Businesses have been in the driving seat of the customer relationship but, as Doc Searls explains, customers are ready to force a change in dynamic by taking control of their personal data.
When it comes to the customer relationship, businesses have had it their way for far too long according to innovative thinker/writer Doc Searls. And for all the talk about customer empowerment recently, he still believes that businesses are in the driving seat.
“The problem we have today is that only the seller - what in business we call the vendor - can drive,” he explains. “The buyer is in the passenger's seat. She can't drive. She can choose to spend or not spend - or to leave the car and ride with some other vendor. But she can't drive.”
However, whilst vendors may have been in control up to now, this could be all about to change.
Silos and walled gardens
In the latest edition of The Cluetrain Manifesto, the groundbreaking book he originally co-authored 10 years ago with Chris Locke, Rick Levine and David Weinberger, Searls sticks the boot into customer relationship management. And even though CRM has become accustomed to bruising encounters, some of these blows hurt – perhaps because there are some painful truths being delivered.
CRM, as Searls sees it, would rather have captive customers rather than free ones. To demonstrate this, we only have to examine the language organisations use when referring to customers – how they try to 'lock in' customers and 'retain' them after they have been 'acquired'. And these efforts are managed by silos that take the form of frequent flyer programmes, subscriptions and loyalty schemes.
“CRM systems are designed to operate what in the tech world we call ‘silos’ or ‘walled gardens’,” says Searls. “It doesn't matter how nice a company makes its walled garden - it's still owned and run by the company as a habitat for customers. The company makes all the rules, sets all the terms, provides all the means for everything the customer does with the company. The customer's only choice is to take the whole deal or leave it.
“Every one of CRM's walled gardens is also different, and most treat the customer as if he or she has no other business relationships, save those to the government or to credit card companies. As a result, customers have no common means for relating with multiple vendors. Thus, as CRM system adoption goes up, so do complications for customers.”
Vendor relationship management
However, whilst it has become apparent that something has to be done to liberate both sellers and buyers from the belief that a free market is 'your choice of captor', Searls has realised that there is a barrier to this - and it isn’t bad CRM. “There is nothing yet on the customer’s side to carry some of the relationship weight – other than what CRM systems provide,” he explains. “That means the whole responsibility lies with the vendor.”
As detailed in his book, this conundrum took Searls on a journey to discover technological developments that could advance customer independence. His conclusion was that full empowerment for customers could be achieved only if they were in control of their own data, including their digital identity data.
Information is the lifeblood of CRM. And the traditional customer relationship is one where “the vendor does all the asking” according to Searls, and where data is coerced. By disclosing data on an as-needed basis, only within the context of secure and genuine relationships, customers can take the power back. This, in a nutshell, is the manifesto of vendor relationship management (VRM).
With a growing community around the world – including the convergence of several formerly separate efforts such as the Buyer Centric Commerce Forum in the UK and ProjectVRM at Harvard University in the US – VRM efforts are focused on providing tools for individuals to manage relationships with organisations; making individuals the collection centres of their own data; giving individuals the ability to control how their data is used by organisations; and basing relationship-managing tools on open standards.
“If a working relationship is in place, the customer will share required information when the right time comes - and do it, when need be, for many relationships at once, and in consistent, standardised ways,” explains Searls. “For example, the customer can issue a trusted change of address just once for many companies, rather than many times and many ways for many companies. In the absence of a customer-driven data-sharing system, we have companies constantly running after the customer for updates and becoming increasingly invasive of privacy over time (Phorm being just one familiar example).”
Work is actively underway to enable selective disclosure of personal data, including "Personal Data Stores" that can be replicated with trusted "fourth parties" (e.g. Mydex.org). And all the many digital identity systems and communities have VRM components and constituents (e.g. IdentityCommons.org, InformationCard.net, OpenID.org, XDI.org). “The plumbing part is easy. Processes and business models are harder, but those are being worked on too,” he adds.
Understandably, the prospect of a shift in power towards the customer could be a daunting one for vendors. But Searls insists that VRM would benefit both parties in the long-term.
“Companies need to be willing to engage with this new type of data. While this may seem scary - giving up control always is - in practice it is just a more highly qualified sales lead and a smoother customer interaction than the current system allows,” he says. “A well designed VRM system will eliminate much of the guesswork that CRM currently involves. For example, VRM can provide customers with tools to say 'Here's what I'm in the market for', or 'Here's my current circumstances. What have you got that is relevant?' - in ways that prevent that data from being used later against the individual, or to inform guesswork that wastes both the vendor's and the customer's time and money.
“A core purpose of VRM is to eliminate the guesswork that has wasted enormous sums of money and energy for marketing and sales - while also wasting the customer's attention and time. We can save that money, energy and time by giving customers the means to control means of engagement with companies, and to do it in standard ways that work across the board.”
It’s an ambitious vision for the future – and certainly an intimidating one for some organisations – but a growing number are becoming optimistic that it is one that can be realised, perhaps even sooner rather than later. “Customers are resigned to stuff they hate when they think there are no alternatives,” says Searls. “Once the alternatives show up, they will get energised.”
For the record, he also adds that – despite what some might think – he has no axe to grind with CRM. “We don’t mean to give CRM a hard time. The problem CRM has had from the start is that it carries the full burden of systematising relationships with customers. All VRM does is give customers means for carrying their end of the relationship. We won't succeed unless it's VRM + CRM, rather than VRM vs. CRM. If VRM succeeds, it will improve CRM enormously.”
“No customer wants to be 'acquired', 'retained', 'managed' or 'owned' by any seller,” he concludes. “Customers want to be respected on their own terms, and not those of a company that seeks constantly to maintain the advantage in a relationship that actually isn't. In other words, they want a real relationship. Not something that is a relationship in name only. The new dynamic is a green field. We've never had it. I believe that if we create the means for enabling good will as well as easy sales, real relationships will follow.”
For the second part of this interviewk, in which Doc Searls discusses the types of VRM that are emerging, click here.
Neil Davey is the managing editor of MyCustomer. An experienced business journalist and editor, Neil has worked on a variety of newspapers, magazines and websites over the past 20 years, including Internet Works, CXO magazine and Business Management. He joined MyCustomer in 2007.