I had the great pleasure this evening of attending the VRMhub meeting organised by Adriana Lukas, and attended by a group of extremely clever people working to try to make it happen (and me). Tonight, Cluetrain co-author and father of the VRM project Doc Searls was in attendance. I’ll paraphrase his introduction and add a little commentary.
Right now, VRM (vendor relationship management) is an idea. It’s predicated on the perception that the relationships between people and brands/companies are terrible. They shout at us with their megaphones and we often do our best to ignore them. Most of the time, the only thing either side ever talks about is the exchange of money — “how much does it cost?” Compared to a real market, a street market, that’s an extremely impoverished relationship.
Up till now, it’s been business that has come up with ‘solutions’ to marketing problems. But there are some problems that can and ought to be solved from the individual perspective, the demand side, Searls maintains.
One of the latest solutions to the problem of marketing without wasting loads of money is CRM. Companies collect loads of data about their customers and potential customers and then target their marketing efforts at segments of those groups. CRM is ‘lame and bad’, though, because it isn’t about relationships at all, but about media planning. And it can go wrong badly, Searls recounted that his Satellite TV company simply lost his account details when he last moved house — he lost the extras and perks he’d gained from being a long-standing customer.
Searls also cited the example of National Public Radio in the US, a service akin to the BBC, but dependent on voluntary contributions rather than a licence fee. So how do they get people to make contributions? Every so often they say they are going to have to close down because they haven’t got enough money. So people send in money. Then, for the rest of their lives, they get spammed by the organisation, asking for more. This is ineffective and intrusive. There’s no mechanism for listeners to act the way they want to naturally. They can’t donate money to a particular show they enjoy, for example.
There are efforts to cut out advertising and create more direct relationships. The online sale of Radiohead’s In Rainbows, for example. The trouble is that these come from the supplier side, so we potentially end up with a million different ways of dealing with organisations we want to buy things from. If the nature and technology for managing those relationships came from the customer side, then it could be uniform and cut out a lot of the inefficiencies in the system.
Searls views the VRM project as unfinished business from the Cluetrain Manifesto. The central insight there, ‘markets are conversations’, has struck many people as true and right, but the technological implementation and management of that remains frustratingly tricky.
So how does VRM work?
That remains something of a conundrum. The best bet — as far as I could make out — is that it integrates with blogs or is similar to blogging. Individuals record their preferences and the personal data that you normally need to use an ecommerce site — on their own sites (or maybe they use a third-party service or a facebook app or whatever).
Those preferences are objects on your site — I think they are probably recorded as microformats — little snippets of machine-readable code that you can post online. There are already formats like hCard that can act as an online business card. Carrying that over to record things like product details or preferences wouldn’t be terribly difficult from a technical perspective, as I understand it. So there might be a microformat that records your preference for airline seats, for example — extra legroom, window seat, not by the wing, say. You’d have that little code snippet at a unique URL and you could decide whether to allow universal access or access only for companies that you’ve decided to have a relationship with. If a company annoys you, you could cut off their access at the press of a button.
So you have got all these details and preferences recorded in your online strongbox. Then — if you want — you let Amazon or Waitrose or whoever have access to the parts of that that you chose. The consequences might be that (a) you never have to fill in online forms again; (b) companies get to submit tenders for whatever it is that you want. I need to buy a new laptop — these are my preferences — I’m letting that information out to vendors. What have you got? © companies have access to rich data about what their customers actually want from them.
Objections
(a) this all sounds a bit geeky — it will never catch on
Yes it is, so are blogs. And blogs have forced companies as big as Dell to completely change the way they interact with their customers. If we just do it, and it becomes a phenomenon, companies will be forced to listen. Eventually, it will become productised, the same way MySpace productised blogging.
(b) I don’t want a relationship with the people I buy things from
Doc said, “Sometimes, I don’t want a deep relationship, I just want a cup of coffee”. And that’s fine. VRM-style approaches won’t replace all other marketing by every company. However, most people spend most money on big, considered purchases like houses and cars. Our ability to properly judge those purchases will be enhanced by a VRM approach. Large B2B purchases also account for a lot of money. Regular, smaller purchases from companies like supermarkets and bookshops will also be enhanced.
© Hang on, I work for an advertising agency/publisher/PR Company.
Yeah. You’re screwed.
Well, not entirely. That’s not going to happen overnight and not going to happen to the whole of the marketplace. Think of VRM as having the same impact as blogging activity now and the way that will grow. We’re at the equivalent of 1999 when it comes to VRM.
(d) Where’s the money?
Good question and it’s not something we know right now. There’s a potential whole new industry called ‘needs management services’; there’s the potential for individuals being paid for access to their data; there’s the possibility to create large, targeted focus groups on the fly similar to YouGov. Basically, that 50% of the advertising budget that doesn’t work is up for grabs because VRM systems guarantee interested, relevant relationships. However, the thing now is to create the phenomenon. From the human being perspective, this better than what we have now. You will have a better life if you embrace VRM.
How to learn more?
I’m glad you asked. NMK is running a panel discussion about VRM on the evening of March 18. Do please come along. Top speakers, cheap ticket, free beers, exciting subject. What’s not to like?
[The picture came via fffffound from here and shows how VRM might work in practise. ;-)]
Share this post:
No related posts.
PR agencies are screwed — you underestimate us Delaney. We’er a sneaky sort and will get by. Ad agencies though…
Yeah, you’re pretty reptilian. Like the way you’re managing blogs, the ‘needs management’ industry seems like an area that prs would move into.
That was ‘taking the piss’, by the way.
Heh, needs management. That’s the one thing individuals know better than anyone else. It has always been a delusion of the ad industry that people are influenced by advertising the way it’s sold the clients.
As for VRM I see it as my personal challenge is to equip individuals with tools that would give them more influence over their own decisions and more power in relationships with companies/vendors. Just like people took charge of their writing/speaking/networking with blogging/podcasting/social networks on the web, there is no reason there can’t be tools to help them do the same with transactions.
To learn more about VRM, here is a brief intro: http://www.mediainfluencer.net/2008/02/vrm-one-pager/
here is a white paper on some technology aspects
and here is a way to get to know VRM in a social way: http://www.vrmhub.pbwiki.com
and, of course, the NMK panel discussion, looking forward! :)
Thanks for the links, Adriana.
These people aren’t going away, though. They’ll re-tool and re-present themselves for new circumstances. I would prefer PR (in Tim’s case) to be moving more into corporate counselling on reputation, but I know that there will be other elements working hard to work out how to game VRM, the same way they have with blogs. (However, and very interestingly, the models of VRM I took away seemed to be ungame-able — except in a crass pay-per-post manner that would be of no use. This is a bit long for a parenthesis, eh).
VRM is going to change how direct marketing works utterly. I think it will also make advertising quite important. As it gets harder to spam people into submission, companies will try to broadcast their brand “promise”. Only it will become very obvious when that promise is empty — in fact it largely is already. When the promise is delivered, advertising is a worthwhile way of conveying that information. I guess the RAC ads are a good example of that.
There was an intolerably smug, authoritarian presentation by Saatchi’s on this subject last year IIRC, which basically said “advertising works and there’s nothing consumers can do about it”. This is dinosaur thinking.
What happens to media when advertising volumes / RoI are low enough to preclude its funding is a whole other discussion though…
great post, ian. nice summary. thanks for putting it together for those of us who were not able to make it across the pond this time.
Good write-up, Ian. Thanks. Interestingly enough PR was classically conceived as a strategic management function. That is to have the PR guy/girl sat at board level advising on what activity the company needed to do to be successful. In my mind there’s nothing that precludes PR from re-gaining this role and saying: “Hey! We need to ask what we can do for our custoemrs mroe. let’s go for VRM.”
What is more likely to go to the wall is some of the crass tactical stuff like DM campaigns, advertising and media relations.
So I still have a job then…?
Simon, alas, I am not really sure about your job. :) VRM is not something you can ‘go for’ from the top — it is decentralised ability of people to do their own thing and let companies in, if they so choose. PR may suggest to their clients to look at VRM but frankly, I can’t see how they can themselves add any value — they are intermediaries and we know what happens to those in a networked world.
It will probably be the same as with blogging — it is only the ignorance of companies that has made them turn to PR, and not the nature of blogging and web interactions.
Saying this won’t make me popular with PR & advertising types… but then, if VRM goes the way I imagine, I won’t need to worry about that. :-)
great post — nice summary in plain english that I will fur sure referecen — so bummed i did not make the meeting.
Chris C and Deb, I am doing these meetings monthly, so that could mean a lot of trips to London. The next one is on Thursday 27th March, Thursday, at Sun Microsystems customer briefing center in London. More details here: http://vrmhub.pbwiki.com/
On the principle that People Are Our Greatest Asset I have been working for some years now on how to allow individuals to manage their personal information ‘under their control, with their consent, for their benefit’.
PAOGA has developed ‘Your digital Safe Deposit Box’ so that you can record, store and update all of your personal information and invite organisations to ‘access’ appropriate information rather than be scattered across an average of 1,000 anonymous data silos.
This is a big, global, disruptive proposition and dependent upon trust. Technology is not the issue, we have the core of that done, it is now about marketing.
thanks for the VRM description and context. Too bad i missed it. I am working on attending on the 15th of april. And the VRM and beers event also looks good too 8-) too bad i’ll be missing that one too.
As I am delving into the VRM subject matter I see a lot of initiatives that cover the onramp on to the VRM path. Initiatives like the Higgins project, Dataportability and Bandit. Has anybody made an overview of these and added commentary on them and the link to VRM?
I’m not sure how a vendor-relationship conversation would occur around the sale of a car or a house, the two largest purchases in a typical consumer budget.
Except for those who don’t understand “depreciation,” folks in the U.S. buy cars once every five years or so, about as often as they change addresses. (And even a Honda Civic is at least a thousand cups of coffee.)
Maybe there’s some value to a relationship with the car company, but the real purchase is made at the excruciatingly consumer-hostile dealership.
I’d like to see more transparency in that congress of middlemen known as the housing industry, though I think that’ll be a long while yet. Again, it’s a large purchase made not very often, mostly from an individual owner (rather than a corporation). In this country, it’s easier to find out where the CIA’s secret prisons are than to learn about the kickbacks and incestuous relationships between appraisers, realtors, mortgage brokers, mortgage insurers, settlement attorneys, title companies, and all the other nimble little elves whose livelihoods depend in no small part on the purchaser’s desire to escape the madness.
Great post Ian
We’re big fans of VRM — and are working on our own implementation — all based on open standards, etc — and we’ve done one very interesting implementation using the VRM principles… but we’ve plenty of challenges ahead…
Talk Soon
Fergus
Thank you — grate post, it was interesting to read your message, even in spite of poor knowledge of foreign ^^
Once again, thank you and good luck)
[…] posts by Delaney and Lukas spell it out in detail, and this is the main Project VRM site. For the quick […]
[…] So this VRM thing Review of the last VRM meeting from an attendee (tags: vrm) […]
[…] you didn’t get a chance to come up to this time then Adriana Lukas and Ian Delaney has a great write ups. If you really have no idea what I’m talking about then you should look up […]
[…] that is done without a person’s consent or knowledge. As VRM’s Saint Searls has said, “Sometimes, I don’t want a deep relationship, I just want a cup of […]