On Customer-Driven Interactions

With all of the hue and cry around “big data,” the forward thinking folks are actually looking the other way. Here’s the ‘graf that matters:

“Much the way powerful mobile devices store your biometric information and translate your language, personalized information filters and search engines will bring you only the information you want. This will invert the premise of marketing,” Mr. Meyerson said. The phones “will start to be your advocate, recognizing what is near and dear to you and getting it. Instead of companies speaking to you, you will reach out to companies.” (emphasis added)

From this NYTimes article: Behind IBM’s Big Predictions

Transaction Failed

Based on the previous post, a thought:

How do we stop thinking about “transaction costs” and, instead, start thing about *relationship costs* (or perhaps their glass-half full counterpart “relationship *value*”)?

Ask Not What Your Customers Can Do For You…

There are some solid points in this article.  Yet, the overall tone is
a bit offputting; a paean to the "customers are a resource to be mined"
mentality.  Customers need tools of independence and engagement, not a new form of servitude.  From HBS Working Knowledge:

"An organization’s best customers — measured in terms such as size, loyalty, or lifetime value — often are the most willing to go to work for it, whether that means referrals of new customers, ideas for new products or processes, or even help in the selection of its frontline employees.  Of greater significance than satisfaction or even the willingness to recommend the organization to others, these ‘ownership’ behaviors can make some customers more than a hundred times more valuable than others."

(A big thanks to Denise Ryan at Blue Marble Strategic Marketing for the pointer.)

The Grand Intrusion

On November 6,  Azadeh Ensha wrote in the New York Times:

"Web telemarketers don’t take aim at just your e-mail
account. In order to block pop-up and banner ads when surfing the
Internet, download the Firefox browser from http://firefox.com, then download (mozillaaddons.mozilla.org/en-US/firefox/addon/1865). Also be sure to enable Firefox’s built-in pop-up blocker (also available on Apple’s Safari browser and Microsoft’s Internet Explorer 8) to take care of sneakier ads.

if all of the above fails, turn off your TV, shut down your desktop and
pick up a book. Advertisers haven’t cornered that market — yet."

Today, Randall Rothenberg, President of the Interactive Advertising Bureau, responded in the Times in kind:

"To the Editor:

Re “Tactics That Tame Intrusive Advertising” (Business Day, Nov. 6):

online banner ads that you recommend blocking with browser add-ons pay
for the free content on the Web — the e-mail accounts, video shorts,
interactive election maps and myriad other new forms that entertain and
inform our citizenry.

Moreover, these ads help companies grow, something everyone ought to be concerned about as we head into a recession.

Randall Rothenberg
President and Chief Executive
Interactive Advertising Bureau
New York, Nov. 6, 2008"

Randall, time to start either (a) working on your business model; or (b) make the things that you put in the "ad" spaces on the web engaging, not intrusive.

1000 Miles To Go For The Enterprise And True Customer Relationships

As noted in my earlier post, spent the last two days up at Oracle OpenWorld, mainly focusing on how they were presenting their offerings that are being hung under the "Social CRM" banner.


First, the pragmatic bits.  Oracle still has a long way to go to truly embrace the notion that the customer can be in control, or at least be a mutually beneficial party, in the business relationship.  Exhibit A, the cringeworthy tag line and subhead on the page shown above.  What does it say?

"Oracle Social CRM Applications leverage Web 2.0 technologies to help sales people identify qualified leads, develop effective sales campaigns and presentations, and collaborate with colleagues to close more deals quickly."

I don’t even know where to start with that messaging and the general wrong-way-rubbing that it induces.  Perhaps the easiest thing to point out is that it’s still 100% focused on the sales team, and implicitly views the customer as the enemy, or at least simply the next transaction.  One of the demos that was shown at the event last night illustrated how one of their new tools could make it easier to identify that sales opportunity that was looking like it was slipping into the next quarter’s business, and how it aided the sales manager in identifying it and enabled him to encourage the rep to do anything possible to bring the business in before the quarter ended.  (N.B. Recall item #7 from the customer’s point of view: "I want to buy things on my schedule, not yours. I don’t care if it’s the end of your quarter.")

There were two bright spots, however.  Number one was the communication that Oracle SVP Anthony Lye shared this morning.  A few quotes and comments from this morning’s presentation, from the Twitter stream (listed newer-to-older):


  • kitson: #oow08 #Lye "With Social CRM, the individual gets a benefit, the network gets a benefit, and the company gets a benefit."
  • kitson: #oow08 #Lye "Oracle is a beta customer for us."
    kitson: #oow08 #Lye "Marketing has a very serious role to play in Social CRM." [cited the Body Shop iPhone app:] "The always-on loyalty program."
    kitson: #oow08 #Lye …“Email?" They scoffed – "You still use that? That’s what we use to talk to old people.”
  • kitson: #oow08 #Lye Told a story of talking to college kids, who scoffed at the contact info on his card…
  • ccarfi: "the way you work with suppliers today is very transactional.  there’s no clue about the conversation." #oow08 #lye
  • ccarfi: "…but the younger generation thinks the network is their power." #oow08 #lye
  • ccarfi: "people my age or above think that knowledge is power.  the more ‘important’ they are, the less they share." #oow08 #lye
  • ccarfi: "there’s
    no benefit to the end users in today’s CRM systems. today’s CRM systems
    are built for the managers, not the end users." #oow08 #lye

  • kitson: #oow08 #Lye
    "If you look at selling today, salespeople are only spending 22% of
    their time actually selling…. &they really don’t like CRM"

  • kitson: #oow08 #Lye [Damn. Battery’s dying, and there’s no outlet here. If I fall silent, that’s why.]

    kitson: #oow08 #Lye "I don’t like ‘CRM 2.0’ because someone’s going to come up with ‘3.0’ and ‘4.0’ Versioning a strategy is flawed."   

  • ccarfi: @kitson is also doing killer live tweet coverage of #oow08


  • acclimedia: @ccarfi Thanks for the great live tweets! Some valuable insights. #oow08
  • kitson: #oow08 #Lye "Maybe there are a few companies that live off their own successes–but that’s really a small percentage now."
  • kitson: #oow08 #Lye "I don’t expect to sell this [Social CRM] to everyone."

  • ccarfi: "the brands that DON’T try to control the conversation will do better than those that try to control it" #lye #oow08
  • ccarfi: "if you have a bad product, it’s game over for a brand whether you like it or not" #lye #oow08
  • ccarfi: "the internet gave the control the customer.  web 2.0 gave the control to the community" #lye #oow08
  • kitson: #oow08 #Lye "Fear is always a good thing, I think. Businesses don’t do anything unless they’re afraid [of the alternative]."
  • kitson: #oow08 #Lye "Taking the best of the consumer Internet and enterprise data to leverage what’s already working with what Oracle can do."
  • ccarfi: "CRM doesn’t have  clue about conversation. Social Networks don’t have a clue about enterprise data." #lye #oow08
  • kitson: #oow08 #Lye "The nicest compliment everyone pays me is how ‘un-Oracle’ Social CRM is."
  • ccarfi: "conversation is very important.  customers want to have conversations, and expect vendors to provide infrastructure for it" #lye #oow08
  • kitson: #oow08 #Lye "Social networks can be public, they can be private, and they can be secret."
  • ccarfi: social CRM overview at #oow08
  • kitson: #oow08 #Lye "What we’re doing in our Social CRM is we’re bringing in ERP data + CRM data–data sets you’d NEVER put on the public Internet.
  • kitson: #oow08 #Lye
    "Customers are choosing not2stay in line w/those relationships.They
    want 2 converse & CRM systems have no idea what’s going on."

  • kitson: #oow08 #Lye "CRM for the first 10 years was about data capture."
  • kitson: #oow08 In a briefing with Anthony Lye of Oracle’s CRM…

So, it’s appears clear that Anthony Gets It with respect to what the right things to say are.  Now, just to turn the Sayonara around to embrace the customer as relationship partner is the task at hand and exhibit that understanding via product, positioning and action.

The other bright spot was a proof-of-concept demo that was shown for customer The Body Shop.  This was an iPhone application that started to inch down the path to giving more power to the customer, or at least include her in the relationship at some level.  Here are a few quick shots from the keynote.

Here’s an entry-screen to the application, which a customer could bring up on her iPhone when she walked into the store.  Behind the scenes, profile information on preferences and purchase history would be available.

Body Shop iPhone App

Oooh!  Product!  The sort of nifty thing here was access to ratings of this particular product both from the "at large" community, as well as the specific ratings from your "friends" and/or "people like you."

iPhone customer connection app

A hop over to a "loyalty card points" page, where points could be redeemed for discounts, etc.

iPhone customer app

Choose from one of a bunch of options for the "loyalty" bonus: Redeem Now, Email/SMS to get Rebate, Share with a Friend, or Donate to Charity.

iPhone customer app

Ok, we chose "Redeem Now."  Discount code is available, take the "coupon" to the register to save a few bucks at checkout.

Body Shop iPhone coupon

What I was NOT able to get were any details on how "real" the application is.  The demonstration that was shown was very, very scripted, and quite a bit of the demo required the suspension of disbelief once you started to delve into the details.  For example, the details around the explicit sharing of a lot of (really) personal data among "trusted" friends was assumed to "just work," with neither the social nor the technical nor the identity underpinnings given any level of discussion. 

Another big thing to note: the access to purchase history and preferences and the like is wonderful, but the information still is 100% in the hands of the vendor.  So, although some of the ideas feel a bit like VRM, the implementation still needs to take the big leap – let the customer control, edit, change, and manage her own data.  That part is still most definitely not there.  We still have the silo problem – if you had one of these apps for The Body Shop, and one for the movie theater, and one for the restaurant down the street, we’d still have the Tower of Babel problem we have today.  Of course, it would just be a shinier Tower of Babel, since it’s on the iPhone.

But…it’s a start.  Where we are now with the enterprise and how it will connect with customers feels a lot like where Big Media (and in particular the newspaper industry) was in about 2004-2005.  Technically, the tools are in place, or soon will be.  The real challenge is NOT a technical one.  It’s a social challenge.  It’s a humbling, or perhaps a realization, of the marketers and sales people in large companies that, no, they really are *not* in control of the "message," whatever that is.  Thoughts around this were written in 2004, and before that in 2000.  Those things still hold true, and it boils down to this:

The customer really is in going to be in control.  Deal with it.

It’s About Times for VRM

Great VRM article in the Financial Times by Alan Mitchell.  An excerpt.

"When the UK market research company CCB FastMap asked consumers
which method they most wanted companies to use when communicating with
them – e-mail, phone, letter and so on – 63 per cent ticked the box
that said “Not at all”.

Even where consumers have an existing
relationship with a company, 23 per cent prefer not to have marketing
communications from it. The rate rises above 50 per cent for some large
utilities and banks.

Consumers are also increasingly unwilling to
divulge data. The same research found that 86 per cent of consumers
routinely tick the third party opt-out box when providing personal
information. “People have become less happy about revealing information
and especially allowing third parties to share it,” says David Cole,
managing director of CCB FastMap.

This was not what customer
relationship management was supposed to deliver when it was first
touted in the early 1990s. The more data companies could gather about
their customers, it was argued, the deeper the insights they would
generate. This would lead to longer, more profitable relationships.

many companies have found themselves stuck between a rock and a hard
place. On the one hand, most organisations’ transactions with their
customers are too limited for them to get an accurate picture of their
motivations and any data they gather quickly goes out of date. On the
other hand, subsequent attempts to fill these holes by gathering more
data simply intensify concerns over intrusion.

A research
project in vendor relationship management at Harvard University Law
School’s Berkman Center for Internet and Society has suggested a way
through the impasse. The core idea of vendor relationship management
(VRM) is simple: the more empowered individuals are when it comes to
managing and using personal data – including the ability to manage
their relationships with vendors – the greater the benefits to both

The whole article is here.

Asymmetric Forces at Work

Seth says that "bringing symmetry to asymmetrical relationships is a huge opportunity for a technology company."  I don’t think this statement goes far enough, not by a long shot.

It’s not just about technology companies.

When there are significant asymmetries, there are systemic issues, not just technical ones.

This is why efforts like ProjectVRM need to exist.  This is why I’m starting to talk about buyer-driven marketplaces.

The statement above needs to be reiterated: it’s not just about technology companies.  It’s not even "just" about business.  It’s about equilibrium, which just seems to be one of those states that things usually trend toward.  Here are over 50 other examples.

N.B. I recognize the inherent conflict between the statement above vis-à-vis W. Brian Arthur’s work on increasing returns (cite).  But there are currently a lot more examples of equilibria versus increasing returns.

VRM Workshop Trip Report

My brain is full.  It needs to digest.

Hopefully, some of you were able to check out the stream of the first ProjectVRM Workshop (#vrm08) that just wrapped up at Berkman.  Over 40 folks attended in person, and the overall vibe was at the intersection of "wow, this is great, needed stuff" and "ok…let’s get going!"

Yesterday started with a few introductory remarks by Doc Searls and Phil Malone (of the Berkman Center and Harvard Law School), and a technology review by Joe Andrieu.  The group then switched into unconference mode and self-organized and created its own agenda (thanks to Kaliya Hamlin for the process facilitation).  We had four concurrent tracks running during the day, and the Day 1 topics were:

  • Open Social: Social Infrastructure for the Web and How to Map to VRM
  • VRM and Public Media
  • Volunteered (Premium) Personal Information
  • VRM Adoption Ambassadors: How to Talk to Big Companies Trying to Understand VRM
  • VRM and Healthcare: Is Medical Home a Stepping Stone to VRM?
  • Trust Services as VRM Foundation
  • VRM Organizational Issues
  • GRM: Government Relationship Management
  • Information Portability: The Enemy of Good is Better (OAuth, OpenID)
  • Intra-Enterprise VRM
  • VRM and Enterprises: Customer v. Vendor and Partner v. Vendor
  • Using VRM as a Personal Address Manager
  • Employability and Recrtuitment
  • Relationship Networks and the Mine!


(Like any great event, there were personal tradeoffs to be made, with multiple "dammit, I want to go to BOTH of these!" moments occurring.)

Day 2 continued right where Day 1 left off, with:

  • VRM Compliance
  • R-Cards (Relationship Cards): The Devil is in the Details
  • VRM as Disruptive Innovation: Vendor Adoption and Best-Fit Markets
  • Interactive Community Future Mapping
  • VRM and Charity
  • Customer-Driven Markets
  • RelButton and the Media
  • Product Representation
  • RelButton Standards Track
  • User-Driven Search


I facilited two of the conversations, "Intra-Enterprise VRM" on Day 1 and "Customer-Driven Markets" on Day 2.

The Intra-Enterprise VRM session was one that was triggered by a passage from the book Reinventing the Bazaar by John McMillan.  In the book (p. 168), there was a section that gave me pause:

"Herbert Simon, economics Nobel laureate and polymath, offered a fable to illustrate how much of a modern economy is ruled not by markets, but by organizations.  Simon imagined a visitor from Mars who "approaches the Earth from space, equipped with a telescope that reveals social structures."  In the Martian’s telescope, firms show as solid green areas, while market transactions show as red lines, so the economy shows as a spider’s web of red lines and green areas.  Most transactions occur within firms, so organizations make up most of the landscape the Martian sees.  If it sent a message back home describing the scene, our Martian would not describe it as "a network of red lines connecting green spots," but as "large green areas interconnected by red lines."

This was one of those "ah-hah" moments.  Up until yesterday, every conversation I’d either heard or had regarding VRM focused solely across the customer-vendor interface; that is, the conversations focused on cases where each party was part of a different organization.  But if Simon’s Martian-with-a-nifty-telescope fable is true, of :course: most parties who interact with each other are within the same organizational entity! 

The key things that came out of the ensuing conversation were the following:

  • A leading opportunity for VRM within the enterprise is around the idea of a "personal data store" for one’s resume/CV, skills and past experience.
  • VRM could be used to enable internal "innovation markets"
  • Customer-driven production processes (e.g. kanban) are, some ways, reminiscent of VRM
  • Agreements such as SLAs (Service Level Agreements) or OLAs (Operation Level Agreements) are also reminiscent of VRM

It was the first item, a personal data store for one’s CV that precipitated the most conversation within this particular breakout group.  The rap went like this…each individual, when starting with an organization, would be provisioned a "personal data store" on the network, along with provisioning of the normal first-day-of-work provisioning of phone number, desk, office supplies, company email address, and the like.  That personal data store would be the repository of one’s experience within the organization — projects that were attempted, their results, any quantifiable objectives that were tracked along the way, etc.  In enabling (and encouraging!) each individual to keep her CV up-to-date in this manner, both the employer and the employee reap benefits. 

The employee reaps benefits in a number of ways.  First, the personal data store is portable; that is, she can export all her information at any time.  So, if she were to leave the organization, she’d have her own personal record of her accomplishments, skills and experiences already up-to-date when getting ready to search for new opportunities in the market place.  Similarly, someone who took the effort to clearly publish her skills via her personal data store within the organization would be more likely to be able to be matched with projects or divisions within the organization that could benefit from her skills.  (N.b. The converse is also true.  You don’t keep yours up to date, you have less of a chance of getting on a cool project.)  Similarly, depending on how often the CV was updated, it may even have the potential to reduce (or eliminate) the need for tedious bulk status reporting — it’s already in there!  All management needs to do is run a report for the updates to the CVs of individuals within a division or on a project to know what the latest-and-greatest was.

The organization benefits as well.  Now, there is a clear way to look across the individuals in the organization, and know what skills are where they should be, what ones are available for an upcoming project, and what ones are perhaps ready for an opportunity for new, relevant challenges.

The second area we talked a bit about was the opportunity to use VRM as the infrastructure of an internal "innovation market."  An example was given as follows:  an engineer working on a project has hit a thorny problem that he can’t seem to solve.  So, instead of banging his head against the wall further for one more day, he instead creates an internal "RFP" (Request for Proposal) that describes the problem that needs to be solve.  The engineer then releases that RFP to an internal marketplace, where others with the skills, interest, time or insight to solve the problem would propose various solutions to the problem.  Additionally, those within the organization who responded to the RFP with a viable solution would also be eligible to partake in a portion of the benefits that accrued to the organization as a direct result of the innovation.

Despite the length of this post, it really only scratches the surface of what was discovered and discussed throughout the workshop.  However, my plane is landing soon back at SFO, so this one’s a wrap.  Check out more coverage of the conference at http://cyber.law.harvard.edu/projectvrm/VRM_Workshop or on Twitter tag #vrm08.

Another post soon summing up Day 2, with a special focus on the idea of Customer-Driven Markets.  Seeya soon.

VRM Update and Overview, May 2008

VRM Overview, May 2008
Headed down to Mountain View for the Internet Identity Workshop, which starts today.  Looking forward to both catching up with a number of old friends, as well as having some great conversation with a number of new ones.

I’ll be doing a quick overview of VRM this afternoon.  Click either on the thumbnail over on the right or the embedded slides below to see my slides.

Seeya soon.