• September 3, 2010
  • More on VRM CRM

    Doc Searls started a great conversation about VRM and CRM last week at the Berkman Center’s conference on the subject.  Berkman is part of Harvard Law School and for those who follow VRM (vendor relationship management) the conversation is not new.

    I love this quote that Doc posted in his blog (http://bit.ly/b6AcwW) from Dan Miller who hosted a panel that I was on:

    “…current solutions that are based in CRM and social CRM capture and conduct analysis on a broad set of customer generated data and metadata. Companies think they are doing a better job of paying attention but, whether they admit it to themselves or not, they continue to use their resources to analyze activity, target messages and promotions and influence future activity.  That’s not listening or engaging in a meaningful conversation.

    Sooo true.  He goes on,

    “VRM involves a totally different engagement model. “Users” (be they shoppers, searchers, mobile subscribers or “other”) initiate conversations with their selected vendors through a trusted resource or advocate. They can compare notes with other shoppers/customers and, while they may be loyal to a brand, they are more loyal to themselves and their peers. In the ideal, the power shifts to the shopper in ways that will disintermediate traditional channels (like the contact center) and influencers (meaning commercials and advertisements).

    The train wreck is not the result of there being too many names for the social CRM phenomenon, it is that CRM and VRM are on a collision course whereby one side seeks to grant more power to buyers while the other seeks to retain nearly all the power by pretending to do a better job of listening.

    I am not sure about the train wreck part of it, but I am in violent agreement that vendors have been doing a not-so-wonderful job of really listening to customers.  In a capitalist system I am not sure that a vendor can listen and generate continuous growth.  The current crush of interest in all things social is a telltale sign given that most of what we value in social media is its ability to deliver outbound messages rather than gathering customer input.

    On the other hand though, companies like Communispace have made it their business to listen and Communispace in particular seems to have a winning formula because they are growing like a proverbial weed even in the recession.  But this brings up another issue for me.  Vendors might now be listening or they might not be listening as much as they ought to but in the free market I see a great deal of creativity expressed by regular people that forces vendors to listen albeit imperfectly.

    If you’ve followed my postings on some crude research (http://bit.ly/bGEVex)  involving searching on terms that include a company name and the word “sucks” you see that even if vendors are not listening, customers certainly are speaking.  And the way they speak is having an effect.  If I was a vendor I would be loath to find out that my negatives were so high that they elicited hundreds of thousands of hits for a search on my company name and “sucks” but that’s indeed what happens for most companies that I have studied.

    What concerns me, and the key to understanding all this is who pays.  CRM grew up organically because vendors saw an opportunity to build products that helped to automate front office business practices.  In fact CRM exists because of the profit motive, i.e. vendors figured out how to make money selling it.

    I can’t say the same for VRM and that’s one of the big hang-ups for it.  Who makes VRM and who pays for it?  The customers don’t seem interested in paying for anything so don’t look there.  And savvy vendors tend to look at VRM as slitting their own throats.  Pretty quickly you realize that while there is a need for what VRM does, there doesn’t seem to be a constituency ready to pay for it.

    But you do see a movement of individuals calling corporations to account with blogs, wikis, web sites and other self-generated tools aimed at the soft underbelly of corporate indifference.  That’s why my conclusion about much but certainly not all of VRM is that it could use an infusion of social media.  Note though, I do not advocate social CRM merging with VRM because that would not be helpful.

    VRM also deals with things that CRM doesn’t even attempt such as the myriad legal issues governing the burgeoning vendor-customer relationship.  But in all of this social media, and especially community development as practiced by Communispace and championed by Eric von Hippel of MIT, could be a major boon to VRM.  Right now VRM seems to be doing customer outreach in ways that are more difficult that they have to be.

    Much as I like the association of CRM with VRM I think the real association ought to be between VRM and social media.  Increasingly, social media looks like the once and future root of both disciplines.

    Published: 13 years ago

    I spent an interesting day at Harvard Law School last week at the invitation of Doc Searls for a conference on the intersection of CRM and VRM or vendor relationship management.  Doc’s involved with the Berkman Center at Harvard, which sponsors research into issues of Law and the Internet among other things.  He’s also one of the authors of The Cluetrain Manifesto which should be required reading in our line of work.  Lots of other CRM folk were too there including analyst Mitch Lieberman and Ed Sullivan from Radian6.  We tweeted up a storm and you can search on the tag #VRMCRM2010.

    It was an interesting and enlightening day and I only wish I’d had enough time to attend the second day but I had commitments.  That said it’s hard to describe what I found out but let me try.

    VRM, in my humble construction is in some ways a mirror image of CRM in that it tries to address what I call the at-large issues of the vendor-customer interface.  But the two differ in many ways that are good and constructive.  Where CRM focuses on issues around sales, marketing, service and support, VRM takes a more holistic view and tries to answer some of the more in-depth issues like the nature of the legal relationship between the parties and what contracts between them should and should not contain.

    That’s grossly over simplified and one-dimensional.  Other aspects include how much personal data a person should store about his or her needs and finances and where it should be stored.  Should all of your household data like income, mortgage status and the vendor relationships you have be stored on line and by whom are typical questions and things get complicated pretty quickly.  Then there’s the mega question, who do you trust and what does trust mean anyhow?

    At the start of a panel I was on with Mitch I said I thought I’d gotten too much information and felt like a baby in need of a nap.  Maybe you get the idea.

    But the big difference between VRM and CRM to me, and this is probably a gross over simplification, is that CRM seems more bottom up and VRM more top down.  VRM seems to me to be seeking solutions that can be coded and provided by vendors or other parties for customers to use but who pays for it and who trusts such a solution are good questions.

    On the other hand CRM has the same kind of top down approach but what makes it different is the social aspect, which is bottom up.  I don’t see much penetration of social media into VRM yet and I think that’s a bet that’s being missed, at least for now.  Social media used correctly is a big deal because it provides a missing element, something that takes CRM and potentially VRM from a more or less static perspective to something more dynamic.

    The great thing about social CRM is that it lets the genie out of the bottle.  It introduces randomness and uncertainty to the puzzle and that’s largely a good thing.  You can’t program a customer relationship, there are too many permutations and customers do things you just can’t always predict.

    My big takeaway from the conference is the wisdom of crowds, the idea that since you can’t predict, take a deep breath and stop trying.  Instead, just ask the customer and, if you do it right, you’ll get amazing insights.  It struck me that the wisdom of crowds is, perhaps, one thing that VRM could incorporate with great success.

    In one discussion I recall, someone asked a question about what it would take to gather customer input with one hundred percent accuracy.  I see that as a problem because nothing gets to the century mark and trying is an exercise in futility.  Crowd wisdom doesn’t go there, it leverages the idea that the majority of a large enough sample managed to incorporate the ideas of decentralization, independence and diversity does the job.

    Crowd wisdom and social media are not silver bullets for improving VRM or CRM for that matter.  For the most part VRM delves into questions that CRM hasn’t even gotten to yet.  Nonetheless, CRM and VRM practitioners appear to me to have more than a few misconceptions about the other and forums like Doc Searls’ last week are a welcome introduction of people and attempt at melding of ideas.  All of us could gain something from more of these.  If nothing else, in the words of Mitch Lieberman, we’d all feel smarter by being in the surroundings of Harvard Law School.

    Published: 13 years ago