Category: vrm

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Tying One On


Post Number 8
Originally uploaded by Auntie P.

A couple of decades ago, my old friend Joe DeCarlo used to talk about “posts” in communities and social groups. A “post” has nothing to do with a blog post in these conversations, incidentally. In these conversations, a “post” was a person or concept that was solid. Tall-standing. Deep-rooted.

A post was the anchor to which other things could be lashed.

On February 7, in his SuitWatch piece, Doc Searls tells the story of his interactions with Sayo Ajiboye. Doc:

“A few years ago I had a Socratic exchange with a Nigerian pastor named Sayo, whom I was lucky to find sitting next to me on a long airplane trip.

He went on to point out that, in his country, and in much of what we call the developing world, relationship is of paramount importance in public markets. In the industrialized world, prices are set by those who control the manufacturing, distribution and retail systems. Customers do have an influence on prices, but only in the form of aggregate demand. The rates at which they buy or don’t buy something determines what price the “market” (meaning: the demand side) will bear. But the whole economic system is viewed mostly through the prism of price, which is seen as the outcome of tug between supply and demand. Price still matters in the developing world, Sayo said; but there is a higher context that tends to be invisible if you view markets exclusively through the prism of price. That context is relationship.

He said relationship is not reducible to price, even though it may influence price. It operates at a higher level. Families and friends don’t put prices on their relationships. (At least not consciously, and only at the risk of cheapening or losing a relationship.) Love, the most giving force in any relationship, is not about exchanging. It is not fungible. You don’t expect a payback or a rate of return on the love you give your child, your wife or husband, your friends.

Yet relationship has an enormous bearing on the way markets work, Sayo said. And it is poorly understood in the developed world, where so much comes down to ‘the bottom line.'”

If you haven’t read the SuitWatch piece, it’s worth the time. Here’s the link again. And I have a feeling the Sayo story is a post that will anchor many other things over the next few years. Actually, some things are lashed to it already.

One of the things the Sayo story is currently anchoring is a discussion of how VRM might apply to changing public radio. In other words, can we use the concepts of VRM to create direct relationships with artists and producers?

Also, as I write this, I’m taking a sidelong glance at Dave, who has chimed in on this issue. Dave’s been very vocal and a key lynchpin to the development of what we currently call “podcasting.” I wonder if, down the road, we’ll see “public radio” and “podcasting” as synonymous terms. Actually, it’s much bigger than that. Much, much bigger.

If this plays out, what we currently call “podcasting” becomes public broadcasting. Think about it.

Oh, look what’s in the bottom of my mug…some tea leaves!

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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?

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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:

Vrmscenarios

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.

“Me-Ville”
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

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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.”

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Mine…Mine…Mine…Mine…

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.

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More On Vendor Relationship Management (VRM)

This post continues where this one, which gives a bit of background on VRM, leaves off.

In a December, 2006 SuitWatch piece in LinuxJournal, Doc Searls writes that there are a number of parts of VRM, which include:

  • Data Independence – “Individuals needs to own and control their own data, independent of vendors”
  • Customer-Centricity – “Customers are at the center — at the inside — and relate outward toward any number of vendors”
  • Reputation, Intention and Preference – “All three bear on relationships, and there is an enormous amount that can be done with each of them.”

Of these three areas, the one that I see as key (and, of course, the hardest one to implement) will be the adoption of true customer-centricity in the marketplace. Why is this the hardest problem? Because, although there are some technical components, this is much more of a “soft” problem, one of culture and mindset, rather than a problem of RFCs and technology. Doc continues that we need to think about:

“…the inside-out nature of relationships between customers and vendors. That is, customers are at the center — at the inside — and relate outward toward any number of vendors. The idea is not to take the old top-down few-to-many pyramid of vendor-controlled markets and turn it upside down, with customers now on top. Instead, we equip customers with the means to function in more ways inside marketplaces, at the center of relationships with any number of vendors.”

With this, I strongly agree.

However, one of the other areas of concentration that Doc proposes is the idea of a “personal RFP.” On the concept of the personal RFP, Joe Andrieu writes:

“I think what we are actually seeing is more of allowing people a way to post a personal digital RFP… which will require some sort of shared API. Interestingly, corporations could also use a digital RFP, since it is all the same to the marketspace.”

There is also now talk of creating a Firefox plugin for personal RFPs. (In fact, there’s already the beginning of a spec.)

To this, I need to say “whoa, cowboys.” Take a step back from the keyboard. There are two reasons for this.

Reason One: Immediately diving into code is going to take us exactly down the same path that CRM did, and focus on the technology, instead of the people.

Remember that little “R” thing in the middle of both CRM and VRM? The one that says “relationship?” Finding a better way to have vendors compete solely on price does not a relationship (or even a conversation) make. It’s simply a different way to do transactions. (My thoughts on the “transactions to communities” path here, from August, 2005.)

Focusing on the transaction alone doesn’t help.

Reason Two: Before diving into creating a new technical spec, step outside and look around a bit.

Don’t reinvent the wheel. A lot of this work has been done, and can be leveraged. Electronic connection between buyers and sellers has been going on for a long time, first via EDI, then using these fancy Interwebs and XML. For example, RosettaNet has been working on these problems for nearly a decade. (Disclosure: I served on the RosettaNet solution provider Board of Directors back in the day.)

For example, what is being described in the Firefox plugin spec is, essentially, a request for a quote from a series of providers. Well, hey, lookie-here!

Partner Interface Process 3A1: Request Quote

“The ‘Request Quote’ Partner Interface Process™ (PIP®) enables a buyer to request a product quote from a provider, and a provider to respond with either a quote or a referral. If referred to another provider, the buyer may request a quote from that party. The prices and product availability reflected in a quote may be influenced by an existing or potential relationship between a buyer and provider.

3a1

Quotes may:

  • Involve one or more items, fixed price quotes or negotiated prices, configurable or stand alone product.
  • Include freight and tax information.
  • Be reconciled with purchase orders.
  • Support ship from stock and debit credit claims.

Should this transaction not complete successfully, the requesting partner executes PIP0A1, ‘Notification of Failure.'”

I want to be clear. I’m not saying that we don’t need technology to do this. I actually feel that technology is critical to making this work. But cart-something-something-horse. Let’s talk to some customers (hey…that’s us!) and find out what’s really needed, and what we want the capital-R-relationships to look like before we start coding.

So, in other words, I’m very hopeful for the direction that VRM is going. I’m looking forward to rolling up my sleeves and helping out in any and every way possible. At the same time, I’m going to be that nagging voice of the human customer, doing my best to ensure that the effort doesn’t solely dive into a series of technical warrens.

I’m going to do my best to ask us all to continually remind each other what brought us here in the first place.

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More Human Than Human


the human touch
Originally uploaded by max_thinks_sees.

“I am the jigsaw.” – R.Z.

I have to disagree, relatively strongly, with a number of items in Dave Taylor’s post “When Is A Blog Too Personal?” Dave writes:

“One of the great ongoing debates in the murky world of blogging is whether your weblog should be personal or professional, whether you should be revealing or private. There are, of course, many different answers and at some level the real answer is “whatever you’re comfortable with”, but I think it’s a topic worth exploration nonetheless.

Business blogging is a different story because your goal is to convey a certain level of expertise, credibility and, yes, professionalism, and that can be counter to the idea of being too personal.

One solution is to use the “water cooler rule”. If a topic isn’t something you’d talk about with your supervisor hanging around the water cooler or coffee station at your office, it’s probably not appropriate for your professional blog either.

That might work pretty well for you, but I don’t think it goes far enough, because I can easily imagine chatting about the latest TV show or sporting event with colleagues and supervisors, but that doesn’t mean it’s a good fit for my business blog.”

I actually think the “water cooler rule” is a pretty good one. However, Dave continues:

“I have a friend who is a professional editor and writer who is also in what she calls an “alternative relationship” where she and her husband both date other people. It works for her, but when she blogged about her relationship on her professional blog, I was shocked.

She said that “I’d rather just ‘out’ myself and if it turns off potential clients, I probably wouldn’t have wanted to work with them anyway.” I just don’t see it that way. When you buy a burger from the local eatery, do you want to know the politics of the owner? When you get your car tuned up at the local garage, do you even care about the religious background of the mechanic?”

Here is where we disagree, strongly. When choosing a service provider, I absolutely want to know his or her context and worldview, biases and motivations, whenever possible.

Exhibit A: I will never get a Domino’s pizza, because I disagree strongly with founder Tom Monaghan’s politics.

Exhibit B: I really like the Magnolia pub, in the Haight in San Francisco. Not only do they have terrific beer, but their menu tells me this about the philosophy of the owners:

“Magnolia is proud to support sustainable agriculture as well as local farms and businesses in order to serve food that tastes better. We buy as much of our produce as possible from independent, local, organic farms based on seasonal availability. Our meat and poultry is all natural, free range, and raised without the use of hormones or antibiotics. We make sure that our seafood choices are abundant and fished or farmed in sustainable ways. In general, we buy as locally and sustainably as possible and encourage you to do the same.”

So I suppose, yes, I do want to know the politics of the owner of the burger joint. (n.b. That said, there are a whole bunch of waypoints from transactions to community.)

We’re all jigsaw puzzles of varying interests, history, background and, yes, skills. For some, the Joe Friday, “just the facts” approach may be what they desire from their vendors. On the other hand, many of us spend at least a third (ha, right…more like two-thirds) of our days in our “professional” skins. Do we really want to be denying all of those aspects of “who we are” a majority of our lives? I think not, so Dave, I need to respectfully disagree with your post.

Some other viewpoints on humanity and business blogging:

From the archives:
The Business Blogging Field Guide (HTML, or PDF)

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Let’s Say This Again, One More Time, With Feeling: Robo-selling Does Not Create A Relationship With The Customer

~rant on~
RobotIn a post earlier today, the usually-on-the-money Jim Berkowitz at the CRM Mastery blog had a post entitled “Turning Sales Into Science” that spotlighted a number of emerging technologies that are (according to Berkowtiz Inc.’s Alex Salkever) going to “launch your sales force into the future” and “turn a sales operation into a gleaming high-tech machine.”

Ahem.

First off…sales should be about the customer, not the technology.
Secondly…actually, there is no “secondly.” Sales should be about the customer, period.

Now, Salkever’s list has a number of points that require comment.

AS: “If you’ve already won a client’s trust, it ought to be relatively easy to sell him or her more stuff.”

Yes, indeed. If you can fake sincerity, you are golden. And that’s right…it’s not about helping the customer solve a problem, it’s about the stuff!

AS: “Now, for the first time, smaller businesses can afford to send automated phone messages to targeted clients. With these products , a salesperson or business owner calls a toll-free number and records a brief message with a sales pitch. The message is uploaded to the Internet and broadcast using a voice over Internet protocol system to anywhere from a dozen to thousands of customers.”

Greeeeeaaaat. I, for one, would like to welcome our robot overlords.

AS: “Make the buyers come to you.”

Yes, because I certainly know that I love it when vendors make me do things. I really do!

Gah, blech, ick, etcetera, etcetera. The rest of the post is all about the shiny tools that sales folks can use to automate tasks and further dehumanize the customer-vendor interaction. And so forth.
~rant off~

I need my moment of Zen. Ah, here’s one. And here’s another. And one more.

Update: As pointed out in the comments, apologies to Jim Berkowitz, who was excerpting this article by Alex Salkever in the above. The post above has been updated to reflect the correct attribution where necessary.

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VRM – Vendor Relationship Management

(Update: Some follow up thoughts here and some scenario thinking here.)

Over the past couple of months, a groundswell has begun around the concept of VRM*.

This needs to be on your radar.

Although the idea has been around in various incarnations for many, many years (e.g. I was aware of a project called “TEKRAM” — yes, that’s cutely “market” spelled backwards — back in 1999; some thoughts from that epoch are here and here), the infrastructure required and, more importantly, the cultural readiness may finally be here.

What is VRM?: At it’s simplest, it’s turning the idea of selling and marketing TO customers on its head. With VRM, the customer is in charge of the relationship. Not the vendor.

Who coined the phrase “VRM?”: Mike Vizard, during a podcast on the subject. It was then pounced on in the way a pitbull pounces on a ribeye by Doc Searls (see the comment section below).

What’s needed for VRM to work?: There are a number of technical things that are needed: a robust way for customers to manage their own online identities without getting trapped in any vendor’s silo, a way for customers to only share the aspects of identity that they want to share with a particular vendor (perhaps anonymously), and a robust way for vendors to interact with those customers. But more importantly than the technical aspects, the cultural shift of actually putting the customer in charge may end up being the largest challenge.

Hasn’t this been done with things like Priceline and LendingTree: Sort of. More on the differences in a future post.

Who else is thinking about this?: Doc has called a number of people who will be involved, including (but not limited to) Mary Rundle, John Clippinger, Dave Winer, Jeremie Miller, Joe Andrieu, Steve Gillmor, Deborah Schultz and myself.

Where can I find out more about VRM?: At the ProjectVRM page

* – No, not CRM (Customer Relationship Management), but its converse, Vendor Relationship Management.