Free Customers Are More Valuable than Captive Ones
September 11, 2012 Editor 0
“Put down the customer. Step away from the marketplace.”
That’s what Craig Burton once said to a clueless marketing officer at a meeting we both attended a few years back. It was one of the most right-on things I have ever heard uttered inside a company. It also comes to mind every time I hear unwanted surveillance of customers rationalized for marketing purposes, or how Big Data lets a company know a customer better than she knows herself.
We hear lots of that jive lately, and it makes full sense only to business people talking to other business people. To most customers it’s creepy, regardless of how many Chief Experience Officers get hired, or how many sales pieces lauding “the Chief Executive Customer” get distributed.
What’s rarely heard amidst all this talk about customer intelligence is the customer’s own voice, expressing her own agency as an independent actor in the marketplace. Instead many companies continue to talk to themselves about “acquiring” “managing,” “controlling” and “locking in” customers — and to create systems for that, described with marketing euphemisms that fool vendor and customer alike.
One example is “loyalty” programs that are often nothing more than coercive gimmicks to provide discounts that aren’t, or rewards that are barely worth the hassle — especially when they make customers carry around different cards for every store, each with its own way of “delivering” a relationship “experience.”
The problem with having as many different experiences as there are vendors is apparent only from the customer’s side of the marketplace. And, as long as solutions to customer experience problems are sold only to vendors who use those solutions to increase “switching costs” and other annoyances, the frictions for both customers and vendors will only increase.
The best way to fix the customer’s experience problems is from her side of the marketplace: the demand side. And, in fact, many demand-side solutions are being developed and moving forward, mostly below the supply side’s radar. The intelligence behind these solutions is the customers’ own. I’m involved in that work, and I’m here to report on it.
1. Independence from vendors; and
2. Better ways of engaging with vendors.
VRM stands for vendor relationship management. Think of it as the customer-side counterpart of CRM, or customer relationship management. With VRM, customers have ways of speaking their wants, needs and preferences in relationships with individual vendors — and simultaneously “at scale” in the open marketplace across many vendors. For example, think about what a pain it is to change your contact information for every vendor separately. If you could do it once for all of them, that’s working at scale — for you.
The first and most obvious tools for independence are browser ad-ons for blocking ads and tracking of users. According to ClarityRay’s Adblock Report, issued in May of this year, the overall rate of ad-blocked impressions in the U.S. and Europe is 9.26%. Even if we discount the source (ClarityRay’s business deals with ad blocking), the rate of ad blocking is substantial. Mozilla shows 170.5 million downloads of Adblock Plus, with more than 3 million downloads in the last 30 days alone, and an average of 13.9 million daily users. That’s for just one add-on for one browser.
People are also taking action against unwanted tracking. All the major browsers support some form of Do Not Track (DNT) signaling by browser users to websites, and Microsoft is committed to turning it on by default with the next version of Internet Explorer.
But to engage, VRM can’t just draw lines in the sand. It will also provide ways to cross those lines, offer a handshake, and back that handshake by demonstrating new and better ways of doing business.
For example, at ProjectVRM we want to add dialog to DNT (informally, we call it DNT-D). With DNT-D, the user can signal an openness to engagement with the website. One dialog might be go like this, entirely in the background…
USER: I don’t want to be tracked, but I’m open to dialog.
SITE: Okay. What would you like us to do?
USER: First, share the data I shed here back to me in a standard form, specified here (names a source).
SITE: Okay. What else?
USER: Second, it’s okay for you to monitor my activities on this site for the purposes of our mutual interests and for managing the performance of your services. But don’t track me with third party cookies, tracking beacons or anything else that monitors my activities outside this site.
SITE: Okay, What else?
USER: Here (points to a source) are my other preferences and policies, and means for matching them up with yours to see where we can agree.
SITE: Good. Here are ours.
USER: Good. Here is how they match up and we can move forward.
SITE: Here are the interfaces to our CRM (Customer Relationship Management) system, so your VRM (Vendor Relationship Management) system can interact with it.
USER: Good. From now on my browser’s r-button will tell me when I’m at your site that we have a working relationship, and I can see at what’s happening on both sides of it.
That’s just one example. You can also expect VRM tools and services to do one or more of these other things as well, just for starters:
- Provide a way for the individual to gather and store his or her own data from transactions in a reusable way.
- Provide ways for managing the use of that personal data in relationships with vendors.
- Provide ways to “intentcast” demand for products and services to whole markets, outside any one vendor’s silo.
- Provide means by which levels of trust can be established between customers and providers and put to use.
- Provide ways for individuals to express their own policies, preferences and terms of service, which can be matched with those of companies open to negotiation.
- Serve as agents for individuals, known as “fourth parties”.
You can see a growing list of these on the ProjectVRM wiki. You can also follow them on the ProjectVRM blog or with the #VRM hashtag on Twitter. You can join the conversation by getting on the ProjectVRM mailing list, which has more than 500 members. You can also join Customer Commons — as a customer. (Customer Commons’ tag line is “We’re the 100%.”)
I launched ProjectVRM because I wanted to make good on a promise laid out by The Cluetrain Manifesto, a business bestseller I co-authored with Chris Locke, David Weinberger and Rick Levine six years earlier. While Cluetrain is best known for its 95 Theses (e.g. “Markets are conversations” and “Hyperlinks subvert hierarchy”), it summarizes its case in a statement that appears above all the other theses, under the line, “if you only have time for one clue this year, this is the one to get…”
We are not seats or eyeballs or end users or consumers.
We are human beings — and our reach exceeds your grasp.
Deal with it.
VRM is how customer reach will exceed vendor grasp.
With VRM, customers will prove that the intelligence that matters most is their own, and that free customers are more valuable than captive ones.
When that happens, vendors will have to deal with it — or find the marketplace stepping away from them.
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