Q: “What’s the difference between a tweeter and a customer?”
A: “One complains, the other buys.”
Just had to write that down. The Q and the A came in the midst of a VRM conference call that also touched on CRM, VRM+CRM, sCRM, trust frameworks, identity and other stuff.
Not saying that’s a fair characterization, by the way. Just that it’s an interesting one.
Yesterday Google opened the curtain on Google Wallet. I think it’s the most important thing Google has launched since the search engine. Here’s why:
Reason #1: We’ve always needed an electronic wallet, especially one in our mobile phone. And, although others have tried to give us one, it hasn’t worked out for them, because…
Reason #2: We’ve needed one from somebody who doesn’t also have a hand in our pocket. 
Google is the only company in the world that can pull this off, because it’s the only company in the world that lives to commodify exactly the businesses that desperately need commodification, and to await interesting consequences. I can’t think of a single company that’s better at causing tsunamis of commodification so they can join hundreds of other companies, surfing them to new shores. List the things Google does but doesn’t make money with, and you’ll have a roster of businesses that needed commodification. What Google looks for is what JP Rangaswami and I call because effects: you make money because of those things, not with them. (Note, not talking about “monetization” here. A subtle distinction.) A Google lawyer once told me this strategy was “looking for second and third order effects.” Same thing. Either way, they’re out to give us — and retailers we do business with — a hand. (But they will need to keep it out of our pockets, which includes data we consider personal. We’re the ones to say what that is, and others — including Google, Sprint, Citi and the retailers — need to respect that.)
Reason #3: This reduces friction in a huge way. It’s not an exaggeration when Google says this on their Vision page for the project:
In the past few thousand years, the way we pay has changed just three times—from coins, to paper money, to plastic cards.
Now we’re on the brink of the next big shift.
What weighs your wallet down? What slows you down at checkout? Sometimes it’s pulling out cash, but most times it’s dealing with cards. In the last few years every store, it seems, has been piling on with loyalty cards and keyring tags. This last week Panera Bread started, and watching the results have been a clinic in business fashion gone wrong. The poor folks behind the counter are now forced to ask customers if they have a Panera bread card, and the customers have to either say no (and feel strange), or to produce one from their wallet or key ring. Yesterday I asked the person behind the counter how she liked it. “We don’t need it, and customers don’t want it,” she said. “We’re only doing it because every other store does it. That’s all.” That’s a pain in the pocket nobody needs.
Says Google,
Google Wallet has been designed for an open commerce ecosystem. It will eventually hold many if not all of the cards you keep in your leather wallet today. And because Google Wallet is a mobile app, it will be able to do more than a regular wallet ever could, like storing thousands of payment cards and Google Offers but without the bulk. Eventually your loyalty cards, gift cards, receipts, boarding passes, tickets, even your keys will be seamlessly synced to your Google Wallet. And every offer and loyalty point will be redeemed automatically with a single tap via NFC.
This assumes that the ecosystem will continue to support the kind of loyalty programs we have today. It won’t, because we won’t and that brings me to…
Reason #4: Now customers can truly relate with vendors. That is, if Google Wallet and participating retailers and other players welcome it. See, CRM — Customer Relationship Management — has thus far been almost entirely a sell-side thing. It’s how companies related with you, not how you related with them. They set the rules, they provided the cards, they put up the websites where you filled out long complicated forms, they send you the junk mail, and they do the guesswork about what you might want, usually because you’ve bought something like it before. But what if your phone has your shopping list? What if you want to advertise what you’re looking for, as a personal RFP for something you need right now, and may never need again? Think of this as advertising in reverse, or what Scott Adams (of Dilbert fame) calls “Broadcast Shopping”. This is one example of how …
Reason #5: Now demand can signal supply in great detail. Until now, about the only signals we could send were with cash, cards, and whatever might percolate up the corporate CRM chain from “social” CRM. There’s a lot here (see Brian Solis’ Converation Prism, for example, or follow Paul Greenberg). But those all depended on second (vendor) or third parties (all the petals in Brian’s prism, which actually looks more like a flower). They weren’t your signals. I see no reason why the open commerce ecosystem shouldn’t include that. Why should customers always be the dependent variables and not the independent ones? Speaking of independence…
Reason #6: Now you have your own pricing gun. You can tell a store, or a whole market, what you’re willing to pay for something — or what you might offer along with payment, such as information about your other relationships, or the fact that you just moved here and are likely to be shopping at this store more. (Or that you’re a high-status frequent flyer with another airline, and considering the same for this one.) Why not?
Reason #7: You can take your shopping cart with you. Back when e-commerce began, in 1995, my wife’s sister was the VP Finance for Netscape, so that company was something like family for us, making my wife (not a technical type) an early adopter. One of her first questions back then was one that exposes a flaw that’s been in e-commerce from the start: “Why can’t I take my shopping cart from one store to another?” At least conceivably, now you can. Let’s say you want to shop at Store B while you’re at Store A. This already happens when you scan a QR or a barcode with your smartphone to see if it’s cheaper at Amazon or something. But what if you want to be more sophisticated than that? The implications for retailers can be scary, but also advantageous. After all, retailers have physical locations, which Amazon doesn’t. Retailers can earn loyalty in ways that are as unique as each store, and each person working at a store.
Reason #8: Now you can bring your own data with you. Inevitably, you will have a personal data store, vault, locker, data wallet (yes, it’s already called that), trust framework — or other combination of means for managing and selectively sharing that data in secure, trustworthy and auditable ways. And your data doesn’t just have to be about shopping. Personal tracking and informatics are getting big now (read Quantified Self for more). That’s stuff we bring to the market’s table as well. The wallet in one’s phone seems a good way.
Reason #9: Now you can actually relate. When a customer has the ability to shop as well as buy, right in his or her wallet — and to put shopping in the contect of the rest of his or her life, which includes far more than shopping alone — retailers can discover advantages other than discounts, coupons and other gimmicks. Maybe you’ll buy from Store B because you like the people there better, because they’re more helpful in general, because they took your advice about something, or because they help your kid’s school. Many more factors can come into play.
Reason #10: Now you’re in a free and open marketplace. Not just the space contained by any store’s exclusive loyalty system. Nor in a “free” market that’s “your choice of captor” (which is one of the purposes of loyalty programs). Along those same lines…
Reason #11: You don’t have to play calf to every store and website’s cow. The reason you can’t take your shopping cart with you from store to store on the Web is that e-commerce normalized from the start on the calf-cow, slave-master architecture of client-server computing. This is what turned the Web from a peer-to-peer, end-to-end egalitarian greenfield into fenced-off ranchland where vendors built walled gardens for “consumers” who fed on the milk of each site’s exclusive offerings, and also got cookies that helped calf and cow remember each other, but which sometimes also tracked the calves as they wandered off into other gardens. It was a submissive/dominant system from the get-go, and has been flawed for exactly that reason ever since. Google Wallet, at least conceptually, gives you ways in which you can relate to anybody or anything, on your terms and not just theirs. And not just in the old commercial-Web-based calf-cow system. You can divine the bovine right in your pocket, and avoid or correct vendors trying to feed you tainted milk or tracking cookies.
I could go on, but I have a book to write and not much time left. But I consider Google Wallet a move of profound importance, even if it doesn’t work out, so I’m putting this list out there for us to correct, debate or whatever else we need to do . At the very least Google Wallet gives us one thing a BigCo is doing that can mesh well with what the VRM development community has been working on for the last few years. I hope the synergies will get everybody excited.
[Later, in August…] Some additional news:
Thanks to a question from @RebeccaCaroe, VRM is now on the radar of Peppers & Rogers, a business consulting group I have followed and respected for nearly two decades. Much of what we’re doing with VRM is right in line with what Peppers & Rogers have been writing and talking about for the duration, so I’m not surprised to see them groking VRM in just one pass. Responding to Rebecca, Don Peppers posted VRM: Next Destination in Technology’s March?, where he says this:,
Think about it: “Management” is synonymous with control or direction by someone, while “social” represents an inherently collective, non-managed value. Trying to describe “social CRM” in other words, is something like trying to describe “citrus watermelon.” And in fact, many of the pioneers in SCRM are finding that in order to have any traction at all in social media they must first give up control – that is, they must admit that they cannot by themselves “manage” the process or its outcomes.
But the VRM idea may just describe the next destination in this march of technology. In our view, VRM makes the most sense for consumers when the process involves highly personal computers with mobile applications that allow consumers to mange their own information more directly, even as they continue to participate in the economic system, buying products and services and putting them to use.
Whether VRM actually takes root or not, however, depends on whether the right intermediaries spring to life to facilitate it. In The One to One Future, back in 1993, we speculated that eventually a form of business would emerge that we termed a “privacy intermediary.” This would be a business that would collect an individual’s personal information and use it to extract the best possible deal from a vendor while protecting the person’s privacy – that is, without allowing the vendor to gain its own access to the individual (see Chapter 9.)
Martha and I often say that if we made one big error in the predictions inside this book, it was overestimating the degree of interest consumers would have in protecting their own privacy. We thought privacy intermediation would be a big business, but so far this just hasn’t happened. On the other hand, it may be that technology has now reached the point that this kind of intermediary function might soon be handled as a simple mobile phone app. And when that happens, VRM will arrive for real.
Don & Martha, if you’re reading this, check out VRM and the Four Party System. (Also find more background on VRM here, here and here.) And look here for some examples of efforts that qualify as “privacy intermediaries.” I think Azigo, Kynetx, MyDex, Paoga, SwitchBook and TrustFabric are all in that ball park, each with different roles. (For more on that park, see Joe Andrieu’s series on user driven services.)
I need to add, however, that we don’t always need intermediaries. VRM is about independence as well as engagement. We need self-hosted and self-directed solutions as well. We also need to build on free and open code, standards and protocols if we don’t want VRM to become as silo’d as “social media” have become. (The big two, Twitter & Facebook, are both companies, not functional categories.) This is what The Mine Project is for. Also webfinger, the code-child of Blaine Cook, whose fingerprints are also on both Twitter and Oauth. Here’s a nice interview with Blaine by Tom Murphy at SocialMedia.net.
Alan Mitchell has a customarily thoughtful post with The customer is not king. He explains,
…today that’s changing and we can look at the world through a different lens – that of the decision-maker (the person) rather than that of the decision-influencer (the seller). Once you do this it quickly becomes apparent that this meta-need – to make (and implement) better decisions – is bigger than all other needs (for chocolates, for cars, for current accounts etc) because it embraces them all, subsuming them into the bigger task of achieving what the person (not the seller) wants to achieve.
Person- or buyer-centric services then, sit on the side of the individual, helping the individual achieve what the individual wants to achieve, including managing relationships with many different suppliers more efficiently and more effectively (VRM, or Vendor Relationship Management). The central questions here are, What challenges does the person face when doing this? How to do it better?
The difference between now and say, twenty years ago, is that twenty years ago this person-centric perspective was operationally irrelevant. You couldn’t do anything practical to help people address these challenges. When marketers said ‘the customer is king’, it was just a disguised way of saying ‘the organisation is king’.
Now, however, as information becomes a tool in the hands of the individual, that’s changing. The organisational king is being deposed. This is not about superficial changes in ‘how to achieve the same old marketing goals better’. For example, it’s got nothing to do with arguments about whether it’s easier, cheaper or better to get marketing messages across via social media or mass advertising. It’s a deep, structural, tectonic, remorseless and comprehensive transformation in the relationship between individuals and organisations.
And if you keep on looking in the customer mirror, you simply won’t see it coming.
Denis Pombriant, who was a very helpful contributor to VRM+CRM 2010 a couple weeks ago at Harvard (with big thanks again to the Berkman Center staff), followed with VRM, CRM and Social Media. While mostly complimentary, Denis adds,
I can’t say the same for VRM and that’s one of the big hang-ups for it. Who makes VRM and who pays for it? The customers don’t seem interested in paying for anything so don’t look there. And savvy vendors tend to look at VRM as slitting their own throats. Pretty quickly you realize that while there is a need for what VRM does, there doesn’t seem to be a constituency ready to pay for it.
Well, we’ll see. Customers will pay for lots of stuff that has real value, provided the means are provided. When the only easy way to get digital music was Napster, everybody talked about how nobody wanted to pay for music anymore. Then Apple made it easy to pay 99¢ per tune, and since then more than ten billion tunes have been sold on iTunes alone. Mobile apps are another one. At a more mundane level, how about coffee. Before Starbucks, coffee was one of the cheapest drinks you could get. Now the new norm is $3+ for a cappuccino or a latte.
But Denis’ point is well-taken. VRM solutions need to provide real value to customers, or those solutions won’t thrive in the marketplace. Some of that value will come from free stuff that business can be built on. Some will come from services that customers — or somebody — will pay for.
David Cutler also has a nice post on VRM, borrowing a very helpful graphic from Julian Gay, which was the subject of much discussion at VRM+CRM 2010. A gallery of pix is here.
And the Danish Magazine Scenario interviewed me, about VRM, e a few weeks back. The piece is up now, in Dansk. Here’s a blog post about it in English, with a short video by Henrik Moltke, shot over lunch outside in Paris. Scenario also got some great shots of me, also in Paris, to go with the piece.
Finally (for now), check out this Klint Finley interview with Josh Bernoff on Josh’s new book (co-authored with Ted Schadler, Empowered. I dunno if VRM comes up in there, but VRM is certainly more than consistent with the title.
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