Getting Real and VRM

Deep in a post about other stuff, Tony Fish asks, “What is Vendor Relationship Management (VRM) and how will it effect your future customer relationship strategy?” The parties to whom that is addressed are corporate CRM and marketing folks. Alan Mitchell provides some answers, along with more questions, in Get ready for Vendor Relationship Management:

Why should marketers be interested in VRM? Because, given a choice between a product that isn’t really addressing their needs (CRM) and one that is (VRM), customers are more likely to opt for VRM. In other words, VRM is a game changer.

A VRM filter helps create a new operational and innovation agenda. The simple question ‘how does this help the customer achieve his or her relationship management goals’ can go a long way to predicting which initiatives will stick, and which won’t. Creating systems to recognise customers at every touchpoint and treat them in a seamless fashion looks pretty good under this spotlight. Profiling and propensity modelling for the purposes of direct marketing? Not so sure.

More answers and questions emerge in a thread that starts with Denis Pombriant‘s The Relationship Entity, at the heart of which is this:

Who owns the customer relationship?  Is it the customer?  The vendor?  Both?  I think this is a trick question because a relationship is a duality that exists independent of both parties but requires both to exist at all.  In fact, the relationship becomes an entity of itself, a mass-less, weightless entity but a reality nonetheless.  Substitute the word marriage for relationship and you see my point.

(Tell me about it. Inside our wedding rings my wife and I have engraved “The couple decides.”)

Denis concludes,

I advocate thinking about the relationship as an independent entity, one that has to be nurtured from both sides.  And that drives my thinking on social CRM.

Paul Greenberg follows with Customer Ownership: Relationship? Conversation? Simply Put. SCRM is not VRM. Simple Being the Operative Principle. Some excerpts:

…the company owns the company, the customer owns their own personal value chain so to speak. That’s why there is a difference between SCRM and VRM.  Vendor Relationship Management is what the customer does to command their side of the relationship.  SCRM is what the company does in response to the customer’s control of the conversation – and all the other things associated with that.  But the company still owns itself – meaning its operational practices and its objectives and its records and its legal status as a company.

I think that the customer is at the hub of business ecosystem – to the point that you can call it a customer ecosystem. Meaning the customer drives demand and the company is now forced to respond to that.   But a relationship between company and customer is exactly what Denis says it is and that relationship’s success is the essence of SCRM…

Companies are increasingly being pushed to respond to customers and that is where SCRM begins to show itself.

So let me put it this way.  The final line of my definition of CRM says, “Its the company’s response to the customer’s control of the conversation.”  At this time, the ongoing way that the company responds to the customers control of the conversation IS the relationship.

Thanks to Chris Carfi for pointing us to that thread.

On the topic of branding (one of marketing’s oldest terms, borrowed originally by Procter & Gamble from the cattle industry), Alan Mitchell gets us started again with Brand messsaging: the heart of it. He begins,

I’ll be as blunt as possible. So long as marketers accept the conventional wisdom so neatly summed up by McKinsey, that the job of marketers is to increase “brands’ power to generate messages that influence the consumer’s decision to purchase” we will never – repeat, never – be able to make the mental and operational changes we need to flourish in the emerging era…

To explore the dynamics of what’s happening here, let’s approach the issue obliquely via a wonderful passage in Youngme Moon’s new book Different

In this passage she describes how modern markets work (or, to be more precise, our prevailing mental model of how they work). They display at least five defining characteristics.

  1. Consumers are exercising choice (but only from among the choices that producers have decided to offer them).
  2. Every consumer in every category is on a journey from novicedom to connoisseurship: most of us are neither novices or connoisseurs, we’re somewhere in the middle, learning. This learning is achieved almost entirely via DIY methods (there are no GSCEs or degrees in shopping).
  3. Aside from advertising, most product information is inseparable from the product itself: we go to market to inspect the product, to understand its features, attributes and qualities etc. To learn, in other words.
  4. Virtually all the information provided about the product is provided by the seller …
  5. … designed and distributed in furtherance of the seller’s goals, i.e. to persuade the buyer to buy.

This is the environment that created the brand-messaging consumer-influencing agenda. But it’s an environment that is fading fast. If we look at the emerging environment it looks rather different:

  1. An increasing proportion of the information that’s made available about the product is separate from the product itself: e.g. online.
  2. An increasing proportion of this information comes from independent sources (including other consumers), not the seller …
  3. … so an increasing proportion of this information addresses the consumer’s goal of making better decisions, rather than the seller’s goal of influence.
  4. These last two developments mean that learning about products and markets isn’t just a DIY activity any more: specialist services (search, comparison, peer-to-peer advice etc) are emerging to help consumers on this front; to provide them with the information they need; to help them become more ‘professional’ in their product judgements and choices.
  5. The more consumers get to understand what’s available and what’s possible, the more the process of arriving at a decision changes – from ‘choosing from among the choices presented to me’ to ‘building a specification of what I would like, and then finding the best fit’.

What this means is that we are in transition. Let’s accept that sellers will always want to influence consumers’ decisions in their favour and that consumers will always want to make better decisions. That’s not changing, but how they go about these tasks is being turned upside down (or, to be more precise, right side up).

For many decades now we have lived in a seller-centric market largely shaped and defined by marketers’ quest to influence consumers’ decisions. Consumers have had to pursue their goals within this context. We are now moving towards a buyer-centric market shaped and defined by consumers’ quest for better decisions, with marketers having to pursue their goals within this context. This is the “tectonic power shift”, the “dramatically altered” balance of power between companies and consumers that McKinsey so rightly referred to.

In Sixth Characteristic, Jacek Chwalisz adds to Alan’s list,

Using current communications tools it is possible to find, understand, communicate and satisfy people who at the moment are looking for particular object, not only its perception.

In that post Jacek probes the distance between the real and the unreal, and the role of branding in creating the latter. He sees in brands a “magic” that is “not rational.” Specifically,

I think people taking under consideration different choices than offered by brands feel risk related to possible lost of this “magic”. And they are right, because brands satisfy their needs of “magic”. How this “magic” works? People have a tendency to mix up subject of perception and method of perception. For many people “story about facts” is the same as “facts”, “knowledge about something” is the same as “something”, “self perception” is the same as “self” (this mechanism was described many times, even in European Middle Ages as “medium quo” and “medium quod”).

This distance between perception and reality is reduced by authenticity, and therein lies the problem with branding itself, of the current craze around “personal branding,” and why the latter is oxymoronic.

I took all this on earlier this month in a string of posts titled Brands are Boring, Branding is Bull, and The Unbearable Lightness of Branding. Quite a few comments followed, but none does a better job than Phil Windley’s
Branding and Indispensability vs Reputation and Influence. “We already have an identity and we have our humanity. Those are the things that we need to emphasize, not the idea of personal brand.”

As everybody above make clear, VRM is something that happens on the customer’s side of his or her relationship with vendors (or with any other entity). As Jacek suggests, real relationship requires authenticity. For that, traditional branding is largely a side issue. In fact, I suggest that all branding is essentially a distraction. I might even suggest that nearly all marketing is too. That’s because marketing is still mostly about push. Let’s face it: pushing is what most marketers get paid to do.

But pull will outperform push, because it will involve less — or no — guesswork. It will be based on what the customer actually wants, rather than what vendors want to push at them.

Back in 1997, before blogging got started, I wrote two pieces no publisher would touch, both about “push,” which was then a big buzzcraze: Shoveling Push Media, and When Push Comes to Shove. The craze went away, but the urge to push hasn’t, and shouldn’t. Sellers need to let buyers know what they’ve got and why it’s good. But the waste involved in blasting out message, and “branding,” is huge. And it wastes more than money.

Bonus link: VRM is #15 on Web Design Cool’s list of 21 Twitter Tips From Socially Savvy Companies.

1 Comment

  1. Denis Pombriant’s quote reminds me of a classic Buddhist philosophy. That is, any relationship is based on three things:

    First, an honest assessment of one’s own capabilities.

    Second, the willingness to listen and genuinely understand whoever you connect with.

    And those two factors, put together, determine the ultimate potential of the relationship.

    Your remarks remind me of the dawn of the modern television age, specifically the role of the lowly cue tone. This unheralded innovation enabled TV stations to create television experiences customized for individual regions and more, just as VRM is a necessary precursor for the customization of just about every experience imaginable by the consumer.

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