Vendor Relationship Management – What Doc Searls is Looking For

January 22, 2009

173

Hi Mei Lin

I have followed the VRM bandwagen for some time. It actually started with marketing journalist Alan Mitchell’s Buyer Centric Commerce Forum some years back in the UK. Like Doc, Alan is a strong believer in the ability of buyers to manage their own buying destinies through the use of buyer-centric buiness. Unlike Doc, Alan is a marketing insider having been involved in commercial marketing for decades.

The problem I have with VRM is that it suffers from a number of fallacies. Each one by itself is probably fatal, and collectively, well, read for yourself:

The Fallacy of Ceding Control – Why would commercial marketers give up their expensively collected data and the power it confers, to a rabble of customers? Would you if you had paid millions to collect it?
The Fallacy of Wanting Control – Which customers actually want control of all their transactional data, have anywhere to put it or would know what to do with it?
The Fallacy of Managed Markets – VRM seems to rest on the assumption that it offers a superior way of deciding what products, services and expeiences to offer to customers than the current free market system. I am not sure why customers reqesting that companies make specific offers to them is in any way better.
The Fallacy of the Economic Model – Transaction cost theory suggests that companies only exist as a bettter way of organising to produce standardised products than markets of individuals. Why throw all that away for a transaction cost heavy model whose economics hasn’t even worked out, let alone tested and proven?

I think that VRM has some way to go before it is a viable alternative to today’s admittedly imperfect free market approach. What was it that Winston Churchill said about “democracy being the worst form of government except for all the others that have been tried”?

Graham Hill
Customer-driven Innovator
Follow me on Twitter

2 COMMENTS

Bob Thompson January 23, 2009 At 1:45 pm

…and it’s called Social Media.

Customers aren’t going to wait for businesses to give them anything. Instead, customers are using the power of Social Media to share info, get what they want… and lean on vendors when they don’t.

Smart vendors will join the conversation and try to forge a win-win relationship.

Bob

Bob Thompson, CustomerThink Corp.
Blog: Unconventional Wisdom
Graham Hill January 24, 2009 At 1:35 am
Hi Mei Lin

I have followed the VRM bandwagen for some time. It actually started with marketing journalist Alan Mitchell’s Buyer Centric Commerce Forum some years back in the UK. Like Doc, Alan is a strong believer in the ability of buyers to manage their own buying destinies through the use of buyer-centric buiness. Unlike Doc, Alan is a marketing insider having been involved in commercial marketing for decades.

The problem I have with VRM is that it suffers from a number of fallacies. Each one by itself is probably fatal, and collectively, well, read for yourself:
1. The Fallacy of Ceding Control – Why would commercial marketers give up their expensively collected data and the power it confers, to a rabble of customers? Would you if you had paid millions to collect it?
2. The Fallacy of Wanting Control – Which customers actually want control of all their transactional data, have anywhere to put it or would know what to do with it?
3. The Fallacy of Managed Markets – VRM seems to rest on the assumption that it offers a superior way of deciding what products, services and expeiences to offer to customers than the current free market system. I am not sure why customers reqesting that companies make specific offers to them is in any way better.
4. The Fallacy of the Economic Model – Transaction cost theory suggests that companies only exist as a bettter way of organising to produce standardised products than markets of individuals. Why throw all that away for a transaction cost heavy model whose economics hasn’t even worked out, let alone tested and proven?
I think that VRM has some way to go before it is a viable alternative to today’s admittedly imperfect free market approach. What was it that Winston Churchill said about “democracy being the worst form of government except for all the others that have been tried”?

Graham Hill
Customer-driven Innovator
Follow me on Twitter