Doc Searls: Customers will use ID data to force CRM change

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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.

Want another view on whether VRM is a CRM threat or opportunity? Click here.

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.

Daunting prospect?

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. 

About Neil Davey

neil

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 15 years, including Internet Works, CXO magazine and Business Management. He joined Sift Media in 2007.

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05th Oct 2009 13:10

Great post, Doc.  Scanaroo, the Loyalty Card for the iPhone, is a glowing example of this concept of putting the customer in control, of demand driving supply.  Scanaroo takes a pix of your loyalty cards, (insurance, membership cards too) with your phone camera and stores the data on your phone - voila, instant access to your data!!  No more bulky wallets or forgotten cards - A simple tool to make life easier for the customer - no strings attached.  (Disclosure:  Cerado developed Scanaroo and is my client.)

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By Graham
05th Oct 2009 13:56

Doc's views resonate with previous articles published by MyCustomer.com in July 2004April 2005 and July 2006.

Earlier this year I blogged The Credibility Gap referring to an article in Business Week about the benefits to organisations of embracing this development.

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05th Oct 2009 14:16

Many thanks for your thoughts - and a very interesting blog post, Graham.

VRM is certainly one of those topics that has reared its head from time to time in the past - and it has always been a fascinating concept. However, there now seems to be a growing feeling that the concept is starting to truly take shape. The convergence of bodies working on VRM-related projects has been one major boon, as has the development of technologies which could turn VRM from concept into reality.

We'll certainly be returning to this topic again soon. Watch this space!

 

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By Graham
05th Oct 2009 14:57

I blogged on reports concerning the potential for HRM (Health Relationship Management) in David and Google-iath (This is bigger than just the consumer relationship with Vendors, hence why we advocate X-RM).

The comment from Gwyn Headley, CEO of fotoLibra eloquently captures the concern about a US solution.

"Graham's significant point is that giant US based conglomerates are not beholden to us or to our puny laws, whether British or European. They write the terms and conditions, and we get the choice. We accept what they write in its entirety, or not:. . . nor all thy Piety nor Wit
 Shall lure it back to cancel half a Line, 
Nor all thy Tears wash out a Word of it.  Cameron is not yet in power, but it would be a foolish man who bet against him. He and his advisors need to be made aware that companies like PAOGA can keep this data secure and in our own hands, not left to the whim of foreign corporations and governments The first duty of any government is to protect its own citizens. I do not believe that duty will be best served by handing over our personal data to a foreign power."

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05th Oct 2009 21:54

I love the idea of customers wanting to take charge of the relationship managment on an equal footing -- not have CRM belong to vendors.

A couple of thoughts occur to me:

1. Multiple vendors have CRM records for a given customer: the many to one problem.  Some are competitors, some are suppliers in a different part of the company.  The question for me is how does the customer interface/combine with a number of different views of themselves?  Seems a bit schizophrenic.

2. Alternatively, to create 'relationship' implies an equality of commitment, involvement, and transparency.  The VRM should be transparent as well.  The opportunity exists to give vendors a tremendous amount of feedback on their strengths and weaknesses, processes that customers put up with or enjoy, and the relationship quality in general.

3. Actually, taking off from my point in #2 -- making both CRM and VRM somewhat transparent to each other affords the organizations many opportunities to gain perspective and improve their service, interfaces, and processes.  That would be the collaborative benefit of this movement -- and a realization of the potential of web2.0.

4. Finally, just as CRM is becoming social CRM, VRM needs to be that from the beginning -- and that greatly increases transparency and potentially authenticity and quality.

Thanks for writing about this -- hope there is more discussion.

-Kathryn

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