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VRM: Next Destination in Technology's March?

September 7, 2010

VRM: Next Destination in Technology's March?

Rebecca Caroe (@rebeccacaroe), a colleague from the UK, sent me an email this weekend asking whether Martha Rogers and I had any point of view on VRM ("vendor relationship management"). VRM may be the buzz-word du jour or it may just be a smart way to better describe the next logical implication of faster, cheaper, more ubiquitous interactive technology. As computers miniaturize further and further, the computers that used to be affordable only for large businesses with thousands of customers can now be held in the palm of your hand.

Advances in interactive technology first gave us the CRM ("customer relationship management") revolution, allowing businesses to track the needs and desires of individual customers, and to interact with them one at a time - rather than continue "broadcast marketing" to them en masse. CRM is best thought of as a business process of treating different customers differently. It was a truly revolutionary idea, undermining the traditional product-centric business processes defining nearly all companies and organizations. Product-centric organizations treat different customers the same, while treating different products differently. Martha Rogers and I called the CRM idea "one to one marketing," but "CRM" is easier on the tongue and we ourselves have used these terms interchangeably for the last 15 years.

Social media platforms have given people the ability to communicate much more with each other (as opposed to their roles as customers, interacting directly with businesses). This has led many commentators to lament that "customers are now in control," greatly complicating the business of marketing and selling. Social media gave rise to its own coterie of acronyms, like SCRM ("social CRM"). Despite everyone's sometimes heroic efforts to define SCRM, however, it's our judgment that the words "social" and "management" are simply irreconcilable. 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.

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