You’ve Heard of CRM, But Do You Know VRM?

You’ve Heard of CRM, But Do You Know VRM?:from Business 2 Community by Lief Larson
In 2006 Mike Vizard coined the term Vendor Relationship Management (VRM) as the counterpart to Customer Relationship Management (CRM).  Whereas companies use CRM to pull, collect, and curate customer data for record management and subsequent follow-on marketing, VRM is a conceptualization of customers owning their own data and maintaining control over how, when and where they choose to push that data to companies (vendors).  Though it has taken time for the idea of VRM to take hold, it will be growing in prevalence in the not-too-distant future.
In a recent blog post I discussed how the future of the web is anonymous. Anonymity is a very scary concept for marketers who carry deep-seated motivations to know as much as possible about their customers and prospective customers.  Who can blame them?  Customer intelligence is a useful weapon for targeting customers based on demographic, psychographic, and behavioral traits, which results in better utilization of sales and marketing dollars.  On the flipside, as customers/buyers we don’t want to be treated as a Customer ID in some CRM.  We want to have control over when, where, how and with whom we share our information.
VRM has a several issues that needed to be addressed:

1. Customers would gladly take control of their VRM and use it as they see appropriate, but they do not want to pay for that right, whereas commercial businesses have every motivation to invest heavily in CRM.
2. Any company can deploy one of many different types of CRM systems, but there is no universally adopted VRM clearing house that companies can provide to customers and prospects as a receptacle for customer-initiated sharing of the VRM record.
3. Companies own their CRM and often perceive their CRM as an advantage over their competitors, whereas the VRM is owned by the customer and the customer could remove the VRM record.  Businesses want control.
4. For the economic model for VRM to be attractive enough, it will require incentives for inventors and companies to innovate useful VRM applications.  (again, the customer will not pay for VRM)
5. VRM is fighting an uphill battle to reach mass adoption by consumers.  Although the benefits to consumers of controlling their own information may seem implicit, most have not heard of VRM, are oblivious of CRM tactics, are not incentived to participate in VRM, or simply don’t care.

For VRM to take hold it will require support from customer advocacy groups AND large, recognizable corporations.  It will require both grassroots and intentional awareness building.  It will require customers to have painless ways to take control of their personal VRM and incredible ease-of-use that encourages frequent management.  Customers will need to be incentived to share their VRM record (merely having control over their information will not motivate).  Lastly, customers will need to trust the security of the VRM and they personal data.
The next question is: who controls the VRM platform that enables the VRM record?  This is a challenging problem to put it lightly.  If a for-profit company builds and owns the platform, will it objectively serve the interests of the consumer?  If not, what non-profit org will materialize to power the centralized VRM (and who within that NFPO will govern)?  These are formidable issues inhibiting immediate advancement of VRM.
Behind closed doors a new non-profit group called Customer Commons is building industry momentum for the future of impartial VRM. There is also a new wave of upstart groups working on VRM digital locker solutions, including: DataBanker, MyDex, and Personal.com.
Despite the challenges with VRM, there are some compelling reasons why VRM can and should have a future:

• VRM has the potential to provide uniformity in the way customers opt-in to their experiences with companies
• CRM is very expensive and there is an argument that companies will get more comprehensive customer data at a lower price if the customer simply shared that information via VRM
• VRM has the potential to enable companies to deliver a more customized experience and for customers to receive a more relevant and customized experience
• VRM overcomes trust barriers to sharing personal information if the customer knows they can withdraw their data at any time
• It could be supposed that companies will need to incentivize consumers to share their VRM, and those incentives could cause more competitive offers and ultimately better value for the consumer
• VRM could encourage companies to deliver better customer experiences if their contingent risk is that the customer could recall their data at any time
• There are untold applications that could come out of VRM with the potential to create economic opportunity (new development, new digital tools, new startups)

In summary, VRM presents both opportunities and challenges for consumers and business alike.  It will require a groundswell effort for the spirit of VRM to catch on, but there is a growing consortium of support behind the movement. VRM has the potential to become a new and exciting way for consumers to have more control over their personal data, and for organizations to build trusted and valuable relationships with their customers.
Recommended further Reading:

• ProjectVRM – Berkman Center for Internet & Society at Harvard University
• ProjectVRM Wiki
• Customer Commons
• Vendor Relationship Management – Wikipedia
• Doc Searls intro Video on VRM