Personal power & vendor relationship marketing

“Consumer technology use has shifted the balance of power from retailers to shoppers,” we say these days, but has the industry fully grasped how far the pendulum could swing?  “No!” says Doc Searls in a provocative WSJ column. He describes a future in which shoppers define and drive what could be called the “C2B” economy via “intentioncasts.” They broadcast their need to vendors who meet their terms and conditions, collect offers from them, and then make a selection. He calls it VRM (for Vendor Relationship Marketing), and it completely reverses the direction in which CRM flows.

Searls draws attention to new ways that individuals on the demand side will exercise power in business relationships. It’s a valuable insight, but groups are probably not a dead letter yet – especially shopper groups that congregate around common goals or desires. These can still gain power by doing acting in concert as these examples show.

• Shoppers who form buying groups to win the attention of sellers use their power to capture significantly greater value for their members than would otherwise be the case.
• Shoppers who focus on lower-cost suppliers in large groups in order to capture more of what’s called “consumer surplus” have the power to break up conventional supply/demand relationships in a market and challenge established pricing.

So don’t throw the baby out with the bathwater, but think seriously about the new form of market exchange Searls describes. Remember those guys who didn't bother testing the idea that housing prices could decline because they couldn't imagine it? Don't be like them. CRM is an important and essential component of retailing and will be for a long time to come, but don't let it blind you. It's not the only possible way that the retail world can work.

Comments

Doc Searls said:

Thanks for digging the WSJ essay, Susan. I also appreciate your interest in the work we've been doing with VRM.

On the baby/bathwater matter, I should point out that VRM does not exclude group shopping or buying. Rather it's focused on individuals because they're fallow ground for development.

In fact, you'll find quite a few VRM projects that include or appreciate group intentcasting and other VRM activities, on this list here: http://cyber.law.harvard.edu/projectvrm/VRM_Development_Work

Also, VRM has been seen from the start as a complement of CRM, rather than an opponent of it. But, of course, it's more than that, because VRM should not require CRM to work.

Doc

July 27, 2012 10:44 am

Dave Carlson said:

Some retailers are doing an increasingly good job in delivering relevant digital content to shoppers based on shopping habits and purchase history. In the case of fast moving consumer goods this includes in stock messages, targeted offers, new products and more. Some offer interactive apps to manage shopping lists, order deli items, select the right recipe or fill a prescription.

Retailers might consider adding more interactive capability that could allow shoppers to drive selection and services. Simple examples include an item the shopper suggests stocking or a request for onsite heating of prepared meals.

This isn’t exactly the C2B reverse auction described above, but allows retailers to listen more closely to preferences, thereby further empowering and serving customers. The retailer must, of course, be prepared to respond to inquiries and suggestions. Clearly there is an associated cost.

July 31, 2012 5:23 pm

Bill Bishop said:

Doc – Thanks for your mind stretching creativity and glad to hear that you’ve already honed in on collective buying. Your ideas feel like a bit of a stretch today, but several years down the road I think they’ll appear clearly in our rearview mirror.

Also agree that VRM and CRM are not in opposition, but could be described as the same type of relationship approach from different angles.

August 1, 2012 8:36 am