Vendor Relationship Management

With VRM, the customer is in charge of the relationship. Not the vendor.

We will be able to manage vendors at least as well as they manage us.

- Doc Searls

If we are moving towards a Intention Economy or a Pull Economy, where the demands of active consumers become primary, rather than the supply of vendors, then we need a new type of tool, so that we as consumers, can manage vendors relations and become independent of any one of them.

Citation

Doc Searls:

"I want to notify the whole market that I want to rent a car, in effect a personal RFP that goes out when I arrive at the airport to Hertz and Avis and all the others. I would like to be the bridge. I would like to handle my own health care data. I should be able to inquire and relate to whole markets, on the fly." The users need to be the platform of the future." (http://www.lunchoverip.com/2007/12/leweb3---doc-se.html)

Description

Doc Searls:

"Imagine being able to relate to vendors -- productively, on mutually agreeable terms -- rather than just paying them money for whatever they're selling, and occasionally giving them "feedback" through surveys that aggregate our "input" inside some impersonal "customer relationship management" (CRM) system. That's the idea behind VRM, or Vendor Relationship Management. It's the reciprocal of CRM: a toolset for independence and engagement. That is, of independence from vendors and engagement with vendors."

""...the inside-out nature of relationships between customers and vendors. That is, customers are at the center -- at the inside -- and relate outward toward any number of vendors. The idea is not to take the old top-down few-to-many pyramid of vendor-controlled markets and turn it upside down, with customers now on top. Instead, we equip customers with the means to function in more ways inside marketplaces, at the center of relationships with any number of vendors."

2.

"VRM, or Vendor Relationship Management, is the reciprocal of CRM or Customer Relationship Management. It provides customers with tools for engaging with vendors in ways that work for both parties.

CRM systems for the duration have borne the full burden of relating with customers. VRM will provide customers with the means to bear some of that weight, and to help make markets work for both vendors and customers — in ways that don't require the former to "lock in" the latter.

The goal of VRM is to improve the relationship between Demand and Supply by providing new and better ways for the former to relate to the latter. In a larger sense, VRM immodestly intends to improve markets and their mechanisms by equipping customers to be independent leaders and not just captive followers in their relationships with vendors and other parties on the supply side of the marketplace.

For VRM to work, vendors must have reason to value it, and customers must have reasons to invest the necessary time, effort and attention to making it work. Providing those reasons to both sides is the primary challenge for VRM." (http://cyber.law.harvard.edu/projectvrm/Main_Page)

3.

"VRM’s goal is to help you play a larger role in the relationship between you and your vendors. Though its origins are earlier, the term stems from a conversation at Visual Identity World in Denver in 2004 where Drummond came up with “CoRM” (Company Relationship Management – later modified by Mike Vizard during a discussion on the Gillmore Gang to VRM). Any technology or system that puts the customer at the center of the relationship falls under the general umbrella of VRM, but the canonical version sees you owning all of the information that is currently locked in each vendor’s silo and sharing it with vendors as you choose. Obviously a strong sense of Identity along with the principles of Data Portability need to be in place for this vision to become a reality." (http://drstarcat.com/archives/29)

Requirements

"There are a number of technical things that are needed: a robust way for customers to manage their own online identities without getting trapped in any vendor's silo, a way for customers to only share the aspects of identity that they want to share with a particular vendor (perhaps anonymously), and a robust way for vendors to interact with those customers. But more importantly than the technical aspects, the cultural shift of actually putting the customer in charge may end up being the largest challenge." (http://www.socialcustomer.com/2006/12/vrm_vendor_rela.html)

Characteristics of VRM

• Data Independence - "Individuals needs to own and control their own data, independent of vendors"

• Customer-Centricity - "Customers are at the center -- at the inside -- and relate outward toward any number of vendors"

• Reputation, Intention and Preference - "All three bear on relationships, and there is an enormous amount that can be done with each of them."

(http://lists.ssc.com/pipermail/suitwatch/2006-December/000124.html)

• A "personal RFP". Requests For Proposal, or RFPs, are formal appeals for bids that companies send out to suppliers.

Advantages/Disadvantages

Graham Sadd:

Buy-side benefits of VRM:

1. My identity, multiple persona and personal data and documents, stored in my personal, secure ‘digital safe deposit boxes’ accessible only by me.
2. The ability to ‘share’ relevant data or documents, on demand or persistently, with specific suppliers with whom I want a relationship.
3. The convenience of ‘write once, use many’.
4. An audit trail of organisations that have, with my permission, viewed or copied information.
5. The ability to have specific data and documents ‘authenticated and certified’ by appropriate trusted third parties and agencies to increase trust/value.
6. Revenue potential for me to ‘market’ my personal information (eg anonymous medical records).

Sell-side benefits of VRM:

1. Reduced costs of collection, storage, maintenance.
2. Increased accuracy and granularity of data (what I want rather than what I have bought).
3. Reduced risks, financial and criminal, of data abuse/loss.
4. Improved relationship with respect for my information.

VRM issues:

1. Drivers – victims of identity/information abuse; convenience of ‘write once, use many’; income from personal data marketing.
2. Laziness – many individuals will baulk at the prospect of entering sufficient data to enjoy the benefits of VRM. They are, and will continue to be, content with being ‘managed’ until abused.
3. Resistance – defence of suppliers legacy systems/process/investment.
4. Trust – verification, authentication and certification of identity and data by trusted third parties will be a growing service, as will independent key server providers for security."

(http://www.mycustomer.com/cgi-bin/item.cgi?id=133716&d=101&h=817&f=816)

More Information

Project VRM

1. VRM Working Group
2. The Social Customer Manifesto, at http://www.socialcustomer.com/2006/12/vrm_vendor_rela.html

Podcasts:

1. Discussion on Vendor Relationships Management
2. Doc Searls on Vendor Relationships Management