VRM – vendor relationship management

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….

  • Hi Nic

    The big picture is correct – in essence a lot of marketing spend is to try and work out what we are going to do, and a lot of production inefficiency comes from not knowing this.

    Your point re “will it work” is very pertinent.

    The issue – to me – is to find out what stopped it from working better before, as ther habve been elements – JIT style ordering (eg Dell), crowdsourcing etc, but they have not really carried

    VRM per se is not new, C2B stuff in Web 1.0 was quite close (Cluetrain was a Web 1.0 book, remember), the diff is the broadband speed / lower tech cost / penetration now is much better – but is that yet enough to make a difference.

  • Hi Nic

    The big picture is correct – in essence a lot of marketing spend is to try and work out what we are going to do, and a lot of production inefficiency comes from not knowing this.

    Your point re “will it work” is very pertinent.

    The issue – to me – is to find out what stopped it from working better before, as ther habve been elements – JIT style ordering (eg Dell), crowdsourcing etc, but they have not really carried

    VRM per se is not new, C2B stuff in Web 1.0 was quite close (Cluetrain was a Web 1.0 book, remember), the diff is the broadband speed / lower tech cost / penetration now is much better – but is that yet enough to make a difference.

  • Iain Henderson

    Hi Alan/ Nic,

    I think the other thing that has prevented VRM or related thoughts taking off before is that previous attempts have ignored the need to build robust ‘personal data stores’.

    Just as CRM has ‘plumbing’ (….the single customer view and a front office application), VRM also requires infrastructure. The primary VRM requirement is the ability to build persistent supply related data on the side of the individual and then the ability to move data into that store and then use it to good effect. Once that is in place then the organisation side no longer has the most accurate view of the customer requirement, and things begin to change from there.

    Cheers

    Iain

  • Iain Henderson

    Hi Alan/ Nic,

    I think the other thing that has prevented VRM or related thoughts taking off before is that previous attempts have ignored the need to build robust ‘personal data stores’.

    Just as CRM has ‘plumbing’ (….the single customer view and a front office application), VRM also requires infrastructure. The primary VRM requirement is the ability to build persistent supply related data on the side of the individual and then the ability to move data into that store and then use it to good effect. Once that is in place then the organisation side no longer has the most accurate view of the customer requirement, and things begin to change from there.

    Cheers

    Iain

  • nic

    This is a great point Iain. Data capture on the consumer side is prohibitively difficult at the moment. Companies like Amazon are starting to make it easier, but only very slowly.

  • nic

    This is a great point Iain. Data capture on the consumer side is prohibitively difficult at the moment. Companies like Amazon are starting to make it easier, but only very slowly.

  • Iain Henderson

    Thanks Nic, yes it is difficult at present but that is precisely what some of us on Project VRM are addressing – watch this space (Sept 08 or so if things go to plan). It won’t be mass market initially, but it will trigger some major changes.

    Agreed, Amazon and other e-tailers make it easier to access data, so they will be well positioned to interact with early VRM deployments.

  • Iain Henderson

    Thanks Nic, yes it is difficult at present but that is precisely what some of us on Project VRM are addressing – watch this space (Sept 08 or so if things go to plan). It won’t be mass market initially, but it will trigger some major changes.

    Agreed, Amazon and other e-tailers make it easier to access data, so they will be well positioned to interact with early VRM deployments.

  • At the risk of speaking out of turn, since I don’t represent the movement/organisation, ProjectVRM is concentrated around developing a spec for the personal data store and the publication of that. That’s the core of the project, practically, I sense, for a little while. Adriana calls that a ‘mine’ (pun on mines containing resources/belongs to you/maybe also explosive). Applications for using that are the second or third phase. That’s where people will make money, I guess.

    The point is that this must be open source, based in a foundation (like wikipedia and linux) and customer-led, like OpenID. The apps come later and help to facilitate the relationships, and *might* be developed by companies – if they are clever. There will be a range of apps that help facilitate communication, and good ones will do well. That’s medium term, as I understand it, but of course, companies, or potential companies, being involved and aware now will help them in the long term.

  • At the risk of speaking out of turn, since I don’t represent the movement/organisation, ProjectVRM is concentrated around developing a spec for the personal data store and the publication of that. That’s the core of the project, practically, I sense, for a little while. Adriana calls that a ‘mine’ (pun on mines containing resources/belongs to you/maybe also explosive). Applications for using that are the second or third phase. That’s where people will make money, I guess.

    The point is that this must be open source, based in a foundation (like wikipedia and linux) and customer-led, like OpenID. The apps come later and help to facilitate the relationships, and *might* be developed by companies – if they are clever. There will be a range of apps that help facilitate communication, and good ones will do well. That’s medium term, as I understand it, but of course, companies, or potential companies, being involved and aware now will help them in the long term.

  • Hi Nic

    Thanks for the mention

    We’re working on a “feed based” approach to VRM – and Ryanair is one case study.

    It will take time to get all the technical ducks in line – esp. adding structure to retailer data – but a lot of good stuff is now used by lots of vendors/sites/services – oauth, hlisting microformat, atom publishing protocol – and good old RSS for data portability.

    The challenge is to provide simple data capture on consumer side – and ecommerce widgets is one good enabler…

    back to work – but its great to see folks getting engaged with VRM – its the way forward for eCommerce/online advertising

    best Regards
    Fergus

  • Hi Nic

    Thanks for the mention

    We’re working on a “feed based” approach to VRM – and Ryanair is one case study.

    It will take time to get all the technical ducks in line – esp. adding structure to retailer data – but a lot of good stuff is now used by lots of vendors/sites/services – oauth, hlisting microformat, atom publishing protocol – and good old RSS for data portability.

    The challenge is to provide simple data capture on consumer side – and ecommerce widgets is one good enabler…

    back to work – but its great to see folks getting engaged with VRM – its the way forward for eCommerce/online advertising

    best Regards
    Fergus

  • Iain Henderson

    Ian, just picking up on your point about ‘must be open source, must be in a foundation’; could you be a bit more specific about which bits of ‘VRM’ you think need to be brought to life through such an entity?

    is it:

    – the design and extension of the personal data store architecture (which i’d agree with)?

    – the running of personal data store services (which I would not agree with, as I think these should not be constrained – and will emerge in all forms from mutual to full blown private sector)?

    Cheers

    Iain

  • Iain Henderson

    Ian, just picking up on your point about ‘must be open source, must be in a foundation’; could you be a bit more specific about which bits of ‘VRM’ you think need to be brought to life through such an entity?

    is it:

    – the design and extension of the personal data store architecture (which i’d agree with)?

    – the running of personal data store services (which I would not agree with, as I think these should not be constrained – and will emerge in all forms from mutual to full blown private sector)?

    Cheers

    Iain

  • Hi Iain – yes, exactly what you say – the former, as I perceive it. The design of the store ought to be open source, with published architecture and APIs. A bit like Bluetooth and OpenID in that respect, though hopefully not so fraught.

    The applications for using that store – from both vendors’ and consumers’ perspectives and the services for creating and maintaining it are certainly ‘up-for-grabs’, as it were. A bit like the way you can grab and install wordpress for yourself or use it on a hosted service. The latter is more accessible, non-techy and quicker, the former offers more control. But it’s the same beast underneath.

    For example, I can envisage a consumer-friendly subscription hosted service that allows for the creation and management of the store – the only proviso would be that the design of that store conforms to the standard, so people can work with whichever vendors and tools they want and potentially move it.

    I guess this is a topic we’ll pick up on tomorrow night…

  • Hi Iain – yes, exactly what you say – the former, as I perceive it. The design of the store ought to be open source, with published architecture and APIs. A bit like Bluetooth and OpenID in that respect, though hopefully not so fraught.

    The applications for using that store – from both vendors’ and consumers’ perspectives and the services for creating and maintaining it are certainly ‘up-for-grabs’, as it were. A bit like the way you can grab and install wordpress for yourself or use it on a hosted service. The latter is more accessible, non-techy and quicker, the former offers more control. But it’s the same beast underneath.

    For example, I can envisage a consumer-friendly subscription hosted service that allows for the creation and management of the store – the only proviso would be that the design of that store conforms to the standard, so people can work with whichever vendors and tools they want and potentially move it.

    I guess this is a topic we’ll pick up on tomorrow night…

  • Iain Henderson

    Yes, that is pretty much what we have in mind – with the first steps being the set up of a co-operative/ mutual business that will be the first VRM personal data store manager; in the full knowledge that the underlying design will be made available through an open source foundation or similar.

    We can discuss further this evening.

    Cheers

    Iain

  • Iain Henderson

    Yes, that is pretty much what we have in mind – with the first steps being the set up of a co-operative/ mutual business that will be the first VRM personal data store manager; in the full knowledge that the underlying design will be made available through an open source foundation or similar.

    We can discuss further this evening.

    Cheers

    Iain

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