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VRM's Missing Ingredient

VRM's Missing Ingredient

Vendor relationship management, in my humble construction, is in some ways a mirror image of CRM in that it tries to address the at-large issues of the vendor-customer interface. To put it perhaps a little too simply, the big difference is that CRM seems more bottom-up and VRM more top-down, and it seems VRM could benefit by learning about proper use of the wisdom of the crowd.

I spent an interesting day at Harvard Law School last week at the invitation of Doc Searls for a conference on the intersection of CRM and VRM, or vendor relationship management. Doc's involved with the Berkman Center at Harvard, which sponsors research into issues of law and the Internet, among other things. He's also one of the authors of The Cluetrain Manifesto, which should be required reading in our line of work. Lots of other CRM folk were there too, including analyst Mitch Lieberman and Ed Sullivan from Radian6. We tweeted up a storm, and you can search on the tag #VRMCRM2010.

It was an interesting and enlightening day, and I only wish I'd had enough time to attend the second day, but I had commitments. That said, it's hard to describe what I found out, but let me try.

Defining a Relationship

VRM, in my humble construction, is in some ways a mirror image of CRM in that it tries to address what I call the at-large issues of the vendor-customer interface. But the two differ in many ways that are good and constructive. Where CRM focuses on issues around sales, marketing, service and support, VRM takes a more holistic view and tries to answer some of the more in-depth issues, like the nature of the legal relationship between the parties and what contracts between them should and should not contain.

That's grossly over simplified and one-dimensional. Other aspects include how much personal data a person should store about his or her needs and finances and where it should be stored. Whether all of your household data, like income, mortgage status and the vendor relationships you have, be stored online, and by whom, are typical questions, and things get complicated pretty quickly. Then there's the mega question: Who do you trust, and what does trust mean anyhow?

At the start of a panel I was on with Mitch, I said I thought I'd gotten too much information and felt like a baby in need of a nap. Maybe you get the idea.

The Difference Is the Direction

But the big difference between VRM and CRM to me -- and this is probably a gross over simplification -- is that CRM seems more bottom-up and VRM more top-down. VRM seems to me to be seeking solutions that can be coded and provided by vendors or other parties for customers to use, but who pays for it and who trusts such a solution are good questions.

On the other hand, CRM has the same kind of top-down approach, but what makes it different is the social aspect, which is bottom-up. I don't see much penetration of social media into VRM yet, and I think that's a bet that's being missed, at least for now. Social media used correctly is a big deal because it provides a missing element, something that takes CRM and potentially VRM from a more or less static perspective to something more dynamic.

The great thing about social CRM is that it lets the genie out of the bottle. It introduces randomness and uncertainty to the puzzle, and that's largely a good thing. You can't program a customer relationship -- there are too many permutations, and customers do things you just can't always predict.

A Dash of the Crowd

My big takeaway from the conference is the wisdom of crowds, the idea that since you can't predict, take a deep breath and stop trying. Instead, just ask the customer, and if you do it right, you'll get amazing insights. It struck me that the wisdom of crowds is perhaps one thing that VRM could incorporate with great success.

In one discussion I recall, someone asked a question about what it would take to gather customer input with 100 percent accuracy. I see that as a problem, because nothing gets to the century mark and trying is an exercise in futility. Crowd wisdom doesn't go there; it leverages the idea that the majority of a large enough sample managed to incorporate the ideas of decentralization, independence and diversity does the job.

Crowd wisdom and social media are not silver bullets for improving VRM or CRM, for that matter. For the most part, VRM delves into questions that CRM hasn't even gotten to yet. Nonetheless, CRM and VRM practitioners appear to me to have more than a few misconceptions about the other, and forums like Doc Searls' last week are a welcome introduction of people and an attempt at melding of ideas. All of us could gain something from more of these. If nothing else, in the words of Mitch Lieberman, we'd all feel smarter by being in the surroundings of Harvard Law School.

Denis Pombriant is the managing principal of the Beagle Research Group, a CRM market research firm and consultancy. Pombriant's research concentrates on evolving product ideas and emerging companies in the sales, marketing and call center disciplines. His research is freely distributed through a blog and Web site. He is the author of Hello, Ladies! Dispatches from the Social CRM Frontier and can be reached at denis.pombriant@beagleresearch.com.

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