Let’s Look At The Big Picture: How Does This Affect Me?

JP writes:

“Information is going to be like money. And we’re going to move it around like money. [We already are.] Institutions that hold information are going to be like banks. With a variety of services, and with rights and duties associated with our information, varying according to the service we sign up for.”

In taking JP’s statement at face value and doing some reading, I found out a number of things regarding the history of money in North America about which I had been previously unaware. These items may (or, admittedly, may not) provide a number of parallels that could be useful now as we think about issues such as online identity, customer behavior, and VRM.

Lesson 1: “Money” was very fragmented for a very long period of time after the colonization of North America

“Money” as we think of it in the form of cash/paper currency has only been around for about 150 years. Over a period of almost two hundred years both before and after that time, a number of fragmented methods were used to exchange value. These included, but were not limited to:

Wampum – Wampum, or “shell money,” is a medium of exchange that was once common. The History of the Canadian Dollar states, “The Aboriginal peoples of eastern North America placed a high value on strings and belts fashioned from beads of white or purple shells found on the eastern seaboard. Early English settlers called such articles “wampum,” an abbreviation of an Algonquin word sometimes spelled wampumpeague. French settlers called shell beads porcelaine. Wampum was highly valued, partly because of the difficulty in making shell beads even after European tools became available in the seventeenth century. By one estimate, it took 119 days to make a 5,000-bead belt (Lainey 2004, 18). Strings and belts made from purple beads were roughly twice the value of those made from white beads, since the purple shell was much more difficult to work.” (cite)

Specie – Coins made of gold, silver or other metal.

Potlatch – Potlatch is a festive event within a regional exchange system among tribes of the North pacific Coast of North America, including the Salish and Kwakiutl of Washington and British Columbia. Sponsors of a potlatch give away many useful items such as food, blankets, worked ornamental mediums of exchange called “coppers”, and many other various items. In return, they earned prestige. To give a potlatch enhanced one’s reputation and validated social rank, the rank and requisite potlatch being proportional, both for the host and for the recipients by the gifts exchanged. Prestige increased with the lavishness of the potlatch, the value of the goods given away in it. (cite)

Barter – Trading one good for another

Furs – The pelts of native animals such as beavers

Tobacco – The leaf of the tobacco plant

Tobacco Notes -The US state of Virgina was using “tobacco notes” as a substitute for currency by 1713. Tobacco farmers would take their crops to warehouses for weighing, testing and storage, and inspectors would issue “notes” that could be exchanged in lieu of moving the actual leaves around. (cite)

The key thing to note here is that it took hundreds of years for these various value storage media to converge (and both the convergence and creation of new ways of storing financial value continues today…remember that the oldest Euro coins and banknotes in the world are seven years old, the same age as a first-grader).

Now, let’s think about our information about ourselves, our attention, and our purchase histories through the prism of the points above. Our information is undeniably a valuable asset. However, at the current time, we’re at the wampum and furs part of the cycle as far as managing it. These various bits of our online identity and history are in disparate forms, with each bit of information in a different vendor’s CRM system in a non-transferable and often inaccessible state.

Lesson 2: Everybody needs to win

After the ideas of “cash” and “checks” had taken hold and become widespread, there were still many inefficiencies in the system. Cash is cumbersome, and subject to loss. Checks may bounce. This continued until the mid-1900’s.

Enter the credit card.*

The credit card resonated with both customers and vendors because both parties received benefits. For customers, the were afforded an unprecedented amount of flexibility and convenience, in addition to delayed billing. For vendors, it’s a lever for differentiation and reduced transactional friction, as well as a way to access customers who might have previously found the vendor’s products beyond reach. For the issuers, it’s a rich revenue stream. For now, we’ll assume that the credit cards are being used wisely by customers and not as mechanisms that get individuals into long-term financial straits through overextension. At this point, we should probably add that if you need help in managing the use of your credit card, then you can find advice in some of the posts on dramming-news.com. But under the presumption of sensible use, perhaps the success of the credit card was a result of this win-win-win scenario.

Now, the widespread usage of credit cards was not something the occurred overnight. Instead, it was something that occurred over a generation. In 1970, only 16% of American households had credit cards. However, by 1995, that number had climbed to 65%. (cite)

As VRM continues to evolve, it is these win-win (or win-win-win) situations that will be kept in mind. Without benefit to all parties, the effort will be stillborn (or, at least stymied). With a view toward mutual benefit, however, the opportunities are expansive.

Managing your finances is not always easy, especially if you run a business. Want to stay one step ahead of the latest trends in accounting? Check out this useful guide from the University of Alabama Birmingham to find out more.

* – Kudos to Drummond for suggesting this parallel between credit cards and the necessity of mutual benefit as a precondition to VRM success.

photo credit: creditcards.com


Doc writes:

“CRM — Customer Relationship Management — is a highly developed set of disciplines: market research, call center tracking, marketing campaign tracking and reporting, contact tracking and so on. نرم افزار crm is extremely useful for businesses since it helps them manage multiple areas of the business. Here’s a white paper (http://www.crm2day.com/library/pdf.php?pdf=50364-0.pdf) featured at CRM Today (http://www.crm2day.com/) that makes a “business case” for CRM by promising to “increase the response rates to our marketing campaigns by delivering a tailored message to customers and prospects” and to “segment customers and prospects in line with our marketing strategy”.

This kind of jive is what you get when it’s easier for companies to talk to themselves than to their customers. And when it’s easier to talk to populations than to individuals. When a recording says “Your call is important to us” or “Your call may be recorded for quality control purposes”, it’s not talking to you as a person. It’s saying, “Calls like yours may be recorded…”

CRM is lame because it is in complete control of its “relationships” with customers. Customers contribute as little as possible to the system other than money, patience and feedback on forms. Complete control is what causes CRM systems to become silos. Those silos become echo chambers for the voices of those in control, and of the inmates who stay and make agreeable noises.”

He continues:

“VRM — Vendor Relationship Management — obsoletes silos and saves CRM by giving it something to relate to. VRM provides customers with tools of both independence and engagement. It gives customers ways of notifying sellers of readiness to buy. It also gives customers safe ways to share useful information without taxing the energies of the vendor or insulting the intelligence of the customer. In all these ways VRM is the reciprocal of CRM, and a powerful way to make CRM useful and to stop being lame.

VRM changes the world by making markets truly free rather than “your choice of silo”. It appeals to customers by providing them with useful, safe and productive ways of relating with vendors. And it appeals to vendors by relieving them of the need to waste money and time on trapping customers and still guessing at what they might want.

The problem is, VRM doesn’t exist yet. We need to make it exist.”

If you are interested in helping to make VRM exist, check out the ProjectVRM wiki and get involved.

Jeff Foxworthy Does VRM

As part of the ProjectVRM meeting yesterday, Joe Andrieu and yours truly facilitated a session asking the question:

“What are the expressions (or perhaps “gestures”) that indicate that you might be in a relationship, instead of just a simple transaction?”

(This was intended primarily to be in the business domain, although there is definitely a blurring of business and not-business when talking about actual interpersonal relationships.) These “expressions” are things you do, or things you feel, or real-world manifestations that indicate that a relationship may exist between parties. Please note, the relationship may be positive, or may be negative.

Here was the list the group came up with. Can you add to it?

“You might be in a relationship when…”

  • there are implications for the future
  • expectations
  • recognition
  • subscription
  • payment
  • tipping
  • genealogy
  • hate sites
  • strong feelings
  • recommend
  • contract
  • employment
  • ask advice
  • expose yourself to vulnerability (“trust”)
  • blacklist
  • conversation
  • stalking
  • repeat patronage
  • badmouth
  • reliance
  • federation
  • referral/introduction
  • sponsor
  • invite
  • rebuff
  • evaluate
  • hug / P.D.A.
  • advocate
  • commenting (e.g. blogs)
  • give gifts
  • find
  • respond
  • keep apprised
  • request
  • extend credit
  • support
  • vouch
  • shared experience
  • having coffee
  • conferences

What are other expressions of relationships that you can think of?

VRM Scenarios

(Note: More background on VRM here.)

Been doing a lot of thinking about VRM (Vendor Relationship Management) in anticipation of this week’s developer’s meeting. It’s a potentially expansive, and extremely undefined, area.

One particular tactic I’ve found useful when dealing with uncertainty is scenario planning. There are many different implementations of scenario planning; the one I use is a modified version of the one described here and originally pioneered by Peter Schwartz at GBN.

So, the two big questions:

  • Q1: Who controls the interactions between vendor and customer?
  • Q2: Are the interactions focused on transactions or relationships?

This gives us a universe as follows:


It’s important to note that the object of this exercise is most emphatically NOT to “predict” which of these four areas will “win.” Instead, it’s to draw a vivid caricature of each world, and determine its key traits. Doing this allows us to better plan for, and recognize, instances of that particular scenario when we run across it in the future.

“Minority Report”
MinrptVendors bring every resource to bear to extract the last bit of margin out of every customer. Targeted ads, served relentlessly and based on our past purchasing behavior, attempt to entice us to consume the next new thing. Friedman’s “Flat World” observation plays out to its logical conclusion, with manufacturing and marketing, sales and service taking place at whatever patch on the globe can deliver the product most cost-effectively. Since vendors use data mining of petabytes of customer data in order to predict the next hot trend, post-sale service becomes increasingly unimportant, since product lifecycles are measured in weeks. Customer data becomes a pure commodity, created, owned and traded by vendors in the way that carbon credits and pork bellies are traded today. Vendors with economies of scale rule the day. Customers get low prices, and limited choice.

Happybunny_1Cryptography, identity management and business processes have all converged, enabling customers to shop securely both online and off. Customers issue anonymous “personal requests” for goods and services, and vendors battle each other relentlessly in order to be selected. Prices are driven to just above cost for commodity items, and a cadre of flexible, “long tail” suppliers emerge to meet the non-commodity requests. eBay stumbles, and then launches a service that is the converse of its current offering. Reputation systems abound for both customers and vendors, leading to the creation of RepTorrent, an anonymous network for the trading of gray-market reputation identities.

“The Global Village”
The customer owns her own information, and does with it what she pleases. In some cases, anonymous transactions are conducted, but most interactions happen with trusted vendors with whom the customer has dealt over time. The customer chooses vendors based on interpersonal empathy and affinity, as well as technical capability. Relationships grow over time, and vendors evolve beyond being simple suppliers of goods and services and into confidants (and sometimes friends). Customers pay somewhat higher prices, but look at interactions with vendors holistically, feeling that price is only one aspect of the true cost of a good or service. Customers and vendors work together to come up with new products and services. Competent and personable vendors succeed, scam artists are quickly outed and ostracized. The same is true for customers, as both vendors and customers belong to interconnected offline and online communities.

“The Matrix (Blue Pill)”
BluepillVendors control production, allocation and distribution, and at the same time understand that a connected customer is a lifetime customer. Supply chain models such as vendor managed inventory and consignments are used. The vendor controls what purchase options are given to the customer, and realizes that he must be equitable, or the customer will terminate the relationship. The vendor has perfect information on the behavior of his customers, including purchase history. Vendors use this information to continually refine and model the selection and quantity of goods and services made available to each customer not only to maximize profits, but also to ensure continued access to that customer. Customers select their vendors based on the belief that they will have an ongoing relationship with the vendors they choose, and give them feedback as to what they’d like to see.

So. These are just first thoughts. Would love to work on this together, both here in the comments and here on the wiki.

marrakech market: malyousif

Changing The Channel

Joe Andrieu, regarding the Shopatron:

“Their system is remarkably simple. They host an online store for a manufacturer, such as Callaway or Brooks. The store is branded 100% as the manufacturer’s and visitors to the manufacturer’s website are seemlessly directed to the store as a way to purchase products. Customer orders are placed on a retailers-only bulletin board, with a fixed price for retailers to “bid” on the right to fulfill that order. Retailers who bid essentially say “Yes, I have that product in inventory and I’ll ship it at that fixed price.”

Once each day, Shopatron resolves all of these bids, sending them to the nearest retailer. That retailer boxes up the product and send it to the customer. The customer gets the product with local support, quickly, and with minimal shipping costs. The retailer gets a new customer and the profit from the sale.

In cases where no retailers want the bid, the manufacturer ships the product themselves. And because nobody wanted it, there is no channel conflict, just higher margins.”


MineOne of the core tenets of the emerging notion of VRM is that we, the customers née users, should be in control of our own information. That is, we should decide what we tell to whom, under what circumstances. Additionally, we should be able to hold onto our own info (and, if a third party needs to hold onto our info on our behalf, we should be able to export it and move it elsewhere, easily).

Mike at Techdirt points to an article about how to create a personal health record (PHR) that gets to this idea in, of all places, the slow-to-change U.S. healthcare industry.

From an abstract, theoretical perspective, the PHR idea makes perfect sense. However, there are so many aspects of this that (I think) would be hobbled by the notoriously risk-averse healthcare industry. In particular, a number of questions come to mind, including:

  • Will doctors accept the information in a patient’s PHR at face value, or need to re-run all test results to “cover themselves” for liability reasons anyway?
  • What are the implications if someone gets ahold of my PHR? For example, can the information in my PHR be used to discriminate via insurance premiums?
  • What if an unauthorized third party gets ahold of my PHR? What are the consequences of the theft of one’s medical history?
  • More broadly, how does one select which portions of a PHR to share with which caregivers? Do I want everyone to have access to everything? (I think the answer is “no.”)

Anyone out there experimented with this at all? If so, would love to hear your stories.