Category: Questions (Page 3 of 5)

Do we have to “trade off” privacy?

Look up privacy trade-offs and you’ll get more than 150,000,000 results. The assumption in many of those is that privacy is something one can (and often should) trade away. Also that privacy trading is mostly done with marketers and advertisers, the most energetic of which take advantage of social media such as and .

I don’t think this has to be so.

One example of a trade-off story is this one on public radio’s Marketplace program, which I heard this evening. It begins with the case of Shea Sylvia, a FourSquare user who got creeped out by an unwelcome call from a follower who knew her location. Marketplace’s Sally Herships says,

There are millions of Sylvias out there, giving away their private information for social reasons. More and more, they’re also trading it in for financial benefits, like coupons and discounts. Social shopping websites like Blippy and Swipely let shoppers post about what they buy. But first they turn over the logins to their e-mail accounts or their credit card numbers, so their purchases can be tracked online.

Later, there’s this (the voice is Herships again):

Alessandro Acquisti researches the economics of privacy at Carnegie Mellon, and he says the value we put on privacy can easily shift. In other words, if giving away your credit card information or even your location in return for a discount or a deal seems normal, it must be OK.

ALESSANDRO ACQUISTI: Five years ago, if someone told you that there’d be lots of people going online to show, to share with strangers their credit card purchases, you probably would have been surprised, you probably would thought, “No, I can’t believe this. I wouldn’t have believed this.”

But Acquisti says, when new technologies are presented as the norm, people accept them that way. Like social shopping websites.

HERSHIPS: So the more we use sites like Blippy, the more we’ll use sites like Blippy?

ACQUISTI: Or Blippy 2.0.

Which Acquisti says will probably be even more invasive, because as time passes, we’re going to care less and less about privacy.

Back in Kansas City Shea Sylvia is feeling both better and worse. She thinks the phone call she got that night at the restaurant was probably a prank. But it was a wake up call.

What we’re dealing with here is an evanescent norm. A fashion. A craze. I’ve indulged in it myself with FourSquare, and at one point was the “mayor” of ten different places, including the #77 bus on Mass Ave in Cambridge. (In fact, I created that location.) Gradually I came to believe that it wasn’t worth the hassle of “checking in” all over the place, and was worth nothing to know Sally was at the airport, or Bill was teaching a class, or Mary was bored waiting in some check-out line, much as I might like all those people. The only time FourSquare came in handy was when a friend intercepted me on my way out of a stop in downtown Boston, and even then it felt strange.

The idea, I am sure, is that FourSquare comes to serve as a huge central clearing house for contacts between companies selling stuff and potential buyers (that’s you and me) wandering about the world. But is knowing that a near-infinite number of sellers can zero in on you at any time a Good Thing? And is the assumption that we’re out there buying stuff all the time not so wrong as to be insane?

Remember that we’re the product being sold to advertisers. The fact that our friends may be helping us out might be cool, but is that the ideal way to route our demand to supply? Or is it just one that’s fun at the moment but in the long term will produce a few hits but a lot of misses—some of which might be very personal, as was the case with Shea Silvia? (Of course I might be wrong about both assumptions. What I’m right about is that FourSquare’s business model will be based on what they get from sellers, not from you or me.)

The issue here isn’t how much our privacy is worth to the advertising mills of the world, or to intermediaries like FourSquare. It’s how we maintain and control our privacy, which is essentially priceless—even if millions of us give it away for trinkets or less. Privacy is deeply tied with who we are as human beings in the world. To be fully human is to be in control of one’s self, including the spaces we occupy.

An excellent summary of our current privacy challenge is this report by Joy L. Pitts (developed as part of health sciences policy development process at the Institute of Medicine, the health arm of the National Academy of Sciences). It sets context with these two quotes:

“The makers of the Constitution conferred the most comprehensive of rights and the right most valued by all civilized men—the right to be let alone.”

—Justice Louis Brandeis (1928)

“You already have zero privacy anyway. Get over it.”

—Scott McNealy, Chairman and CEO of Sun Microsystems (1999)

And, in the midst of a long, thoughtful and well-developed case, it says this (I’ve dropped the footnotes, which are many):

Privacy has deep historical roots. References to a private domain, the private or domestic sphere of family, as distinct from the public sphere, have existed since the days of ancient Greece.  Indeed, the English words “private” and “privacy” are derived from the Latin privatus, meaning “restricted to the use of a particular person; peculiar to oneself, one who holds no public office.” Systematic evaluations of the concept of privacy, however, are often said to have begun with the 1890 Samuel Warren and Louis Brandeis article, “The Right of Privacy,” in which the authors examined the law’s effectiveness in protecting privacy against the invasiveness of new technology and business practices (photography, other mechanical devices and newspaper enterprises). The authors, perhaps presciently, expressed concern that modern innovations had “invaded the sacred precincts of private and domestic life; and . . . threatened to make good the prediction that ‘what is whispered in the closet shall be proclaimed from the house-tops.’” They equated the right of privacy with “the right to be let alone” from these outside intrusions.

Since then, the scholarly literature prescribing ideal definitions of privacy has been “extensive and inconclusive.” While many different models of privacy have been developed, they generally incorporate concepts of:

  • Solitude (being alone)
  • Seclusion (having limited contact with others)
  • Anonymity (being in a group or in public, but not having one’s name or identity known to others; not being the subject of others’ attention)
  • Secrecy or reserve (information being withheld or inaccessible to others)

In essence, privacy has to do with having or being in one’s own space.

Some describe privacy as a state or sphere where others do not have access to a person, their information, or their identity. Others focus on the ability of an individual to control who may have access to or intrude on that sphere. Alan Westin, for example, considered by some to be the “father” of contemporary privacy thought, defines privacy as “the claim of individuals, groups or institutions to determine for themselves when, how and to what extent information about them is communicated to others.” Privacy can also be seen as encompassing an individual’s right to control the quality of information they share with others.

In the context of personal information, concepts of privacy are closely intertwined with those of confidentiality and security. Privacy addresses “the question of what personal information should be collected or stored at all for a given function.” In contrast, confidentiality addresses the issue of how personal data that has been collected for one approved purpose may be held and used by the organization that collected it, what other secondary or further uses may be made of it, and when the permission of the individual is required for such uses.Unauthorized or inadvertent disclosures of data are breaches of confidentiality. Informational security is the administrative and technological infrastructure that limits unauthorized access to information. When someone hacks into a computer system, there is a breach of security (and also potentially, a breach of confidentiality). In common parlance, the term privacy is often used to encompass all three of these concepts.

Take any one of these meanings, or understandings, and be assured that it is ignored or violated in practice by large parts of today’s online advertising business—for one simple reason (I got from long ago): Individuals have no independent status on the Web. Instead we have dependent status. Our relationships (and we have many) are all defined by the entities with which we choose to relate via the Web. All those dependencies are silo’d in the systems of sellers, schools, churches, government agencies, social media, associations, whatever. You name it. You have to deal with all of them separately, on their terms, and in their spaces. Those spaces are not your spaces. (Even if they’re in a place called . Isn’t it weird to have somebody else using the first person possessive pronoun for you? It will be interesting to see how retro that will seem after it goes out of fashion.)

What I’m saying here is that, on the Web, we do all our privacy-trading in contexts that are not out in the open marketplace, much less in our own private spaces (by any of the above definitions). They’re all in closed private spaces owned by the other party—where none of the rules, none of the terms of engagement, are yours. In other words, these places can’t be private, in the sense that you control them. You don’t. And in nearly all cases (at least here in the U.S.), your “agreements” with these silos are contracts of adhesion that you can’t break or change, but the other party can—and often does.

These contexts have been so normative, for so long, that we can hardly imagine anything else, even though we have that “else” out here in the physical world. We live and sleep and travel and get along in the physical world with a well-developed understanding of what’s mine, what’s yours, what’s ours, and what’s none of those. That’s because we have an equally well-developed understanding of bounded spaces. These differ by culture. In her wonderful book , Polly Platt writes about how French —comfortable distances from others—are smaller than those of Americans. The French feel more comfortable getting close, and bump into each other more in streets, while Americans tend to want more personal space, and spread out far more when they sit. Whether she’s right about that or not, we actually have personal spaces on Earth. We don’t on the Web, and in Web’d spaces provided by others. (The Net includes more than the Web, but let’s not get into that here. The Web is big enough.)

So one reason that privacy trading is so normative is that dependency requires it. We have to trade it, if that’s what the sites we use want, regardless of how they use whatever we trade away.

The only way we can get past this problem (and it is a very real one) is to create personal spaces on the Web. Ones that we own and control. Ones where we set the terms of engagement. Ones where we decide what’s private and what’s not.

In the VRM development community we have a number of different projects and companies working on exactly this challenge.  is pure open source and has a self-explanatory name. Others (, and others) are open in many ways as well, and are working together to create (or put to use) common code, standards, protocols, terminologies and other conventions on which all of us can build privacy-supporting solutions. You’ll find links to some of the people involved in those efforts (among others) in Personal Data Stores, Exchanges, and Applications, a new post by  (of Switchbook). There’s also the One example is the and at . (For more context on that, check out Iain Henderson’s unpacking of the .) There’s also our own work at ProjectVRM and , which has lately centered on developing -like legal tools for both individuals and companies.  What matters most here is that a bunch of good developers are working on creating spaces online that are as natural, human, personal—and under personal control—as the ones we enjoy offline.

Once we have those, the need for privacy trade-offs won’t end. But they will begin to make the same kind of down-to-Earth sense they do in the physical world. And that will be a huge leap forward.

Getting Real and VRM

Deep in a post about other stuff, Tony Fish asks, “What is Vendor Relationship Management (VRM) and how will it effect your future customer relationship strategy?” The parties to whom that is addressed are corporate CRM and marketing folks. Alan Mitchell provides some answers, along with more questions, in Get ready for Vendor Relationship Management:

Why should marketers be interested in VRM? Because, given a choice between a product that isn’t really addressing their needs (CRM) and one that is (VRM), customers are more likely to opt for VRM. In other words, VRM is a game changer.

A VRM filter helps create a new operational and innovation agenda. The simple question ‘how does this help the customer achieve his or her relationship management goals’ can go a long way to predicting which initiatives will stick, and which won’t. Creating systems to recognise customers at every touchpoint and treat them in a seamless fashion looks pretty good under this spotlight. Profiling and propensity modelling for the purposes of direct marketing? Not so sure.

More answers and questions emerge in a thread that starts with Denis Pombriant‘s The Relationship Entity, at the heart of which is this:

Who owns the customer relationship?  Is it the customer?  The vendor?  Both?  I think this is a trick question because a relationship is a duality that exists independent of both parties but requires both to exist at all.  In fact, the relationship becomes an entity of itself, a mass-less, weightless entity but a reality nonetheless.  Substitute the word marriage for relationship and you see my point.

(Tell me about it. Inside our wedding rings my wife and I have engraved “The couple decides.”)

Denis concludes,

I advocate thinking about the relationship as an independent entity, one that has to be nurtured from both sides.  And that drives my thinking on social CRM.

Paul Greenberg follows with Customer Ownership: Relationship? Conversation? Simply Put. SCRM is not VRM. Simple Being the Operative Principle. Some excerpts:

…the company owns the company, the customer owns their own personal value chain so to speak. That’s why there is a difference between SCRM and VRM.  Vendor Relationship Management is what the customer does to command their side of the relationship.  SCRM is what the company does in response to the customer’s control of the conversation – and all the other things associated with that.  But the company still owns itself – meaning its operational practices and its objectives and its records and its legal status as a company.

I think that the customer is at the hub of business ecosystem – to the point that you can call it a customer ecosystem. Meaning the customer drives demand and the company is now forced to respond to that.   But a relationship between company and customer is exactly what Denis says it is and that relationship’s success is the essence of SCRM…

Companies are increasingly being pushed to respond to customers and that is where SCRM begins to show itself.

So let me put it this way.  The final line of my definition of CRM says, “Its the company’s response to the customer’s control of the conversation.”  At this time, the ongoing way that the company responds to the customers control of the conversation IS the relationship.

Thanks to Chris Carfi for pointing us to that thread.

On the topic of branding (one of marketing’s oldest terms, borrowed originally by Procter & Gamble from the cattle industry), Alan Mitchell gets us started again with Brand messsaging: the heart of it. He begins,

I’ll be as blunt as possible. So long as marketers accept the conventional wisdom so neatly summed up by McKinsey, that the job of marketers is to increase “brands’ power to generate messages that influence the consumer’s decision to purchase” we will never – repeat, never – be able to make the mental and operational changes we need to flourish in the emerging era…

To explore the dynamics of what’s happening here, let’s approach the issue obliquely via a wonderful passage in Youngme Moon’s new book Different

In this passage she describes how modern markets work (or, to be more precise, our prevailing mental model of how they work). They display at least five defining characteristics.

  1. Consumers are exercising choice (but only from among the choices that producers have decided to offer them).
  2. Every consumer in every category is on a journey from novicedom to connoisseurship: most of us are neither novices or connoisseurs, we’re somewhere in the middle, learning. This learning is achieved almost entirely via DIY methods (there are no GSCEs or degrees in shopping).
  3. Aside from advertising, most product information is inseparable from the product itself: we go to market to inspect the product, to understand its features, attributes and qualities etc. To learn, in other words.
  4. Virtually all the information provided about the product is provided by the seller …
  5. … designed and distributed in furtherance of the seller’s goals, i.e. to persuade the buyer to buy.

This is the environment that created the brand-messaging consumer-influencing agenda. But it’s an environment that is fading fast. If we look at the emerging environment it looks rather different:

  1. An increasing proportion of the information that’s made available about the product is separate from the product itself: e.g. online.
  2. An increasing proportion of this information comes from independent sources (including other consumers), not the seller …
  3. … so an increasing proportion of this information addresses the consumer’s goal of making better decisions, rather than the seller’s goal of influence.
  4. These last two developments mean that learning about products and markets isn’t just a DIY activity any more: specialist services (search, comparison, peer-to-peer advice etc) are emerging to help consumers on this front; to provide them with the information they need; to help them become more ‘professional’ in their product judgements and choices.
  5. The more consumers get to understand what’s available and what’s possible, the more the process of arriving at a decision changes – from ‘choosing from among the choices presented to me’ to ‘building a specification of what I would like, and then finding the best fit’.

What this means is that we are in transition. Let’s accept that sellers will always want to influence consumers’ decisions in their favour and that consumers will always want to make better decisions. That’s not changing, but how they go about these tasks is being turned upside down (or, to be more precise, right side up).

For many decades now we have lived in a seller-centric market largely shaped and defined by marketers’ quest to influence consumers’ decisions. Consumers have had to pursue their goals within this context. We are now moving towards a buyer-centric market shaped and defined by consumers’ quest for better decisions, with marketers having to pursue their goals within this context. This is the “tectonic power shift”, the “dramatically altered” balance of power between companies and consumers that McKinsey so rightly referred to.

In Sixth Characteristic, Jacek Chwalisz adds to Alan’s list,

Using current communications tools it is possible to find, understand, communicate and satisfy people who at the moment are looking for particular object, not only its perception.

In that post Jacek probes the distance between the real and the unreal, and the role of branding in creating the latter. He sees in brands a “magic” that is “not rational.” Specifically,

I think people taking under consideration different choices than offered by brands feel risk related to possible lost of this “magic”. And they are right, because brands satisfy their needs of “magic”. How this “magic” works? People have a tendency to mix up subject of perception and method of perception. For many people “story about facts” is the same as “facts”, “knowledge about something” is the same as “something”, “self perception” is the same as “self” (this mechanism was described many times, even in European Middle Ages as “medium quo” and “medium quod”).

This distance between perception and reality is reduced by authenticity, and therein lies the problem with branding itself, of the current craze around “personal branding,” and why the latter is oxymoronic.

I took all this on earlier this month in a string of posts titled Brands are Boring, Branding is Bull, and The Unbearable Lightness of Branding. Quite a few comments followed, but none does a better job than Phil Windley’s
Branding and Indispensability vs Reputation and Influence. “We already have an identity and we have our humanity. Those are the things that we need to emphasize, not the idea of personal brand.”

As everybody above make clear, VRM is something that happens on the customer’s side of his or her relationship with vendors (or with any other entity). As Jacek suggests, real relationship requires authenticity. For that, traditional branding is largely a side issue. In fact, I suggest that all branding is essentially a distraction. I might even suggest that nearly all marketing is too. That’s because marketing is still mostly about push. Let’s face it: pushing is what most marketers get paid to do.

But pull will outperform push, because it will involve less — or no — guesswork. It will be based on what the customer actually wants, rather than what vendors want to push at them.

Back in 1997, before blogging got started, I wrote two pieces no publisher would touch, both about “push,” which was then a big buzzcraze: Shoveling Push Media, and When Push Comes to Shove. The craze went away, but the urge to push hasn’t, and shouldn’t. Sellers need to let buyers know what they’ve got and why it’s good. But the waste involved in blasting out message, and “branding,” is huge. And it wastes more than money.

Bonus link: VRM is #15 on Web Design Cool’s list of 21 Twitter Tips From Socially Savvy Companies.

CRM & VRM, Figure & Ground

Antagonyms, Social Circles and Chattering about VRM is a deep and helpful piece by Cliff Gerrish on his blog. He starts by visiting and (words that carry dual and opposing meanings) and how context tilts perception and meaning toward one side or another. By example he suggests that Google’s problems with were (at least in part) a result of internal perspective and experience (“Google launched Buzz as a consumer product, but tested it as an enterprise product”). From there he suggests that CRM and VRM also require that we consider perspective and reciprocity:

Meanwhile, introduces Chatter to the enterprise and rolls it out at no extra charge to all employees on the internal network. And while it will start inside the enterprise, Chatter will quickly expand to the boundaries and begin to cross over. From a business perspective, it’ll be used to turbo-charge collaboration and create real-time communication for project teams and business units. But very quickly you’ll see friends sending messages to each other about meeting up for lunch, and a public-personal communications channel will be opened within the enterprise. And the circles will connect and widen from there.

Here are a couple more Contranyms:

clip (attach to) – clip (cut off from)

cleave (to cut apart) – cleave (to seal together)

Salesforce.com calls itself the leader in Customer Relationship Management and Cloud Computing. Chatter may just be the communication medium that ultimately contains both CRM and its opposite number, VRM. Vendor Relationship Management is a reaction to the data toolsets belonging to the enterprise and not to the individual customer.

In a narrow sense, VRM is the reciprocal — the customer side — of CRM (or Customer Relationship Management). VRM tools provide customers with the means to bear their side of the relationship burden. They relieve CRM of the perceived need to “capture,” “acquire,” “lock in,” “manage,” and otherwise employ the language and thinking of slave-owners when dealing with customers. With VRM operating on the customer’s side, CRM systems will no longer be alone in trying to improve the ways companies relate to customers. Customers will be also be involved, as fully empowered participants, rather than as captive followers.

If you were to think about what kind of infrastructure you’d want to run VRM on, Salesforce.com would be ideal. To run the mirror image of CRM, you need the same set of services and scale. The individual Chatter account could be the doorway to a set of VRM services. I can already see developers using the Force.com platform to populate a VRM app store.

Some corporations will attempt to maximize the business value of each individual worker, stripping out all the extraneous human factors. will be erected to keep the outside from the inside, the personal from the business, and the public from the private. But when you put messaging and communications tools into the hands of people they will find ways to talk to each other— about work, life, play, the project, and the joke they just heard at the water cooler.

I’ll need to study Salesforce’s services before I venture opinions about how well they apply on the VRM side. But in the meantime I do think there is an especially appropriate optical illusion for illustrating CRM/VRM reciprocity: the :

Rubin2

As Wikipedia currently puts it,

Rubin’s vase (sometimes known as the Rubin face or the Figure-ground vase) is a famous set of cognitive developed around 1915 by the . They were first introduced at large in Rubin’s two-volume work, the Danish-language Synsoplevede Figurer (“Visual Figures”), which was very well-received; Rubin included a number of examples, like a Maltese cross figure in black and white, but the one that became the most famous was his vase example, perhaps because the Maltese cross one could also be easily interpreted as a black and white beachball.

One can then state as a fundamental principle: When two fields have a common border, and one is seen as and the other as , the immediate perceptual experience is characterized by a shaping effect which emerges from the common border of the fields and which operates only on one field or operates more strongly on one than on the other.

Says Rubin (in Synsoplevede Figurer, 1915),

One can then state as a fundamental principle: When two fields have a common border, and one is seen as and the other as , the immediate perceptual experience is characterized by a shaping effect which emerges from the common border of the fields and which operates only on one field or operates more strongly on one than on the other.

Over the next century Rubin’s vase illusion has more commonly been illustrated with a wine glass between two faces (perhaps because we’re drinking more and arranging flowers less):

I think this imagery does a better job of illustrating the figure-ground distinctions of CRM and VRM. I suggest that CRM sees the wine glass (from which they might drink from the wealth of well-managed relationships with customers), while VRM sees two faces that represent one-to-one interactions between equals.

After CRM and VRM come to be working well together, vendors and customers will still have their own tilted perspectives — one’s figure will be the other’s ground — but both will be fully present.

As of today that’s not the case. CRM is a multi-$billion industry, while VRM is just getting started. Perhaps, by thinking about CRM from a VRM perspective (and vice versa), we can build out tools and solutions better, and faster.

How VRM Helps CRM

CRM — Customer Relationship Management — is a huge business. According to this article, Forrester expected the CRM software market to hit $74 billion in 2007. This more modest Gartner report says the worldwide CRM market totalled $9.15 billion in 2008, growing at a 12.5% rate over 2007.

CRM is pure B2B: business to business. You’re not involved, except as a customer of CRM’s customers. It’s your relationship with a company that’s being managed—by the company. Not by you.

Last month Neil Davey of reached out from the CRM world to interview me on the subject of VRM. The result is Doc Searls: Customers will use ID data to force CRM change. The angle was data. If VRM gives customers more control over their data and how it is used, how does that help CRM? Wouldn’t customers want to share less of their data rather than more?

In fact data will be front and center as a topic at —

200px-Vroomboston2009_small

on Monday and Tuesday of next week at Harvard Harvard  (please come, it’s free). While most of the workshop will be organized on the open space model (participants choose the topics and break off into groups to move those topics forward), we decided to have one panel, titled Getting Personal With Data: How Users Get Control and What They Do With It. I invite local CRM folks (and everybody interested) to come and participate.

In his piece Neil sourced my new chapter (“Markets are Relationships”) in The Cluetrain Manifesto, as well as text from an interview by email. Since CRM+VRM is our topic here, I thought it would be cool to provide the long form of my answers to Neil’s questions.Here goes…

About what VRM does that CRM alone cannot…

Think of a buyer-seller relationship as vehicle that can be driven by two people: the buyer and the seller. The problem we have today is that only the seller—what in business we call the vendor—can drive. The buyer is in the passenger’s seat. She can’t drive. She can choose to spend or not to spend—or to leave the car and ride with some other vendor. But she can’t drive.

VRM gives her a way to drive.

To mix metaphors a bit, CRM systems are designed to operate what in the tech world we call “silos” or “walled gardens.” 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.

Perfect example: loyalty programs. Most of these burden the customer with cards and key-ring tags—all to “increase switching costs,” to obtain a higher “share of wallet” or to impose other inconveniences. I know one guy who carries around a key ring with dozens of little tags. In my own case I recently counted fifteen different loyalty cards populating my wallet, my key chains and my glove compartment. None make me feel loyal. All increase my resentment more than “loyalty” by any measure.

Limiting customer choices amounts to wearing blinders. Companies can’t see what they won’t let themselves see. For example, they can’t see customers who choose not to shop at a store because the store only gives discounts and benefits to loyalty card holders. In my own case I buy groceries at Trader Joe’s. rather than Stop & Shop because Trader Joe’s doesn’t require that I carry a loyalty card to get a “discount” that I believe is nothing more than a regular price—while the non-card price amounts to a surcharge and a punishment for non-card-carrying customers. Whether or not this is true, it’s a legitimate perception, and an unintended negative consequence of the loyalty card system. Stop & Shop can put the world’s best data-collection behind its loyalty cards, but one thing they won’t find in that data is why I don’t buy at their store.

Being customer-driven means a company knows what customers actually want and what they actually feel. Wouldn’t it be better to know directly when a customer wants something, rather than to guess at it? Wouldn’t it be better to have whatever market intelligence the customer can provide, willingly, rather than to give the customer a limited set of choices, which may exclude the one thing that might cause a sale or make a better customer?

Friends of mine who have worked in the CRM business, and studied it over many years, tell me that in many — perhaps most — cases, customer-centricity is secondary to organization-centricity. They know of few cases where customers actually drive the company.

In the beginning CRM was about building a “single customer view,” with lots of talk about better understanding the customer’s needs, and how that should be become part of “integrated” marketing, selling and customer service. Over the years, however, this ambition was compromised by minimal data and cost-cutting requirements.

My wife, a business veteran with a long history in retailing (both at the store level and as a supplier) has observed that the trend in recent years has been to out-source support to the customer herself. “Go to our website,” the call center says. Yet typical websites are so poor at customer support that the customer is left to seek help from other customers, or from websites other than the company’s own. This is why so many customers now support each other, rather than bothering with companies’ own support sites and services.

The problem here isn’t bad CRM. It’s that there is nothing yet on the customer’s side to carry some of the relationship weight — other than what CRM systems provide. That means the whole responsibility lies with the vendor. With VRM we want to give the customer means for carrying some of the burden herself.

About VRM and its community…

The current VRM community is a convergence of several formerly separate efforts. In the UK, the Buyer Centric Commerce Forum came together in 2003. In the U.S., VRM grew out of the Internet Identity Workshops, which started in early 2005 — as a workshop discussion subject that broke off and acquired a life of its own. In my own case, VRM started as a sense of unfinished business after Chris Locke, Rick Levine, David Weinberger and I wrote The Cluetrain Manifesto in 1999. Listen to what Chris was saying (in the original manifesto posted at Cluetrain.com) with “we are not seats or eyeballs or end users or consumers. we are human beings and our reach exceeds your grasp. deal with it.” That is the voice of the customer, energized by powers granted by the Internet but not understood by sellers there.

After Cluetrain came out, I realized that Chris’s statement wasn’t quite true, because if customer reach truly did exceed vendor grasp, loyalty cards would be pointless. Customers would have native means for expressing their own wants, needs, terms of engagement and loyalties. Thus I came to realize that relationship was the next frontier. Something had to be done to liberate both sellers and buyers from the belief that a free market is “your choice of captor.”

We didn’t call it VRM, however, until Mike Vizard suggested it during a Gillmor Gang podcast in October 2006. Before that we had called it CoRM (for Company Relationship Management) and other names. As a new fellow at Harvard’s Berkman Center, I needed a project. So I titled mine ProjectVRM, and the rest is history.

On how customers control personal data and its exposure…

The short answer is that customers will disclose data on an as-needed basis, within the context of a secure and genuine relationship, and not a coerced one where the vendor does all the asking.

The longer answer is that this requires a new system on the customer’s part and a modified one on the vendor’s part. That’s how VRM + CRM will work together.

Both systems need to recognize that the individual, and not the organization, should be the point of integration for his or her own data, the point of origination for sharing that data, and the authority about what gets done with that data.

The ‘single customer view’ is naturally that of the customer, not the company. 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, standardized ways. 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.)

VRM enables personal data management by the individual, in ways that work for the individual and which can also enable selective disclosure to companies. There are various ways of achieving that, many of which are being actively worked on at present. The plumbing part is easy. Processes and business models are harder, but those are being worked on too.

The challenge lies in developing a more granular view of what data is shared, by whom, how, where and why. For CRM today that equates to WHO, bought WHAT, WHERE, WHEN and HOW it was offered to them. These are all data that can be derived from a system if it is built well enough. These data can then be used to make good guesswork about WHY customers bought products, and then make educated guesses about what customers will buy next.

A well designed VRM system will eliminate much of the 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. The customer also needs to be able to assert his or her own terms of engagement, rather than being forced to accept those required by the vendor. Customer-driven terms would naturally include commitments to pay and otherwise behave honorably; but they might also include preferences (such as “send no junk mail” or “email my receipts”). They might even include expressions of willingness to pay for good service.

On the personal data side, this system will involve what we call “volunteered personal information.” In effect this is a new class of data. Right now that data lives mostly in the heads of customers, because they don’t have the tools or systems to express any of it on their own.

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.

On how VRM will influence vendors who don’t want to give up control…

Money talks. Consider one form of VRM we call the Personal RFP. This is where the customer advertises his or her desire to buy a product or service at a given place and time. (And not just through a walled garden such as Facebook or eBay.) For example, “I need a stroller for twins in Grand Rapids in the next 5 hours.” Data with money behind it will fund all kinds of changes in data collection systems.

On other appeals to the CRM side…

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 is not possible to see how any of this will work if you look at it only from the supply side of the marketplace — from the standpoint of the seller. You have to take off your seller’s hat and be the other self you’ve always been: a customer.

No customer wants to be “acquired,” “retained,” “managed” or “owned” by any seller. 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.

On how “realistic” VRM is…

How realistic was the Internet in 1985?

Look at networks in the 80s and early 90s. If you wanted email, or instant messaging, you had to join a walled garden called AOL or Compuserve or Prodigy. If you were an AOL member and wanted to send an email to a Compuserve member, you couldn’t. Just as today you can’t use a Costco loyalty card at a Best Buy.

The Internet changed all that, by providing new protocols for communication that weren’t owned by anybody, but could be used by anybody and improved by anybody.

VRM will likewise change buyer-seller relationships by providing new means for engagement that aren’t owned by anybody, but can be used by anybody and improved by anybody.

Customers are resigned to stuff they hate when they think there are no alternatives. Once the alternatives show up, they will get energized. “Invention is the mother of necessity,” Thorstein Veblen said. What we’re doing with VRM is inventing protocols for buying and selling that will mother many new market necessities. One of those will be reforming CRM so it can respond to real customer demand, along with much better data than was ever before possible.

About where data lives, and how…

Some VRM folks (e.g. Mydex.org) are working on “Personal Data Stores” that can be replicated with trusted “fourth parties“. Some are working on ways of representing personal data (e.g. Azigo.com, Kynetx.com). Some are working on ways of consolidating loyalty data on the customer side and reforming loyalty programs from the outside in (e.g. Scanaroo from Cerado.com). All the many digital identity systems and communities have VRM components and constituents (e.g. Kantara.org, IdentityCommons.org, InformationCard.net, OpenID.org, XDI.org). Some are working on simple customer-held means for organizing one’s own data and relationships (e.g. TheMineProject.org). Some are working on means for logging one’s own media usage, and providing means for putting the pricing gun in customer hands (e.g. ProjectVRM and its friends in various media businesses). Some are working on customer-driven terms of service (e.g. ProjectVRM and friends at Harvard Law School and elsewhere). Some are working on patient control of their own health care data and relationships with health care providers (too many efforts to name, but Google and Microsoft are on this list). Some are working on user driven search, outside the walled gardens of Google and Bing (Switchbook.com). I am probably insulting many by ending the list there, but that should be enough.

About ProjectVRM.org…

ProjectVRM is a research and development project at Harvard’s Berkman Center for Internet & Society. The project was created in 2006, and has focused mostly on development over the following three years. This next year we will be doing much more research as well.

I am a fellow at the center, and I run the project. The vast majority of the development work is going on among members of the VRM community. For them ProjectVRM serves as a central clubhouse, with workshops several times per year, a mailing list, a wiki and other supportive services. The idea isn’t to create a central VRM body, but rather to focus disparate VRM efforts on common goals.

I want to say before closing that we do not mean to give CRM a hard time. The problem CRM has had from the start is that it carries the full burden of systematizing 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.

Is RedBeacon VRM?

That question came to me this morning, in response to RedBeacon being named the winner of this year’s TechCrunch 50.

What RedBeacon offers is a form of what in the VRM community we call a personal RFP. As the company’s site says, RedBeacon provides a way to …

  • 1Customers find you on Redbeacon
    Request a local service
  • 2Work when you want
    Compare prices
    from qualified providers
  • 3Did we mention it's FREE?
    Schedule the job online

(Whoa. I didn’t know WordPress would let you copy and paste images and text together like that. Nice. An old dog learns a new trick.)

As it says here, you can request a service, review qualified buyers, select a provider, and schedule the job, all at the RedBeacon site.

Is that VRM? In a number of ways, yes. RedBeacon to me looks like a fourth party service, such as those outlined in VRM and the Four Party System.

I would like to see how it fits as what Joe Andrieu outlines as a user-driven service. What do the rest of ya’ll think?

Dawn of the Living Infrastructure

So how do we get out of this place?

infrastructure_of_living_dead

Let’s face it. Mike Arrington’s problem with the iPhone, Om Malik’s problem with AT&T, the FCC’s problem with Apple + AT&T together, my own problems with Cox, Dish Network and Sprint, David Pogue’s problem with the whole freaking cell phone industry … all of these are a great big WAAAH! in the wilderness of industrial oblivity to what customers want. We’re in the graveyard of what Umair Haque calls the zombieconomy. We’re living in Night of the Living Dead and complaining that the zombies want to eat us alive.

What they really want is to strap us down while they bleed us for small change—tiny amounts of ARPU. They do this, for example, by forcing us to sit through “The … number … you … have … dialed … eight … zero … five … seven …” until a small ka-ching happens somewhere deep in their billing system, so you get bled whether or not you’ve left (or received) a message. David Pogue:

Is 15 seconds here and there that big a deal? Well, Verizon has 70 million customers. If each customer leaves one message and checks voicemail once a day, Verizon rakes in — are you sitting down? — $850 million a year. That’s right: $850 million, just from making us sit through those 15-second airtime-eating instructions.

It was JP Rangaswami (disclosure: I consult JP and his company, BT) who first pointed out to me that the primary competence of phone companies isn’t technical. It’s financial. They’re billing machines. That’s their core competency. And it was r0ml who pointed out, way back when he was with AT&T Wireless (before it became Cingular, and then the AT&T we all know and hate today), that phone companies arrived at the holy grail of micropayments decades ago. They don’t charge small amounts, but they know how to add them up, and round piles of microminutes into billions of dollars.

A better movie metaphor is The Matrix. We’re all wet cell batteries inside giant phone company billing systems. The machines took over a long time ago, and they’re still running the world.

Not that acting like machines does them much good in the long run. Umair Haque:

Profit through economic harm to others results in what I’ve termed “thin value.” Thin value is an economic illusion: profit that is economically meaningless, because it leaves others worse off, or, at best, no one better off. When you have to spend an extra 30 seconds for no reason, mobile operators win — but you lose time, money, and productivity. Mobile networks’ marginal profits are simply counterbalanced by your marginal losses. That marginal profit doesn’t reflect, often, the creation of authentic, meaningful value.

He adds,

The fundamental challenge for 21st Century businesses — and economies — is learning to create thick value. We’re seeing the endgame of a global economy built to create thin value: collapse. Why? Simple: thin value is a mirage — and like all mirages, it ultimately evaporates. In the 21st Century, we’ve got to reconceive value creation.

Constructive Capitalists are disrupting their rivals by creating thicker value. Thick value is sustainable, meaningful value — and a new generation of radical innovators is wielding it like a strategic superweapon.

Rick Segal thinks Mike Arrington‘s CrunchPad is one of those superweapons. Here’s what the Crunchies say will look like:

crunchpad-near-final-design

Sez Rick,

No, this probably isn’t the next Apple or Motion Computing, but here’s the secret.

Let’s assume there are just 1000 people out of all the TechCrunch people in the world that want this device.  If this device gets made and sold to 1000 happy people and the result is a manufacturing world and process which can now do these “one off” type devices, the game changes.

That’s why I want this device to get made. It begins a high profile (and positive) disruption at the point of manufacture and that can mean exciting things to you.

One way to blow up silos and walled gardens is de-verticalize industry itself. Not by making it horizontal (that’s too abstract), but by making it personal. Rick’s angle here is to go all the way to the source, and make manufacturing personal.

That’s what Rick thinks Mike & Co. are doing here. I also think the Crunchpad is compliant with what Dave says in this post here:

I’ve been through this loop many times, this is Mike’s first. The only platform that really works is a platform with no platform vendor, and that’s the Internet.

Right. The Crunchpad, as I understand it (and the Crunchies have explained it) is a Net-native device. Standards-based. Commodity parts. Full of open source stuff. The platform is the Net. The vendor is TechCrunch, but trapping users isn’t their game. They’d rather have thick value than thin.

So how do we contribute, besides paying cash for goods? By being constructive customers, rather than passive consumers. That’s what Rick is calling for here, and why we, as free and independent customers, can choose to support something that uses the Net as the platform, and is built to be user-driven.

Think about it. Is the Crunchpad crippled by any deals with a major vendor of any kind? Is it locked into any phone company’s billing and application approval systems? Is it locked into any one industry’s Business-as-Usual? No.

So who is in the best position to contribute to its continued improvement, besides the Crunchies themselves?

You. Me. Users. Customers.

We can drive this thing. Even if what Dan Frommer says is right, and Apple comes out with the world’s most beautiful pad ever, and pwns the whole category, there’s more vroom for improvement in the Crunchpad, because Apple’s device will be closed and the Crunchpad will be open. Or should be.

You listening, Mike?

Off base but still kinda relevant

I suppose you’ve succeeded when people start making fun of what you’re up to. That might be what’s going on with The Vendor-Client Relationship, a YouTube video I found via markfonteijn. In this video the clients — diners at a restaurant, a customer at a hairdresser — bargain over costs. I suppose this is to point out the oddities of doing the same kind of thing in a B2B world.

It’s not about VRM at all, but it does bring up an occasional misunderstanding about VRM: that it’s about negotiating on price. It’s not. It’s about relationship; or more precisely, about relating. If price negotiation isn’t on the table, or shouldn’t (or can’t) be on the table — as would be the case at a restaurant, a hairdresser, or most retail establishments — it’s outside VRM’s scope. VRM is about enlarging the table, not turning it over.

EmanciPay does put the pricing gun in the hands of the customer, but only for goods that cost nothing and are worth more than that. Which is why our likely first deployments are with public radio.

It helps organize our understanding to divide market activities there into three categories: transaction, conversation and relationship. Of those three, the least developed in our “developed” economy is relationship. (And it’s the most developed in the less-developed world.) The most developed in our familiar settings is transaction. With VRM we are trying to create more balance between the three by concentrating on relationship, even when the relating required is minimal. We’re doing that by better equipping the buyers’ side with tools that will serve both sides.

The kind of interaction we see in that video is about as far from VRM as you’ll get.

Answering tweeted questions about VRM

So, with the help of vangeest and Twitter Search for #vrmevent, I’m addressing questions tweeted from the virtual floor here at the VRM Event in Amsterdam. Here goes…

vangeest: @dsearls: retweet @vangeest: #vrmevent: what is the relationship between the good old B2B marketplaces like Ariba and VRM?

As an idea VRM owes something to B2B, for the simple reason that B2B relationships tend to be between equals. Thus they can be rich and complex as well. B2C tend to be simplified on the B side, mostly so maximum numbers of templated Cs can be “managed”. Iain Henderson has talked about how there are thousands of variables involved in B2B VRM, while only a handful with CRM, which is B2C.

VRM essentially turns B2C into a breed of B2B — to the degree that both terms no longer apply. VRM equips individuals to express their demand in ways that B2C never allowed, and B2B never included.

But VRM is not a site, or a marketplace. That makes it different from Ariba, eBay, or online marketplaces. VRM may happen inside of those places, but VRM is not about those places.

Most importantly, VRM is not something that companies give to customers. It’s something customers bring to companies.

zantinghbozic: #vrmevent ichoosr: vrm is socialism 2.0 – http://mobypicture.com/?pcg0qr

This reports a provocative tease by Bart Stevens of iChoosr in his opening slide. I don’t agree with the statement, but his deeper point rings true: it involves a shift in power in the marketplace, from producers to consumers. Except I wouldn’t use the word consumers. I’ll explain that later.

The buyer’s envelope, please

Sitting here talking with Tara about her new VRM business. Lots of helpful ideas bouncing around. So we’re both pausing in the midst to write stuff down. Here’s my brain dump of the moment, with some actionable ideas toward the end…

For retailing, the Net changes everything. But it’s still new. It’s three seconds after the Big Bang and all we have are a few light elements, a lot of heat and no galaxies. Yet $billions are already being made in online retailing, and$billions more are being spent and saved by retailers and shoppers using the Net to advantage. And because of those $billions, and the successes of companies like Amazon and Zappos, and services like Google Checkout and Orbitz, we’re inclined to think this stuff is mature. It isn’t. It’s still embryonic and protean, compared to what it will become.

In the meantime, consider this thesis: Amazon and other excellent online retailers have improved the online shopping experience as far as a retailer can. Yes, there is always room for improvement, but there is only so much improvement you can carry out only on the sell side, even if you’re equipping buyers to do a better and better job. At a certain point the improvements need to happen on the buy side. You need better buyers, not just better sellers. You need to improve the tools available to buyers — tools that help buyers with all sellers, and not just within each seller’s walled garden or silo.

Therefore… At a certain point the problem is no longer scale but scope.

Amazon and its competitors are pushing out the envelope of sell-side scope. On the buy side we’re just getting started. The envelope is still mostly empty. The job of VRM is to start pushing out its walls, starting at close to zero.

Another way of putting it. There is only so much any retailer can do, because they are sellers and not buyers.

Still another: It doesn’t matter how big you make a walled garden if it’s still a walled garden. At a certain point you reach the Multiple Walled Garden Problem. (Shall we call it MWGP? Or SO for Silo Overload?)

If you’re carrying a pile of retailer loyalty cards, you have a silo overload problem. It may not be a huge one for you, but it’s still a problem. It’s friction, and not just for you. Loyalty cards can be a PITA for the seller as well. They require multiple pricings, slow things down at the cash register, and involve piles of often wrong and irrelevant data. But I don’t want to go into how good or bad loyalty cards are here, because they’re beside a larger point: that we need to start solving market problems from customer’s side, by improving the scope of what the customer can do in the same way with multiple vendors.

For example, take affiliate programs, or affliliate marketing. Tara has been schooling me about these things, which are a huge part of how online retailing works. Hell, I didn’t even know that when I clicked on an a Head Butler link such as this one, Jesse Kornbluth gets a kickback (or at least puts himself in a position for one) from Amazon.com. He’s not just pointing to a book. He’s part of a new retail system in which commissions or kickbacks (or whatever you want to call them) are silo’d. Amazon has one kind and other retialers have other kinds. Some have none. Whether he means to or not, Jesse discriminates against those, and does so for financial reasons.

From the sellers’ side this is all fine in the sense that it’s a free (and fee, I suppose) marketplace. Every retailer is at liberty to compete by providing the best kickback system.

But what if the customer wants, say, purchasing guidance that’s uncontaminated by bias toward one kickback system over another? What if the intermediary guides the customer to a seller that doesn’t have a kickback program, and the intermediary gets nothing from the sale while the seller gets everything? Wouldn’t it be better to have the buyer (or the intermediary, on behalf of their buyers, and for the good of the marketplace) assert a single form of commissioning that’s fair and helpful to all sellers and all intermediaries — even while respecting the kickback (or commissioning) systems that are already in place?

This is a greenfield here. Let’s think and talk about it.

Also, let’s think about what kind of research project this might make — or that the theses presented here might make — for a business school student or class (at HBS or elsewhere). Because that’s one of the things I’d like to do in the next school year, which is just getting started.

Because principles are good to have.

I’m vetting ten VRM principles here: all grist for next week’s VRM Workshop mill. We’ll be changing these as the workshop approaches, I’m sure.

Note that these apply to management of relations with vendors by customers: the narrowest scope of VRM. The larger topic of relationship managmement (RM) is part of the discussion as well. Obviously there are other relationships — with chuches, clubs, civic organizations, government bodies and so on — where VRM tools apply, but the individual is not a customer. Do we want to broaden things by saying “individual” and “organization” rather than “customer” and “vendor”? I think we’re better off with the former than the latter, but I’m open.

  1. VRM provides tools for customers to manage relationships with vendors. These tools are personal. They can also be social, but they are personal first.
  2. VRM tools are are customer tools. They are driven by the customer, and not under vendor control. Nor to they work only inside any one vendor’s exclusive relationship environment.
  3. VRM tools relate. This means they engage vendors’ systems (e.g. CRM) in ways that work for both sides.
  4. VRM tools support transaction and conversation as well as relationship.
  5. With VRM, customers are the central “points of integration” for their own data.
  6. With VRM, customers control their own data. They control the data they share, and the terms on which that data is shared.
  7. With VRM, customers can assert many things. Among these are requests for products or services, preferences, memberships, transaction histories and terms of service.
  8. There is no limit on the variety of data and data types customers can hold — and choose to share with vendors and others on grounds that the customer controls.
  9. VRM turns the customer, and productive customer-vendor relationships, into platforms for many kinds of businesses.
  10. VRM is based on open standards, open APIs and open code. This will support a rising tide of activity that will lift an infinite variety of business boats, and other social goods.
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