From Transactions To Community

Have been road-testing this model over the past few months, most recently with the fine folks from Blue Marble Marketing, and would love your feedback as well.

The interactions between customers and vendors are in a state of flux, and, as best as I can tell, are moving up through the levels shown in the graphic to the right. These are as follows:

The Transaction stage: At this point, both customer and vendor are thinking of their interaction as a “one shot” deal. The vendor’s trying to sell something, the customer is going to buy something, and that’s it. Historical knowlege of the other party, as well as the potential for future interactions, is not even really part of the equation. At least in most “traditional” markets, most organizations are still mired at the “transactional” level. Push, push, push…the vendor creates a product, markets it, spins it, and tries to reap as much short-term profit as possible. It’s a “one size fits all” type of interaction, and if the customer doesn’t like it, he or she can go elsewhere. And customers will.

The challenge in going from “Transaction” to “Conversation”: You need to stop talking, and listen.

The Conversation stage: This is the first realization from the vendor’s perspective that, huh, whatta-ya-know, customers might have some opinions and beneficial input into the process of doing business. Everything from features (both pro and con) to terms to future direction of the organization are things on which the customer may have an opinion. The vendor starts to listen, and starts to create a dialogue, at least for some period of time. The conversation may take place around a particular transaction (i.e. the customer and vendor work together to collaboratively “discover” all the aspects of a particular transaction), or the two parties may be exchanging information and each go off on their own afterward.

The challenge in going from “Conversation” to “Relationship”: You need to stop thinking in terms of “making this quarter’s numbers” and start thinking about how you can contribute to the conversation over weeks, months, years.

The Relationship stage: Conversations are good, very good, in fact. However, managing them over time takes effort, again, on the part of both parties. First off, participation in a conversation over time requires commitment. Commitment to follow up and execute on agreements that have been made, commitment to continue to contribute to each others’ well-being, commitment to work shoulder-to-shoulder (as opposed to confrontationally across a contract) when challenges emerge (and they will). A big part of building relationships is committing to having a long-term memory, as well as a long-term future view. There are a few folks who are eidetic; the rest of us need to have processes and systems in place to augement our feeble crania. Everyone is different, and what works for one person may not work for another. But regardless of the mechanism that is used (be it a bazillion dollar software package or a set of 3×5 notecards), having some way of recalling past conversations and their associated commitments, and noting what future commitments are in place, are all required components.

The relationship level is where things start to get really, really interesting. Customers aid in designing products with a vendor. Vendors do things for a community without (necessarily) expecting an immediate quid pro quo in the form of a sale (but believe that doing the right thing now will make everyone better off down the line). Loyalty, customer satisfaction, and not incidentally profits, start to blossom.

The challenge in going from “Relationship” to “Community”: You need to give up control, and trust your customers.

The Community stage: Major tectonics come into play when moving from relationships to community. First and foremost, everything discussed up until now is primarily pair-wise, that is, it occurs between two parties (for this discussion, primarily between a particular customer and a particular vendor). However at the community level, the partitions between sections of the walled garden fall away, and everyone starts to connect with everyone else. For an organization trying to make a buck (pound, yen, yuan, etc.), its role changes markedly at this point. Hopefully, when exiting from the “transactional” view of the world, this evolution already took place, and the vendor organization realized that it cannot dictate the conversation. At the community stage, vendors need to realize that they need to step back even further, and in many cases may not be participating in a some conversations at all (but certainly better be listening to them).

(Another great view on the “community” level of this, from Lee LeFever.)

At the community stage, the role of the vendor changes to that of enabler, providing the venue where great things happen and solutions get created. Perhaps the vendor is providing infrastructure, or knowledge, or support, or expertise, but…whatever is being provided…it’s just a part of the whole picture. In many cases, the customers in a community will be aiding each other (think forums, think user groups, think collaborative development). The vendors that will excel at this stage of the game will be the ones with enough confidence to act as gracious hosts, providing the rich soil where the important ideas grow.

Note: A huge thank you to Doc, for this loamy conversation, from which this thinking has sprouted.

(And I’m afraid I’ve just sown an entire field of perennial gardening puns…)