating Web Page

I hit the back button and it went nowhere. Then I clicked on the address in the email. That timed out. So did I.

This is the point at which one might be tempted to write to Bruce Rogers or the nameless  Privacy Administrator, but Forbes has gone out of its way here to avoid human contact (no email address for Bruce, a surface mail address for ATT:Privacy Administrator — both of which scream “WE ARE AVOIDING YOU. PLEASE COOPERATE.) But that would be weak and supplicating, and I have no interest in being either. I’d rather be the good Forbes subscriber that I’ve been for years and attempt to make constructive human contact instead.

I’ll do that three ways. First is with the headline above, plus links and other bait that might get the attention of Bruce Rogers or one of his factota. [Note: I posted this at 1:12pm, and Bruce responded personally at 1:56. Well done!] Second is with an email to some folks I know at Forbes. Third, and most importantly, I’ll try to explain the VRM angle on this.

VRM is Vendor Relationship Management. It’s how customers manage relationships with vendors. (Or with other individuals, or with organizations of any kind — such as churches or governments.)

Most vendors are familiar with CRM, for Customer Relationship Management. I can’t tell if a CRM system was involved in this little exchange, but a failure of this kind is certainly within the scope of CRM’s concerns. (To visit those, check out the CRM sites for SAP, Oracle, SalesForce, Amdocs and Microsoft, which are the top four companies in an $8+ billion business.)

Right now VRM is a $0 billion business. But in the long run it’ll be big, and it’ll improve the CRM business along with it, because it’ll give CRM something more substantial than mailing addresses to relate to.

A number of development communities are working on VRM solutions right now, but rather than talk about those I’ll just say what I’d like here. Not from Forbes, but from VRM developers. If Forbes or any CRM companies want to help with that, cool.

I would like a simple dashboard that tells me what I’m subscribed to and what I’m not — both for print publications such as Forbes and for email subscriptions of every kind. I would like to have global preferences that would govern how I relate to each of those publishers, and how they relate to me. For example, I would like to throw a switch that says “No” to all third party mailings, both to my font door and to my email addresses. When I establish a relationship with a new publisher, or publication, or supplier of any kind, I would like them all to know, as a matter of policy, that I don’t want them to waste their time, money and server cycles by sending me junk mail of any kind. And that I don’t appreciate having my own bandwidth, cycles, disk space, rods, cones and time wasted dealing with any of it. I might give a global or selective thumbs up to surveys, provided I also have a standard way to send error messages and other feedback to survey sources.

On the positive side, I would also like to open conduits through which productive interaction could take place with the publishers, authors and circulation officials whose “content” I pay to get. (And even those that I don’t pay.) I would like a simple, straightforward, universally understandable way to do this, across all “content providers”, so I don’t have to relate only inside each provider’s silo. (By the way, we’re already working on change-of-address, to pick just one subcategory of subscriber-publisher interaction that can be a pain in the butt for everybody. That last link is a working draft, by the way. More work is happening off-wiki.)

That’s just one part of what we’re doing at ProjectVRM. But it’s one I’d like the “content providers” and CRM folks out there to know about. Because it’s going to happen anyway, and I’d suggest getting interested, and perhaps also involved, sooner rather than later.

Who in CRM 2.0 will help VRM 0.1?

I like following Paul Greenberg’s blog, which focuses on what he calls CRM 2.0. He’s hip to VRM, calls it a “labor movement for customers”, and kindly lists it as one of the developments to watch (or places to watch for developments) in 2009.

Here he ists CRM companies to watch for in 2009. Before reading that list, I had barely heard of any of them. Mostly I’ve been looking at big companies like Oracle, Salesforce and Microsoft and SAP.

So now I’m wondering which, if any, of these companies (including Oracle and the rest) are following VRM and might like to work with us on customer-side tool development.

Meanwhile, it’s interesting to see what’s hapening with the CRM entry on Wikipedia. The 11:10, 19 January 2009 was the last to include a “Market Structure” section with a table of companies, which I found quite helpful. The next version, 06:43, 20 January 2009, by 122.168.243.254, cut most of that section out, and considerably shortened the entry.

Here’s a comparison. I think somebody is working on the entry as I write this. If they’re following this, it would be nice to get the missing table back. (My MediaWiki editing skills aren’t up to it, and I don’t feel qualified to do it anyway. Just watching along here.)

The architecture of scaffolding

We’ve had a lot of discussion, both online and off, about the V in VRM. It speaks one kind of relating, in the economic sphere. Which is just one sphere.

Britt Blaser has spoken often of the kind of RM that begins with a G — GRM for Government Relationship Management.

We’ve also talked about why we start with the individual in our work with VRM. Why not start with groups, and group empowerment? Especially since “social” is such a hot theme?

The answer is that relating starts with individuals. Even though it always involves more. One’s relationship with one’s self may be interesting to a shrink, but it’s too small for building a society, an economy, a politiy.

Erik Cecil, a friend and freshly minted blogger, almost poetically captures something about relating in this paragraph from his latest post:

IntERdependence is the engine of democracy; it creates the nanostructures of new economies.  People lined 137 miles of railroad track, therefore, not to see some new Hercules.   They came to see in their new President a reflection of their individual importance reflected back to them in the President they just elected.   He not only moved the power of democracy to the edge, but opened the path back to the middle.   Reverberating throughout the crowds was the music of interdependence.  Let the new freedom ring.

We’re in new territory here — one we’re just beginning to make for ourselves.

Creating a market force

So I’ve been asked (somewhere… can’t find it right now, so maybe one of ya’ll will remind me) if the last three paragraphs of this post by Daniel Goleman speak in some way to VRM. Here they are:

The singular force that can drive this transformation of every manmade thing for the better is neither government fiat nor the standard tactics of environmentalists, but rather radical transparency in the marketplace. If we as buyers can know the actual ecological impacts of the stuff we buy at the point of purchase, and can compare those impacts to competing products, we can make better choices. The means for such radical transparency has already launched. Software innovations now allow any of us to access a vast database about the hidden harms in whatever we are about to buy, and to do this where it matters most, at the point of purchase. As we stand in the aisle of a store, we can know which brand has the fewest chemicals of concern, or the better carbon footprint. In the Beta version of such software, you click your cell phone’s camera on a product’s bar code, and get an instant readout of how this brand compares to competitors on any of hundreds of environmental, health, or social impacts. In a planned software upgrade, that same comparison would go on automatically with whatever you buy on your credit card, and suggestions for better purchases next time you shop would routinely come your way by email.

Such transparency software converts shopping into a vote, letting us target manufacturing processes and product ingredients we want to avoid, and rewarding smarter alternatives. As enough of us apply these decision rules, market share will shift, giving companies powerful, direct data on what shoppers want — and want to avoid — in their products.

Creating a market force that continually leverages ongoing upgrades throughout the supply chain could open the door to immense business opportunities over the next several decades. We need to reinvent industry, starting with the most basic platforms in industrial chemistry and manufacturing design. And that would change every thing.

It’s certainly consistent with VRM. And the first four words of the last paragraph are exactly what we expect VRM to do.

VRM in 2009

This blog is #19 and Chris Carfi’s Social Customer Manifesto is #7 on Chris Bucholtz’s Best CRM Blogs of 2008, at Inside CRM. About this blog, Chris wrote,

The bumpy economy has perhaps been unkind to forward-looking philosophies like vendor relationship management, but that has not curtailed Searls’ explorations of what will be when the business world finally understands that the customer is now running the show. He makes a convincing argument that companies are leaving dollars on the table already by refusing to admit that this is a consumer-driven world. As Searls wrote, “I’d rather have ‘-driven’ than ‘-centric.’ Because being ‘-centric’ doesn’t require you to relate. Being driven does.”

I never thought about this as a CRM blog, but to the degree that CRM and VRM will work together, it makes sense.

It will be interesting to see which CRM companies realize that customers are driving with VRM. Some are already waiting to see VRM tools show up in customer hands. At a recent ProjectVRM committee meeting, one of the attendees from a CRM company reported that the top honcho at his outfit said “Whoever wins at VRM wins at CRM.” That’s good to hear. VRM will give CRM much more to engage with.

Anyway, Larry Dignan seconds Paul Greenberg’s expectation that 2009 will be VRM’s breakout year. He adds this:

Simply put, a VRM tool would be something customers use to relate and manage multiple vendors. Greenberg thinks that 2009 will be the year in which VRM becomes more than just a concept. What’s ironic is that vendors that have the most tentacles into companies (Oracle, for instance) may become players. Just imagine the following: here’s a VRM tool from a big vendor so you can better manage it.

Well, if the tool only helps you manage one vendor, it’s not a VRM tool. But the irony risk is not small. That’s why I’m still not eager to promote VRM before we have working code and ways of demonstrating how VRM tools make you both independent of vendors and better able to engage with them.

May the best customers win.

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