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VRM – vendor relationship management

By February 29, 2008 March 3rd, 2008 23 Comments

VRM is CRM flipped on its head.  Instead of vendors collecting data in systems like Siebel and managing customers the idea is that customers start storing and managing their own data and using it to manage suppliers.

At the moment this is little more than concept stage stuff, championed by Doc Searls and being talked about and promoted by the likes of JP Rangaswami, Alan Patrick, Adriana Lukas and now Ian Delaney at NMK.

I think there is a lot of potential in this idea for a couple of reasons:

  • Traditional advertising is increasingly broken – people are less and less tolerant, they have more tools to avoid it, and they are increasingly spending their attention in places where advertising doesn’t work for one reason or another
  • VRM is a much more elegant solution to matching supply and demand than traditional advertising.  At the moment their are inefficiencies on both sides of the equation – advertisers waste a lot of money with machine gun campaigns and as consumers we have to put up with a lot of irrelevant ads.  VRM potentially eliminates both these problems.

So what is VRM?

These posts by Delaney and Lukas spell it out in detail, and this is the main Project VRM site.  For the quick version here are some excerpts from Delaney’s post.

VRM as an implementation of the Cluetrain notion that markets are conversations (finally):

Searls views the VRM project as unfinished business from the Cluetrain Manifesto. The central insight there, ‘markets are conversations’, has struck many people as true and right, but the technological implementation and management of that remains frustratingly tricky.

The basic idea:

Individuals record their preferences and the personal data that you normally need to use an ecommerce site …. So you have got all these details and preferences recorded in your online strongbox. Then – if you want – you let Amazon or Waitrose or whoever have access to the parts of that that you chose. The consequences might be that (a) you never have to fill in online forms again; (b) companies get to submit tenders for whatever it is that you want. I need to buy a new laptop – these are my preferences – I’m letting that information out to vendors. What have you got? (c) companies have access to rich data about what their customers actually want from them.

Ryanair bargains built by the guys at Nooked is an example of VRM working, but only with a single vendor.  You download their widget to your desktop, tell it which airports you are interested in and it sends you special offers for the places you have said you are interested in.

The bigger idea is that from the same widget you solicit offers from all airlines, and you do so using more parameters than are available in the Ryanair gadget.

Going back to the big picture, to me it all sounds very cool.  VRM will be an amazing tool/service, if and when, it is implemented successfully.  The challenges I forsee include buidling a service that really adds value from a consumer perspective, figuring out who hosts and pays for it, getting vendors to interact with the system responsibly.

If these problems (and doubtless many others) can be licked the opportunity is BIG here – the market you are going after is, um, all of the advertising in the world.

Advertising broken
Improved efficiency of system

Quotes from Ian’s post on what it is
And maybe Adriana

Question – will it work….