With growing 'customer power' the balance is shifting from marketing-led sales to a more consumer-driven dynamic and while Gartner's story ended at SocialCRM, a few of the analysts hinted at what may be next, and that's what I'll be looking at today.
Companies that build deeper relationships with their customers will have greater insight into their context and needs and will be better able to deliver the 'delight' that will be critical to competitiveness in the coming years. But, relationships need at least two parties. With CRM and even SocialCRM the focus is on the vendor's side of the 'conversation'. As social networks increase customer power, solutions in a new Vendor Relationship Management (VRM) category are emerging to complement and disrupt the current market dynamics. Let's take a look...
With Facebook at 500m users, it's clear that a growing number of customers, and potential customers, are spending more of their time in social networks - publicly declaring their interests, opinions and connections. Looking to engage their customers more deeply, companies are starting to deploy SocialCRM solutions to monitor social network interactions and enable collaboration within the Enterprise to respond coherently and consistently.
SocialCRM provides companies with the 'ears' to listen, but that's just one side of a conversation. What of the wealth of private information requiring customer consent to access? As the recent Facebook privacy debacle showed, people are becoming aware that their personal information is valuable and they want to protect it, ultimately they'll expect to use it for their own benefit! As Jeff Chester of the Center for Digital Democracy said, "Everybody is making money off consumer data, but the consumer."
VRM - Building scalable trust-based relationships
VRM, a concept pioneered by Doc Searls of Harvard's Berkman Center for Internet & Society and co-author of the 'Cluetrain Manifesto', proposes a new category of tools which enable individuals to get value from their personal information and to manage their relationships with companies. VRM complements CRM and SocialCRM by enabling the 'voice' of the customer to be communicated directly to company's 'ears'. With a CRM and VRM infrastructure in place, we have a platform for dialogue, and ultimately a context for building scalable trust-based relationships. While VRM doesn't (yet) exist as a category in the same way as CRM or SocialCRM, we're starting to see examples of VRM dynamics:
- Bynamite - Gives people a way to control the information advertisers see about you.
- Needium - Giving businesses a way of tapping into customer needs.
- Foursquare and Starbucks - People are sharing their location with businesses in the form of 'checkins', and 'mayors' are rewarded with discounts.
- Mint - Enabling people to aggregate their personal financial data and to get detailed product recommendations (acquired by Intuit 2009)
- RedBeacon - Enables people to create 'personal RFP's' to find local service providers (Winner TechCrunch50 2009).
Ultimately, CRM relies upon internal silos of data, SocialCRM relies upon public information on social networks. Deep customer context, requires customer control and consent - that's VRM. CRM, SocialCRM and VRM together enable customers and businesses to converse, relate and ultimately transact more efficiently. A win-win for all participants.
I have to agree with this blogger about the risks associated with getting too chummy with your vendors. They can keep your organization pinned into running your business in such a way that you are not able to be as competitive as you need to be.
http://bit.ly/b8Krzc
Ryan,
Thanks for your comment. Just wanted to clarify that 'Vendor Relationship Management' in this case refers to individuals interacting with companies, rather than, companies interacting with companies.
Interesting approach. CRM Socialcrm now VRM. Where do you see customer experience and process improvement fitting into this evolution ?
Per @rwang0 tweet nudge, grabbed the bait for a swag.
Here's the E2.0 layer, imho.
E2.0 is very similar to SCRM, except change out word "customer" for "employee" everywhere. E2.0 feeds SCRM/VRM and SCRM/VRM feeds E2.0.
Just as SCRM enables and encourages the customer with "touch" information, assistance, relations, and a voice - strengthening the community and trust for better service and naturally more business - the same is exactly true for E2.0 - only internal spin (yet also external results).
With E2.0, continued encouragement of the employee - sharing information, enabling tools, and a voice - strengthens and expedites the internal community, trust, team, innovation, productivity, and naturally, profitability and better business (both inside and outside).
In sum - we are all customers and we are all suppliers - regardless of where the firewall is. With open enablement (and efficient tools) and right attitudes, best practices evolve. Human nature.
Julian,
Great post and very well done.
I cannot say that I agree totally with your positioning (there is a some value to the relationship by using CRM pre-interaction - especially analytical aspects of CRM and sCRM), but I like the progression.
I am somehow concerned that by dividing and advocating different capabilities to VRM, SCRM, and CRM you are making the case for three different implementation strategies or even technologies - when in reality it is a natural progression. I am no certain that VRM is ever going to exist beyond the theoretical (I am working on this, so trying not to make it sound like it is a proven theory) but the concepts are easily assimilated into CRM and SCRM as they progress.
Of course, since SCRM is a natural evolution for CRM, we can make the argument that we are talking about different flavors for CRM (as Gartner presented at the conference you mention, Social CRM is another aspect of CRM -- just like analytical and operational).
And this is where I am leading with my research: VRM may never existed, but customer-driven CRM is the ultimate goal (which essentially builds a new flavor of CRM, like Social now).
What do you think? Would love to hear your thoughts...
Esteban,
Thanks for your comment.
In a different version of the diagram I have an arrow going from bottom-left to top-right to indicate a timeline for the emergence of CRM, SCRM, VRM. Right now, we're in the middle of SCRM emerging as a separate category (Gartner just published their first MQ), so it's still early days. VRM is even more nascent in terms of implementations, but, as you mentioned the trend is clearly towards the inclusion of 'customer-driven relationships', whether they're called VRM or CMR.
I don't think customers are ever going to go out and buy a 'VRM system' but I think we'll see more solutions with VRM capabilities, enabling customers to leverage their own data to provide rich context, like the ones at the end of my piece and ones Doc Searls mentions here.
It's also important not to build a relationship to much because it could be seen to annoy the customer, and that's where you start to venture into the realm of spamming. You should let your customer manage the relationship with you subliminally, rather than you getting in their face so to speak.
OK. VRM invites us to convey our wants and needs to marketers. It empowers consumers but it's also a rip-off. Our self-disclosure is worth of lot of money to marketers (on both the cost and revenue lines) but we won't get a penny for being so forthcoming. In what Searls et al. call the "Intention Economy," the producers of intentions should get paid. FYI: I examine VRM closely in "The Consumer's New Clothes," chapter 4 of my new book; PDFs of all chapters (free) are at www.lenellis.com/books.