Vendor Relationship Management

Doc Searls stands up for a lot of stuff that I could take issue with today in a lengthy interview with Shel Israel. I’ll just pick on one thing. Doc says,

VRM stands for Vendor Relationship Management. It’s the reciprocal of Customer Relationship Management, which is the field that has been devoted to customer entrapment for far too long, and which has borne nearly the full weight of “relating” to customers — and entirely on terms supplied by vendors. Customers need to be able to set terms as well, and to relate in ways that work for both sides.

Now what is that about? CRM is a humongus corporation managing its marketing and products by aggregating sales, supply, and marketing relationship data of customers sliced and diced a million different ways. CRM is 1:1000000, so the reciprocal of that is 1000000:1 and that implies organization of customers, like cooperative buying, like unions. But Doc is a big-time bourgeois individualist, a self-reliance kind of guy, so VRM is likely not really about a reciprocal to CRM. Later in the interview he clarifies further,

In general tools that increase freedom and choice are what matter. The ones I care about are the ones we’re working on with ProjectVRM. They have to do with independent individual-controlled identity and the ability to express preferences, choices and demand, across whole markets rather than just within vendor silos. I see CRM as we understand it now — ways to own and manage the creatures called consumers changing utterly once VRM comes along. I believe this will change business itself, and markets along with it.

What was it Henry Ford said? You can get any color you want as long as it’s black? Identity is identity, why… it’s almost tautological! Many on the web would protect and preserve their privacy through anonymity, but underlying that anonymity, that pseudonymity is a real identity that is tied to a real entity. So I still don’t get ProjectVRM, what it’s trying to accomplish, what entities it will ultimately benefit.  I think Doc’s use of “reciprocal” implies “reciprocity;” but I don’t see how I, a lonely little consumer of (for example) Kraft products have a lot to say to them all by myself about toning down the dayglo orange color of their boxed mac and cheese dinners.

Now perhaps along with the communications revolution that we’ve brought to the world with our little network, there is also waiting in the wings a manufacturing and distribution revolution that will play into these VRM dreams. Some mash-up of Just In Time manufacturing of consumables and Fed-ex… If we’re agile we’ll deliver the network that addresses those supply-side changes as the market evolves to feed our individual demands for unique products and personal and private service. Maybe then I’ll be able to anonymously order up a dayglo orange Ford Model T and a case of black enamel colored mac and cheez.

[tags]burger king, VRM, Doc Searls[/tags]

Posted in Networks, Tools
12 comments on “Vendor Relationship Management
  1. Doc Searls says:

    I don’t know how to respond to this, Frank. “big-time bourgeois individualist”? That feels like a flame to me. Is it? If so, why? If not, how?

    I’ve been writing and talking about VRM and stuff like it for a long time now. There’s plenty at http://projectvrm.org, if you care to look. You’ll also find there evidence of a lot of hard work by a growing community of people who are trying to do something good for individuals in markets that have been stacked against them for a long time. There are good ideas there about how to make markets work better by equipping customers with tools that increase their independence and give them better ways of engaging — on the customer’s terms, rather than just the vendor’s.

    How is that not clear? How is that a bad thing? Or worse, deserving of sarcasm?

    Your conclusions about “Just in Time manufacturing of consumables” and the rest of your last paragraph are nowhere close to what we’re trying to do.

    Are you interested in knowing more about what we’re trying to do? Or is your mind all made up now?

  2. madame l. says:

    there’s a comma typo in doc’s vrm link that leads to an error.

    should be:
    http://cyber.law.harvard.edu/projectvrm/Main_Page

    or:

    http://www.projectvrm.org

    [Thanks for pointing that out. I’ve fixed it. –fp–]

  3. Over the last year or so, Doc, I’ve spoken with you directly a couple of times about my discomfort with whatever VRM actually is, my inability to “get” it, and my desire to encounter it on my own blog some time. You may not have heard me, but my reaction should come as no surprise to you. My lack of understanding may be a personal failing, a slowness in catching on. I’m open to learning more as the thing itself develops. It seems to be early days for VRM right now.

    Regarding “bourgeois individualist,” it’s only a flame if you feel it is. I refer you to wikipedia’s article on the bourgeoisie. I’m afraid the negative connotation discussed in the 3rd par. of that article colored your understanding of the use of the word as a more general descriptor, a term of art. Thus Ronald Reagan does make asshats of us all. Perhaps if I had described you as a “well fixed libertarian” you would have felt less friction. The import of the observation rests in your sense of empowerment and the idea that we — each of us — can get decent terms on a contract for a few hundred pounds of Thiokol to enliven our 4th of July celebration.

    There was a time a few years ago when working for a big technology company I was in the awkward position of explaining to customers that if they wanted us to respond to their RFPs, they’d have to front the costs of RFP response development. Lacking a commitment to purchase, we weren’t going to put a lot of engineering into something for free. I offer that anecdote in response to the diagram from the VRM wiki that draws out personal RFPs as somehow doable.

    I wonder what would happen if I told Apple I liked their new hand-held, but I want one that will permit me to carry a spare battery and change it myself, that will support a bluetooth qwerty keyboard, and I’d like their business partner AT&T to let go of me as a potential customer and let me use the thing on the Sprint network. Is this the kind of problem that VRM is designing itself to solve? Because, if it is, you have my best wishes but I’m skeptical. Absent a new generation of nano-manufacturing techniques that provide low cost one-offs, I’m skeptical that it can be achieved.

    I am interested in the specifics, and I’m having a hard time locking into VRM at that level. It seems to be early days yet, and if there’s a specific project that’s being developed, then if it’s for my benefit it would seem reasonable that you would be willing to share some of the details. If it remains in a higher level planning stage right now, that’s fine too, but it seems premature then to claim anything for the effort besides that it’s underway.

    Sorry if you felt the need to criticize the way I’ve given voice to my skepticism as “sarcasm.” By framing the conversation as a conflict you miss the opportunity to engage with good will, an opportunity that might inform each of us.

    My post was a quickie. It didn’t detail each of the concerns I had while reading your message at Shel’s place. It didn’t tease out the irony of VRM and SAP and “wonder what that means for me.” It didn’t rise to defend three enterprises you seemed to dismiss but that I find to be life’s blood of the net right now: eBay, Amazon, and Orbitz. The first two already function to commoditize their wares and assure fair prices and rapid delivery. Orbitz and other online travel services might be good places to provide live-web mash-ups of interactive sessions with each of them to tease out the best prices and arrangements for ticketing. The secure sockets issues might give us trouble with that.

    But let me take the travel industry idea forward as explaining to myself what VRM could mean, unless I have it hopelessly wrong again.

    A lot of blogging and commenting seems to be about thinking out loud and working our way to our own conclusions without retracing our steps for elaborate re-writes. I am sorry if you find hurtful what I say or the way I say it. I think we are all rewarded if we can engage in a little push and pull around new ideas without getting our egos bruised.

  4. Doc Searls says:

    Thanks for clearing so many things up, Frank. I really do appreciate it.

    Some responses. These are being made in haste, so if they’re not clear, tell me so and I’ll do my best to clarify them in the next round.

    First, if you look for VRM exclusively from the vendor’s side, it will never happen. From a vendor CRM perspective, a personal RFP makes no sense. That’s why we need to start from the customers’ side. What happens to an industry customer empowerment is increased in ways that are good for *both* sides? That’s the idea here.

    Second, it has been amazing to me how many senior executives at large vendor organizations are interested in having customers that come equipped with better tools for both independence and engagement — which is what VRM is about. Three companies I feel comfortable naming so far are British Telecom, Target Stores and Johnson & Johnson.

    Third, we’re not looking for totally individuated manufacture. That has never been on the table at any discussion of VRM that I’ve been part of (that I recall, anyway), and I don’t expect it to be — certainly not short of the very long term. One big thing we’re looking for in the nearer term is liberating vendors from the kind of guesswork they have to do when they are trapped in their own silo’d CRM and marketing systems, which — by limiting the customer’s request and feedback options — tend to exclude lots of truly useful market intelligence as well as feedback. If lots of car rental customers come to agencies wanting something the company *could* provide (but is not on the standard roster of options) maybe they’ll start providing it. We’re not talking radical stuff here. Just creating tools for scaffolding do-able incremental changes that work for everybody.

    Fourth, I should be clear that I’m not knocking eBay, Amazon or Orbitz. I’m a customer of all three, and respect them a great deal. In fact, I would love to have each of them supporting VRM development. All those companies have silos (like everybody else) because they have little other choice in the absence of tools for independence working on the customer side. Wouldn’t it be good if our movie and music reviews were open to use by Amazon, Yahoo and Netflix? Wouldn’t it be good if each of us could set the terms for their use — especially if those terms, out of the gate, were mutually beneficial? Wouldn’t it be good if our reputations, our transaction histories, our preferences, were not locked up in these silos as wheels that need to be re-invented for each vendor-controlled “relationship”?

    Fifth, my ego is not bruised. Nor am I averse to push-and-pull. I will cop to being frustrated and pissed at what I thought was an unnecessarily dismissive response. So I’m glad you cleared that up.

    Conversation, however, requries some common ground. The common ground we have tried to establish from the beginning with ProjectVRM is the need to approach at least *some* problems and opportunities from the *customer* side. Not the vendor side. If we approach everything from the vendor side, nothing will happen and the whole thing will be a waste. (This, by the way, is one of the many areas in which I stray far from Libertarian defaults.) That’s not to say we don’t respect the vendor’s side. Quite the contrary. Again, whatever we create needs to work for everybody involved. What’s different about VRM the anchor of the solution vector. It starts with the customer. Not the vendor. Of course, we could be wrong about that. But I’d rather have the ideas proved wrong in practice than dismissed on theory alone.

    Sixth, VRM is mostly theory at this point. We have theses to advance, test, prove and disprove. The core thesis is that a real relationship requires empowerment and choice on both sides, on terms that both sides provide. Check-box EULAs and form-filling on terms only vendors provide are not “relationships” no matter how well a CRM system may put a rhetorical gloss on the absence. What if CRM systems did not bear the entire responsibility, did not set all the terms, and related instead with customers on mutually useful as well as agreeable terms? What would happen then? We don’t know. We’ll need to be able to test some things out.

    Seventh, right now we have a number of workshops planned for building out VRM tools in a variety of categories.

    One is public radio funding — reducing the friction involved in supporting public radio by equipping the listener with better and easier ways to hit the “buy” button… ways that help every station. That’s to supplement and improve the current system, which requires slogging through each station’s CRM silo online or calling a phone number during funding breaks. We’ve had a number of workshops on this subject already, and we’ll have a number more.

    One is health care: specifically, giving patients better ways of owning and controlling and presenting their own health care data when they change doctors or plans or arrive at emergency rooms. No date yet on that, but we’ll be talking about it a week from Monday at a VRM workshop at Oxford University. The event will probably be in the U.S., however.

    Another is CRM. What are the conceptual implications of VRM for CRM? What happens when we get developers for both in the same room to talk about the constructive possibilities and common ground? This will be on the table next week in Oxford, and we’ll have a more focused workshop again in the UK, probably in October.

    Another is peer-to-peer-built infrastructure. If the Net really is a “world of ends” (as Dr. Weinberger and I suggested in 2021: http://worldofends.com), how can we build it from the edges inward, as *our* network rather than the carriers? Can we do this? Don’t know yet. Are muni-based fiber and wireless build-outs the only option here? Right now we’re thinking about having a workshop next spring at UCSB in Santa Barbara, and using that as a springboard to deep research toward building conceptual foundations for regarding the Net as a public good — a rising tide that lifts all economic boats — than as a grace of phone and cable TV carriage. The VRM angle here is giving individuals and small groups means for creating their own connectivity solutions. Again, equipping them with tools for both independence and engagement.

    Finally, we have an active community, with an energetic mailing list and weekly conference calls. It’s kind of a barn-raising. It’s exciting and fun and constructive and challenging.

    Could be it won’t get off the ground, or will fall down a time or two before we figure how to build it right. Obviously we can use all the help we can get — including criticism of our premises, our architecture and the rest of it.

    Looking forward to whatever you can bring to the table. Even if the table so far is a drawing of a thing with four legs and a flat surface.

    Thanks,

    Doc

  5. Jim Bursch says:

    I’d like to offer what I think is a real world application of VRM principles, which can perhaps function as a middle ground on which you can stand with regard to VRM.

    MyMindshare is a platform where vendors and customers can come together on equal terms — each in control of what is important to them, and each in control of their half of the relationship.

    I don’t read VRM as some sort of consumer/socialist fantasy. It’s about creating a tool that helps people to control their assets in the marketplace, and among those assets is information about oneself (identity) and one’s needs/wants. If you don’t control your assets, you cannot strike the best deal in the marketplace, and you even risk being robbed.

    Vendors bring powerful information tools (CRM) into the market, and use those tools to strike the best bargain they can. Consumers would be well served to be equally armed at the bargaining table (or checkout counter).

    Note: I have been developing MyMindshare independent of the VRM project, so Doc might take issue with my characterization of it as conforming to VRM principles, but it is my goal to make it conform to VRM as it develops.

  6. Doc, I’m going to walk through your response and react… some of my reactions may be ground that ProjectVRM has already covered, but hopefully there will be something fresh in my perspective. I have had a chance to read a lot of what’s on the ProjectVRM wiki, so I’m less at sea than I was just hours ago.

    Trying to make sense of a “Personal RFP…” The promise of the market economy is that goods and services will be created to meet demand and offered at fair/competitive prices. How the personal rfp differs from making a market is not clear to me.

    The web supports warehouse/mail order purchase and distribution scenarios. It supports virtual storefront services from product selection and distribution to banking transactions. Lending Tree is cited as a VRM type business… lenders compete to sell us a loan. Loans are pretty generic… bottom line costs are easy to determine and customers are easy to qualify. A personal RFP for a loan would be simple… I want $x for five years and I’ll collateralize it with a car I intend to purchase with the money.

    I’m at a point here where I’ve touched superficially on some aspects of point one, and I’ve gone on and on, and points two through seven remain to be addressed. Clearly my comments to this post ain’t the place to do it.

    I would like to underscore that I think it is necessary that a corporation’s entire customer base be empowered to negotiate for quality of goods and services and the best terms and conditions that can be driven out of a supply model that treats big buyers best.

    I think there are ways for this to be achieved by returning to government public service models that control and administer the public goods. I think that a good outcome of VRM would be the organization of fragmented markets so the best prices were guaranteed to users of the VRM tools.

    It is certainly a fertile field that you’re working in. Empowering individual customers seems to require organizing an entire customer base in order to influence production and supply alternatives.

  7. Frank, I remain dubious of the ability of government to supply public goods. After all, good government is itself a public good. Bad government, on the other hand, is oversupplied by the market for political action.

    I’m just back from the FGC Gathering, and as always, I’m impressed by the Quaker’s love/hate relationship with big govenment. They hate it
    when it fights wars, but love it when it supplies universal health care, or minimum wages, or same-gender marriages, or education, or (fill in the blank here). The same characteristic which lets it do all these good things also lets it fight wars. You’d think that after a century of wars and socialism, Quakers would wake up and smell the bacon.

  8. Many Quakers respect the idea of democratic process assuring that public services are delivered by public entities. Many of us call this “government” and welcome the opportunity to pay fair and progressive taxes in order to assure an equitable distribution. Many of us also abhor war and as a matter of conscience escrow that portion of our taxes that would pay for war, requiring the government to confiscate our assets rather than paying forward into an abhorrent system. Public policy development and administration is the business of government, and public policies have as an important focal point the concern for public service identification and delivery.

    Commodities like water, bandwidth, and electrical power are more fairly priced and delivered by public enterprise than by natural monopolies of profit seekers. Services like education, libraries, garbage, sewage, roads, and health care are too important to trust to profit takers.

    No bacon to wake up and smell. I had it on my cheezburger

  9. Frank, it’s pacifists like you who make me WANT to get read out of meeting. In a system of majority rule, the minority must be coerced using violence. The more majority rule, the less peace. I’d write less, but I’ve run out of time.

  10. I had a good experience with the Extreme Democracy bunch Monday night. Got me thinking of ways that the paradox of democracy/coercive violence can be broken. Interesting that you took my phrase “democratic process” and translated it to “majority rule.” Our common answers lie on an orthogonal vector.

  11. A couple of thoughts prompted by these exchanges.

    First, Doc’s use of the idea that CRM is the reciprocal of VRM is a powerful and useful way of reframing/challenging deep and unquestioned assumptions that see all go-to-market challenges from the corporation’s point of view.

    Doc’s terminology helps us see that there is an opportunity in viewing these challenges from the individual buyer’s point of view. The obvious implication is that any systems or processes that arise from this will impact on sellers’ go-to-market strategies.

    Both of these implications of ‘reciprocal’ are useful. The drawback of this terminology however is that it encourages the assumption that VRM is simply a sort of mirror image to CRM. In fact, it is about the development of a new set of services/business models that earn their keep by helping individuals achieve what they want to achieve in their lives more efficiently and more effectively. At the core of this, is providing individuals with a greater ability to gather, store, manage, analyze, share, pass on, and otherwise use information in ways that help them assess options, decide on priorities, make plans and implement them, administer things, coordinate activities, etc. In other words, doing for individuals what all the big information systems currently do for companies.

    This is much,much bigger than a sort of mirror-image to CRM. We are talking about the emergence of a new industry as well as a new paradigm.

    On RFPs specifically, there are two points to make. First, the RFP is just one of many emerging service opportunities – highlighting the RFP is just another good way of challenging deeply held assumptions about who is in control of the process, which way information should flow, etc.

    Second, RFP is an umbrella term for a whole range of specific services. At one end it may simply be an announcement that ‘I am now in the market for a new car, and would welcome messages and offers about cars in the following price bracket’. I think Frank would agree that most sellers would see benefit in developing systems capable of responding to such useful information.

    At the other extreme, there is the personally customised, completely new concept: the dayglo Model T with tractor wheels. Frank is right, very few suppliers will jump at this opportunity (though some specialists might, if the price is right). But it would be silly of Frank to dismiss even this because, as such as a system of ‘this is what I really want’ expressions develops critical mass, it will give sellers a real time window on changing and emerging market trends.

    In the middle, there are a host of other forms of RFP (both individual and aggregated) which could provide huge benefits for both sellers and buyers.

  12. I find this discussion both fascinating and at times a little concerning when it comes to CRM v. VRM. There is no versus here. I’ve been involved rather intensely in CRM for the past 12-13 years and have authored the book that’s called the “bible of the industry.” Yet, my perspective has ALWAYS been from the customer side – perhaps coming from my historically leftist bent. In fact, for the last several years (always referring to the Cluetrain Manifesto), in all my speeches, teaching and writings, I speak to the idea that we live in a customer ecosystem and that businesses , to be intelligent at this stage, need to understand that they have to cede control to their customers, because the Net and the Live Web or Web 2.0 or whatever you want to use as the term, has provided a means to instantaneously communicate among peers which also means without business involved. So the businesses are actually on the outside looking in. That means, as Beth Comstock, President of NBC Universal said, “the customers know what they want to do. We have to give them the means to do it.” (this is a paraphrase). That also means that customer strategy is not involved with the management of relationships by business anymore but in fact, has to be customer engagement – which means the businesses, as aggregators, need to provide the products, services, tools, experiences etc. that allow the customer to control and create their own highly personalized experience with the company’s cooperation but not just to “have” the experience but to SHARE the experience too. Businesses that Doc mentions are among the leaders in getting this as is Proctor & Gamble, and more recently the Gannett Publications like the Cincinnati Enquirer. CRM vendors with a couple of exceptions like salesforce.com (to a limited extent) and even SAP (to a limited extent), don’t really get it and tend toward the traditional, operational and tactical approaches that CRM was known for. Some of the newer collaborative companies like Zoho and Neighborhood America (enterprise social networking) among others are more focused on providing the offerings that are needed to give the customers the control they need in their relationships with business.

    One thing that bothered me a little though in this discussion, was a relatively straightforward and innocuous comment that Doc made about VRM and CRM developers being in the same room to discuss things. While unto itself there is nothing wrong with that, the biggest problem CRM proponents who do get it (and there are many), have had was to overcome the “CRM is a technology” misconception that’s been going on for years. My definition of CRM which goes back to a column I did for CRM Magazine in 2021 is “CRM is a philosophy and a business strategy supported by a system and a technology designed to improve human interactions in a business environment.” Note the latter phrasing. That’s the important part. It seems to me that at this stage of the game it would be better suited to also have a room full of customer strategists who are CRM folks with the VRM strategy folks to talk over the strategic relationships that are needed to fulfill the “value and values are given and in return, value and values are received” nature of the newer VRM/CRM collaboration or CRM 2.0 or whatever the heck its going to finally be called. That comes before any discussion of the technologies that are needed to effectuate that, IMHO. I have a wiki up that I would encourage you guys to take a look at on CRM 2.0 that has just short of 200 of the industry’s leading lights who are trying to define as a community where CRM needs to go and what it needs to be and to then act on it. Its at crm20.pbwiki.com. Also, I’m gonna write the 4th edition of my book (CRM at the Speed of Light), something I vowed I’d never do because I was sick of it, because the social evolution in the peer to peer means of communication and community is so dramatic and its impact on contemporary business models so deep, that I just had to. I’m at the point though that I want to make sure that we understand all told this isn’t a VRM replaces CRM thing. Its finding out how to evolve and create mutual value for both business and the customer with an understanding by business that the customer now commands the business ecosystem, as painful as it may culturally be for that company to understand it. Baby, si. Bathwater, no. In any case, just to clarify something, I’m not trying to save CRM here. I’m trying to figure out with the help of thinkers like you all what the new models for the prosumer world we now live in are. The only thing I truly know is that they are personal.

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