The Social Customer Manifesto

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.

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."

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

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.

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

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.

Is Oracle "Web 2.0-Washing"?

For those who follow the enterprise software space, there is some news this week regarding Oracle's latest release of their CRM product.  However, there are really two stories here:  what Oracle is doing with the CRM product, and how they are engaging with the market.

Touted as being filled with "Web 2.0" goodness, the new release seems to allow consumption of a number of external services via RSS feeds, as well as allowing sales reps to customize their personal start pages within the app or include CRM gadgets in iGoogle or a presumably a Yahoo start page.

While an interesting technical step forward, the fundamental embrace of true, big-R customer Relationships is still missing.  The product, the presentation, the glossy online video demo -- it's not about the Customer -- it's all about how the two fictional sales reps are closing the next deal.  I was also quite amused that the crowning glory in the video -- "closing the deal" and the subsequent high-five -- was only able to be accomplished by offering an increased discount to the prospect.  Sales VPs everywhere cringe at the thought.

What disappointed in this first look at the Web 2.0-ified version of the software is it's still about the bloody transaction. It's not about the relationship.  What's the difference, you ask?  Doc Searls lays out the story in this article from Linux Journal last year.  Doc:

"Transaction rules the Industrialized world. Here 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' will bear — in a system where 'market' means aggregated demand, manifested in prices paid and quantities sold. Here 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 relationship matters more. It's a higher context with a higher set of values, many of which are trivialized or made invisible when viewed through the prism of price. Relationship is not reducible to price, even though it may influence price."

The presentation of this app is all about consumption.  It's about consuming external services, and even the "social networking" features that are included are about consuming interpersonal capital -- there's not the concept of actually connecting a customer and a sales rep via social networking as far as I can tell (someone please correct me if this is not the case).  Instead, the social networking feature is yet another take on the "how can I exploit the social graph to wangle an introduction to a prospect?"  (Click the picture to see it expanded.)

There's a second story here that is of note.   In bringing this product to market, Oracle reached out to a number of bloggers (myself included) prior to the formal release date, in the same way that organizations typically pre-brief analysts and traditional journalists.  I would wager that this plan was a part of a strategy that was designed to "push the limits of communication mediums" and "leverage the blogosphere" in order to "gain visibility and control [the] message."  So, I give Oracle points for bringing another constituency to the table but, at the same time, am still not entirely sure if this is a step on a path of increasing openness and engagement, or was simply a new tactic added to the traditional "push"-oriented marketing arsenal.

Time will tell if this new release is "Web 2.0-washing," a la "greenwashing" where traditional companies try to spin something that they are doing as green or eco-friendly, or if Oracle starting to move on a path to greater clueship.  What do you think?

More coverage here:
Paul Greenberg: I Shall BE Re-leee-sed - as Has the Siebel CRM on Demand Release 15 Embargo
Denis Pombriant: Little Deuce Coupe
Erika Morphy: Oracle Ventures Into Web 2.0 Universe and CRM Bloggers are People Too
Phil Wainewright: Oracle Skins CRM with Social Networking
Chris Buchholz: Oracle Gets All 2.0 With Release15
Brent Leary: Blogger Relationship Management - Oracle Steps Up

Note: In this post, I'm not trying to take a shot from afar...I'd actually prefer to ask these questions on Oracle exec Anthony Lye's blog or the blog of their PR contact Aaron Wessels, but 10 minutes of Technorati searching and searching on the Oracle site itself turned up nothing of the sort on either count.  So, although the message is buzzword-compliant, I'm still not 100% convinced that the embodiment is actually there.  I've an email into Aaron to see if I missed blogs that they may be doing and will post an update here if I find anything out.

Sell This Man A Car!

David Cushman is doing a little experiment in being a connected, active customer.  Here's the skinny.  David:

"There's a prize at stake, of sorts. The winner gets to sell me a car.

I want to buy a Toyota Yaris - and I'm going to blog about this fact (and twitter a bit) to see if this simple piece of disaggregated content gets picked up by someone savvy enough to sell me one.

It's also a test of word of mouth because it's possible that the dealer (owner?) with the car I want isn't clued up... but he might know a friend, or a friend-of-a-friend who is.

So let's begin.

I'm in the UK.

I want a low mileage Toyota Yaris in either T3 or TR spec, registered late 2006 onwards (new shape one). Must have aircon of some form. Ideally 1.3 petrol but will consider 1.0. Probably go for the five door. My wife prefers silver (and it will be her car). Ex-demo would be ideal."

Now, again, there are some basic channels through with customers and vendors typically interact.  From the customer's perspective they are:

• Search - Research and look for a solution
• Shop - Engage in commerce
• Help - Fix something you already have

Here's the vendor view of these three items:

• Market (as a verb, the converse of Search)
• Sell (the converse of Shop)
• Support (the converse of Help)

Key point: I feel the friction in this process is a result of the transactional mindset that most vendors are in today.  For if vendors were truly engaging in "customer relationship management," David would already be connected to them.  Instead, we're trying to mesh the customer and vendor gears, each of which is spinning at a different speed, and rotating in a slightly different plane.

So, going back to the model...David has already nailed the "Search" part of his process, and is moving into Shop.  So, is there a vendor out there who is either (a) actively listening or (b) is connected through a reasonable number of hops to someone who is?  Let's find out...

CRM vs. VRM

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. 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.

Haystack Networking Now Supports OpenID

Big news today: As of this morning Haystack Networking now supports OpenID! We are entering an age where the users and customers (that's us) are increasingly in control of our own information, at least when interacting with vendors who respect us. That means we're moving away from the silo-oriented model of the industrial age (where the vendors have all the power, and we have none), and moving into a time where we are afforded increasing power and commensurate responsibility. The emergence of disciplines like VRM (Vendor Relationship Management) and CRM2.0 are the bellwethers that are pointing the way, and OpenID is one of the tools that will enable us to get further down the path toward that goal. We've been working on this for a while, and it's important stuff.

What it means: Cerado's support for OpenID means that professionals who use Haystack Networking are fully in control of their own online identity, and are able to better manage their online representation of their professional reputation. OpenID support also means that customers can now take advantage of "single sign-on" capabilities across a variety of complementary services that also support OpenID, including blogs, wikis and social bookmarking sites. This enables a single username and password to be used across a wide variety of sites that support the standard.

Why we did this: Cerado has a commitment to empowering customers of its Haystack business social networking service to control their own information and online identity.

Who else supports OpenID: In addition to Cerado, other industry leaders such as Microsoft, Verisign, AOL and Symantec have also announced support of the OpenID standard for online digital identity management.

Haystack Networking home page: http://haystack.cerado.com

Related capabilities: Cerado's Haystack networking supports this philosophy of open-ness in a number of ways. These ways include:

* Export capabilities
* Import capabilities
* The Haystack social networking widget
* An open API

Export: You, at any time, can export your profile data. That means no lock-in. You're free to take your information with you anywhere, anytime. Your profile information is exportable in both CSV (Excel comma separated value) and XML formats.

Import: Additionally, Haystack administrators can import CSV and Excel files to easily set up new Haystacks with a minimum of hassle.

The Haystack social networking widget: Organizations can create Haystack networks on their own websites or blogs using our widget (http://www.widgetbox.com/widget/haystack)

The Haystack open API: Cerado partners like SwapThing (http://www.swapthing.com) are using the Haystack networking API to integrate Haystack capabilities into their own offerings. Much, much more on the API here (http://haystack.cerado.com/html/sdk.php).

Related links: Much more background on the history of Cerado's Haystack social networking system for businesses and associations can be found at: http://del.icio.us/Cerado.Haystack

2007 Social Media & CRM 2.0 Professional Certification Seminar

Drumroll, please...announcing:

What: 2007 Social Media & CRM 2.0 Professional Certification Seminar
Where: San Francisco, CA
When: March 27-28, 2007
Learn more: http://www.bptpartners.com/socialmedia_agenda.aspx

On March 27th and March 28th, I'll be co-hosting a two-day professional seminar, "Social Media & CRM 2.0" along with Paul Greenberg (Author, "CRM at the Speed of Light" and principal at BPT Partners). This event will be held at the offices of our friends Fleishman-Hillard here in San Francisco. (Thanks, Fleishman!)

The 2007 Social Media & CRM 2.0 Professional Certification Seminar is endorsed by Rutgers University Center for CRM Research, CRMGuru.com, the National CRM Association, Greater China CRM and CRMA Japan.

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Topics include:

Why the new social media: Communications and the era of the social customer -- Traditional means of doing this through messaging marketing campaigns are no longer adequate. The new social media, blogging, user communities, podcasting and social networking are increasingly become tools of choice for businesses. Learn the why's, where's, and what's in the segment on the strategic framework.

The Business Blog Field Guide -- Every publication from Business Week, Forbes, The Wall Street Journal to online white papers warn businesses the blogging is not an optional endeavour. Those that don't will not survive, so we are going to give you what you need to not just survive the on rush but prosper. This module will explain how to produce a blog, what the benefits are, and what conditions you need to make it a success.

Components of Blogging -- You have the framework with the first 2 modules, now we're going to get down. You've created the environment, time for you to get what you need to know to actually write the business blog in a consistent and timely way.

Customer Communities and Social Network Analysis -- In this session, you will learn about the value of social networks, customer communities and the tools and practices to facilitate their creation and maintenance. If you do it right, your customers will be the advocates you desire and the business lifeblood you need for sustaining the kind of growth you've dreamed about - in collaboration with those customers you know to be important to your present and future.

The Theory and Practice of Podcasting -- This module will not only explain what a podcast is, why it's important to you as a business person, but how to actually produce a podcast. It will also bust some of the myths of podcasting that have already grown up around its young, explosive life. There is no form of social media that promises to meet the needs of the new generations of customers as well as this one - especially for those on the move. Imagine, having a good time creating something that can benefit your business - anytime, anywhere, any way you like? This module will give you the tools to do that.

Defining Your High Value Opportunities Using Social Media -- Now, we get down and well, sorta dirty. How does this directly apply to your business? What industry you're in, who your target markets are, will make a genuine difference in the approaches and applications of the social media tools. If you're a B2B business v. a B2C business, there will be differences in approach. If you want to use the tools for co-creation of value with your customers or for feedback retrieval and customer conversations it will make a difference. The final module will examine what those specific applications can be for specific business situations and models.

Learn more: http://www.bptpartners.com/socialmedia_agenda.aspx

Over The Horizon

David Myron: "If business professionals would pause for a moment to analyze how their short-term actions can negatively affect long-term customer attrition rates, many would likely do things differently."

Social Networking For Business

The following is an article from the current issue of CRMGuru, where I was asked for my thoughts on a trend that CxO's should be thinking about in 2007. Would love your thoughts.

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Why You Shouldn't Ignore Social Networks

By Christopher Carfi, Cerado Inc.

Social networking was big in 2006. Really big. Really, really big. MySpace has more than 50 million members. Google bought YouTube, a video-sharing site with a heavy social component, for $1.65 billion. Facebook, a social networking site for college students, is rumored to be courting buyers with a price tag in the billions as well. However, most of the social networking action in 2006 was in the consumer space. I predict 2007 will be the year when social network becomes a critical part of the business landscape. Customer-facing executives—and CSOs and CMOs in particular—need to be aware of this fundamental shift that is on the horizon if they want their companies to succeed in the wake of this transition.

Deceptively simple, online social networks contain great power. They change the online space from one of static web pages and stale marketing messages to a live, vibrant network of connected individuals who share their abilities, expertise and interests.

Online migration
In both professional and personal life, human beings naturally form groups based on affinities and expertise. We gravitate to others with whom we share interests. These real-world networks form organically, and consist of our family, friends, colleagues, mentors and advisors. These networks have always formed in the "real world" and, not surprisingly, rapidly migrated to the online world.

Customers have lost trust in traditional sales, marketing and service (the three areas commonly referred to encompassed by CRM. According to the 2006 Edelman Trust Barometer, a survey of 2,000 opinion leaders in 11 countries, "the most credible source of information about a company is now 'a person like me,' which has risen dramatically to surpass doctors and academic experts for the first time." The survey relates that in the United States, trust in "a person like me" increased from 20 percent in 2003 to 68 percent today.

The connections enabled by social networks are the glue that put the humanity back into business to solve the trust problem. In other words, the organizations that will win are the ones that most easily enable individuals to build relationships and communities with people they trust.

Not just kids
And don't discount social networks as something just for young people. Although social networks such as MySpace (known for being an online hangout for the high schoolers) and FaceBook (which targets the college crowd) have garnered much press in the social networking space in 2006, other professionally-focused online networks are being used in many ways in the business and association realms, and social networking is poised for growth in 2007 in a number of areas. A few of these areas are:

• Customer and member relationship development. Customer satisfaction is at an all-time low, perhaps as a result of reduced business focus on actual relationships and an increased business focus on CRM systems that emphasize the management of data, rather than personal connections. Online social networks allow a prospective customer or prospective member to easily facilitate a real, human-level connection with individuals within an organization. This enables genuine business relationships to form and puts an authentic human face on the interaction, changing the external perception of an organization from a sterile, faceless behemoth into a collection of individuals who are ready to help.
  
  
• The use of the network to find experts or locate knowledge to better support customers. Only a fraction of an organization's "knowledge" exists in databases. Another fraction exists in the form of explicit documents and reports that may be found on an organizational intranet. The vast majority of organizational knowledge, however, exists only in the heads of its members. Inside an organization, online networks with even basic profiles of its individuals' experience, location and interests can greatly reduce the time required for organizational problem-solving, through enabling faster connection between a questioner and the person who has solved similar problems in the past.
  
  
• Better service by providing customers with the "whole product." It is rare that a single organization can provide all the pieces needed to meet and create an entire solution. For example, even though a real estate agent aids in the process of buying a home, the customer must have an entire network of other service providers, such as title company, bank, insurance agents and contractors to complete the purchase. By creating a strong network of complementary providers with similar philosophies and business practices, a single service provider can provide a much greater proposition to a prospective customer than an individual working without the benefit of the network.
  
  
• Creation of "all-star" teams that are right for each customer. Especially in service organizations, creating both the right set of skills and the right culture are key to creating a connection with a prospective customer. An internal social networking system enables the individuals responsible to creating relationships with prospects to pull together the "right" team to meet the prospective customer's needs and, at the same time, pull together the unique group of individuals who will resonate with the prospect at a personal level.

As technology has progressed at an ever-increasing rate, the things that are actually beginning to bring customers closer to an organization are not technical at all. It's an interesting bit of irony. And it's inevitable.

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"
Vendors 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"
Cryptography, 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)"
Vendors 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