Who says we're not close to our customers?

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Will Customers Ever Get Any Respect?

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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The customer is king. A weird sort of king, though -- one whose secrets belong to corporations that buy and sell and sometimes lose them.

There are those who believe the world doesn’t need to work this way, and that not only consumers but most companies would be better off if customer data were treated in an entirely different way.  I wrote somewhat skeptically of this belief last week, in light of the big Anthem data hack. One of those whose views I discussed, Doc Searls, tried to leave a comment but something went wrong. So now we’ve got something much better: a Q&A!

Searls is the author of “The Intention Economy: When Customers Take Charge,” a 2012 book on what he has dubbed vendor-relationship management, or VRM. For a short version, see his Wall Street Journal essay “The Customer as a God” (which is even better than king). Right now almost every company that sells stuff uses customer-relationship management, or CRM, software to keep track of what they know about us. What Searls has been trying to do for the past eight years is to help jump-start an industry that manages the process on consumers’ behalf.

Before all this, Searls was an advertising executive in Silicon Valley, co-author of the legendary website/book “The Cluetrain Manifesto,” and a pioneering blogger, among other things. What follows is our e-mail exchange, edited for length.

Your basic idea is that we should switch from a system in which companies amass data on consumers to one in which consumers control their data and hire companies to manage it for them. Am I describing that correctly?

Well, neither is exactly a system, and they are not necessarily opposed.

My basic idea is that free customers are more valuable than captive ones -- to themselves, to the companies they deal with and to the marketplace. And that this will prove out over time, as one-sided methods of understanding customers and controlling them are obsoleted in the networked marketplace by two-sided systems for engagement between equals.

Data is a big issue, but it should be a secondary focus. What matters most is engagement.

Market interactions take three forms: transaction, conversation and relationship. Everything that happens in a marketplace is one or more of those three things.

Transaction happens among equals. And the means -- cash and credit -- are common ground to both buyers and sellers. Conversation happens in the open marketplace, but between customers and companies it tends to be controlled by company-side systems: call centers, etc. Relationship is almost entirely controlled by companies, through CRM and similar systems. All of those are siloed, and all are different, even if they use the same back-end cloud from Salesforce, Oracle, IBM, SAP or Microsoft. Hence we have little or no scale, as customers, with either conversation or relationship. I wrote about this the other day here.

My job with ProjectVRM is encouraging development of tools and services that give customers both independence and better means for engaging with sellers. I've been at it for eight years, and we're starting to see many signs of progress. Most of that progress, however, is in Europe and Australia and New Zealand. It's less visible in the U.S.

Invention is the mother of necessity. When we have the tools to do the job, people will use them. The Net was designed to give customers all the power they're equipped to exercise. We are peers there. We don't need to be captive. And modern history is one of individuals getting powers that were once corporate alone.

You and I will be able to do more with our own data than companies can with data about us gathered by surveillance. This will become apparent in the marketplace in the next several years, especially as inefficient big-data means for guessing at what we might want (and dislike by people of surveillance-based means for obtaining that data) are outperformed by customer-side systems for expressing well-informed intentions in the marketplace.

I get why consumers might like this. But aren't the Googles and Facebooks of the world (not to mention retailers and banks and others) going to fight it tooth and nail?

I doubt it.

First, those two companies hate each other, and don't pay much attention to what you and I are doing, other than by having their robots follow us around.

Second, their customers are advertisers, not you and me. This makes them kind of deaf and blind to what you and I are actually doing, or actually want. They think they can know enough just through following us. Meanwhile the Apples of the world, which have real relationships with customers, and know much better what customers actually want (because they have relationships with them), have a much better feel for the marketplace. 

Facebook's and Google's problem, by the way, is that their consumers and customers are different populations, and that they feed the former to the latter.

Commercial broadcasting has the same problem, by the way, which is one reason they are to some degree market-deaf as well.

When somebody comes along, like I did last week, and basically says "this is a great idea but I'm dubious that it'll ever happen," what's your reaction? Are people like me just being too impatient?

I try to engage, like I'm doing now. :-) 

I'd say more, but I'm out of time. Meeting in a few minutes with two VRM companies in the UK that are doing amazing stuff I wish I could tell you.

  1. I was working for the book's publisher when it came out, although I didn't have a huge amount to do with it beyond that.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
James Greiff at jgreiff@bloomberg.net