CMR as a Precursor of VRM

Vendor Relationship Management (VRM) is a term used by Doc Searls and other members of ProjectVRM to distinguish market relationships between vendors and consumers where the latter gain increased control over that commercial relationship. Building on the VRM concept, Jeremiah Owyang recently noted that VRM offers a potential future for public relations agencies in which the future of PR is in representing communities rather than brands. As Doc recently declared,

We therefore resolve to avoid all relationships in which the privileges of loyalty are determined entirely by the seller, and to construct new terms and means of engagement that will work in mutually constructive ways for both customers and sellers, for the good of all.

 So, in the spirit of the Declaration of Customer Independence recently outlined by Doc, I offer the following turn of the century anecdote for thinking about Customer Managed Relationships (CMR).

Personalization and Privacy

In late 1999 and early 2000 I led a venture that aimed to provide consumers with control over the way personalization in web services, especially eCommerce, intersected with their individual privacy. The venture was called PrivacyProfits and, if this topic seems interesting, an overview of it is still available in the archives;  just click on the link above. Privacy Profits was built on the assumption that individual privacy consists largely of personal information, and that personal information is a property for which a market exists. The key challenge lay in finding a way to allow consumers to manage access to their personal information, and value from it, so that personalization served their interest as well as the companies making offers.

PrivacyProfits failed to get traction as a going concern due to a funding shortfall, though a team of software developers and I did produce a functioning prototype. At that point in time, and still in many ways, personalization really meant eCommerce web sites gathering as much data as possible about visitors in an effort to use predictive analytics to push content, mostly advertisements, based on information gleaned about individuals, all with the goal of increasing the likelihood that people browsing find the ads interesting enough to click through to a product or service offering. Indeed, the fragility of web analytics data collection practices is one of those topics left unaddressed by many who claim that purely data-driven insights inform their strategic and operational engagement with customers. PrivacyProfits was an effort to increase the information value of the data used in web analytics while protecting the privacy of people’s personal information.

I thought it might interest people who are thinking about, and working on VRM, to consider a previous effort to design for customer managed relationships (CMR). The basic point of PrivacyProfits was that personalization is most effective when customers manage their own relationship to the corporate enterprise’s products and services, and do so because the relationship serves their interest. Here is an excerpt from the archived site:

Back in the early 1980s I saw a cartoon that shaped my own view of information and property from that time forward. The cartoon is of a middle-aged gentleman at his front door, dressed in a three-piece suit. Anyway, he is talking to a younger man who has a notepad in his hand. He says to the younger man, obviously a survey taker, “young man, I don’t give my opinions away — I sell them.” We would all do well to think about his implied conception of information property as the web services industry develops and strategies to personalize the web mature.

Software and services designed to personalize web sites, particularly sites offering business to consumer (B2C) transactions, have gained a lot of attention over the past few years. Personalization has largely been promoted as one component of overall customer relationship management for corporate enterprises. Yet, personalization overall has produced disappointing results on the sales side as well as the services side of enterprises. Converting “browsing” consumers to buyers before they abandon their electronic shopping carts has proven difficult. Electronic shopping carts are abandoned at a high rate. Personalization is now used largely as one data element in customer relationship management to cross sell and up sell merchandise or services. It is seldom used to organize the corporate enterprise’s knowledge of how to relate to customers and markets. Notwithstanding the goal of customer relationship management (CRM), much of what passes as CRM today really involves managing customer behavior rather than customer relations. Yet, CRM advocates are slowly recognizing that the approach is most effective when used to empower customers to engage in self-service. Our main point here is that designing effective self-service systems requires personalization and, further, that personalization is most effective when customers manage their own relationship to the corporate enterprise, i.e. customer managed relationships (CMR).

If you aren’t approaching personalization as a CMR challenge you are failing to develop information sources crucial to making personable, relationship-oriented, customer service and marketing work. You can call it 1-to-1 marketing, or viral marketing, or any number of terms. By personable I simply mean talking to the customer like they are a unique individual, conversing with them. That is the trick, and the key, to serving customers and allowing customers to serve themselves. Yet, conversation is a difficult communication process to engage in over time without some personal knowledge of the other party. There’s the rub.

People are reluctant to share personal knowledge with impersonal voices (computer or otherwise) reading a corporate communications script and, in too many cases, this is what customers receive from marketing as well as customer service operations. The key to most personalization lies in “interacting” with the customer and, ideally, changing the content design of a web site’s user interface based on what is learned from those interactions.

Yet, the personal knowledge of customers is just that, “their knowledge.” It belongs to them; they own it. This strategic position builds on a number of recent attempts to make sense of the fact that customers own the very information that the personalization of web sites requires to succeed.

……

The basic assertion made here is that personalization techniques will prove most effective when implemented as part of a CMR enterprise strategy that recognizes the consumer’s personal information as an economic asset, their property. How would any of us feel if we were followed around by a sales person every time we shopped at a brick-and-mortar store? Most shoppers don’t mind having a salesperson ask if they can help, and will gladly accept their assistance, when it is needed. But, when a salesperson shadows any of us around the store we are likely to get a little bothered. Personalization techniques, such as collaborative filtering, clickstream analysis, and data mining, all have managing customer relationships as their goal, rather than allowing the customer to manage the data about their relationship. They are typically opt-out programs, not opt-in. As such, information is generated by virtually shadowing each web site visitor around the site. The informative quality of data about purchase patterns makes each person’s data interesting to business enterprises that sell goods or services to the public.

PrivacyProfits was a flawed effort in several crucial ways. However, it explicitly pointed to a needed market mechanism for collaborative information sharing between customers and businesses that still does not exist. VRM is as good an acronym as CMR for that market mechanism. Ultimately, though, as Will Kreth probably noted first in “You Own Your Own Metadata” (sorry can’t find a link), it makes no difference to claim that customers own their data if the meaning of “ownership” is that of systems administration and security rather than economic asset and information property.

Posted by Larry R. Irons

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6 Responses to CMR as a Precursor of VRM

  1. Thanks for posting, I really enjoyed your latest post. I think you should post more often, you clearly have talent for blogging!

  2. Doc Searls says:

    Thanks, Larry. In fact we have been aware of the earlier work done around CMR. Here’s one post by Adriana Lukas that visits the overlaps between CMR and VRM: http://www.mediainfluencer.net/2009/01/crm-cmr-or-vrm/

  3. Larry Irons says:

    Hi Doc, thanks for the link, though as we both know CMR goes back at least a decade. My vision was for individuals to own and control their own personal information. It is a dated vision at this point, but I think it spoke to some of the inspiration behind VRM.

    I’m anxiously waiting to read the second version of Cluetrain.

    Larry

  4. Larry,

    I love that you take the time to call out the people who own personal information: the individuals. I feel like the Facebooks of the world have raced down a path where somehow it became their’s to use as they wished; here’s to a massive about face.

    Regarding your point on my blog about a point for a single identity to be held, can you see a company like Facebook winning that battle?

    Cheers,

    David

  5. Larry Irons says:

    David,

    The initiative I discussed in the post is dated at this point, though I still believe that, in principle, any metadata collected about online activity is the property of the individual engaged in the activity and not the property of the company making the activity possible through social networks, ecommerce sites, etc. Making that happen is a different matter entirely. I’m optimistic that ProjectVRM may make some genuine headway.

    Best,

    Larry

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