Vendor Relationship Management (VRM) is a new research, and development, project  (www.projectvrm.org) led by The Berkam Center for Internet & Society at Harvard Law School that seeks to “bring a useful and productive balance of power between vendors and customers, supply and demand — for the good of both — in the marketplace.”

Traditional CRM tends to be focussed mainly on the following topics:

• Sales automation
• Marketing automation
• Customer service / call centres and
• Analytics

Automation and reporting are quite central in the above 4 CRM topics but what about the relationship with customers and those customers own relationships with one or more vendors?

CRM systems offer businesses many useful opportunities to streamline customer service that they provide to their customers but from a customer perspective can quite often be a “relationship hell”.

The VRM project seeks to research, develop and explore the potential for VRM.

What could a VRM solution or marketplace look like?

• www.elance.com - a website to post an ICT project, review and select proposals, manage & track progress and rate work before paying for completed project.

Scenario Planning is being used to good effect in the early stages of the project to draw out key traits or caricatures and the following VRM “universe” has been developed to answer two key questions:

• Who controls the interactions between vendor and customer?

• Are the interactions focused on transactions or relationships?

Minority Report

• Vendors bring every resource to bear to extract the last bit of margin out of every customer. Targeted ads, served relentlessly and based on our past purchasing behavior, attempt to entice us to consume the next new thing. Friedman's "Flat World" observation plays out to its logical conclusion, with manufacturing and marketing, sales and service taking place at whatever patch on the globe can deliver the product most cost-effectively. Since vendors use data mining of petabytes of customer data in order to predict the next hot trend, post-sale service becomes increasingly unimportant, since product lifecycles are measured in weeks. Customer data becomes a pure commodity, created, owned and traded by vendors in the way that carbon credits and pork bellies are traded today. Vendors with economies of scale rule the day. Customers get low prices, and limited choice.

Me-Ville

• Cryptography, identity management and business processes have all converged, enabling customers to shop securely both online and off. Customers issue anonymous "personal requests" for goods and services, and vendors battle each other relentlessly in order to be selected. Prices are driven to just above cost for commodity items, and a cadre of flexible, "long tail" suppliers emerge to meet the non-commodity requests. eBay stumbles, and then launches a service that is the converse of its current offering. Reputation systems abound for both customers and vendors, leading to the creation of RepTorrent, an anonymous network for the trading of gray-market reputation identities

The Global Village

• The customer owns her own information, and does with it what she pleases. In some cases, anonymous transactions are conducted, but most interactions happen with trusted vendors with whom the customer has dealt over time. The customer chooses vendors based on interpersonal empathy and affinity, as well as technical capability. Relationships grow over time, and vendors evolve beyond being simple suppliers of goods and services and into confidants (and sometimes friends). Customers pay somewhat higher prices, but look at interactions with vendors holistically, feeling that price is only one aspect of the true cost of a good or service. Customers and vendors work together to come up with new products and services. Competent and personable vendors succeed, scam artists are quickly outed and ostracized. The same is true for customers, as both vendors and customers belong to interconnected offline and online communities.

The Matrix (Blue Pill)

• Vendors control production, allocation and distribution, and at the same time understand that a connected customer is a lifetime customer. Supply chain models such as vendor managed inventory and consignments are used. The vendor controls what purchase options are given to the customer, and realizes that he must be equitable, or the customer will terminate the relationship. The vendor has perfect information on the behavior of his customers, including purchase history. Vendors use this information to continually refine and model the selection and quantity of goods and services made available to each customer to not only maximize profits, but also to ensure continued access to that customer. Customers select their vendors based on the belief that they will have an ongoing relationship with the vendors they choose, and give them feedback as to what they'd like to see.

What about ERM – Education Relationship Management?

Looking at VRM in an educational context, particularly in a vocational and personalised scenario and VRM concepts are already being established:

• Students manage their own learning via the Internet
• Teachers managing content for students is reducing due to the consumers (students) having far more options available to them due to technology

“Content” is inert. It isn’t alive. It doesn’t grow, or catch fire, or go viral. Ideas and insights do that. Interesting facts do that. “Audiences” are passive. They sit still, clap and leave. That might be what happened with newspapers and radio and TV in the old MSM-controlled world, but it’s not what happens on The Giant Zero. It’s not what happens with blogging, or with citizen journalism. Here it’s all about contribution, participation. It involves conversation, but it goes beyond that into relationship — with readers, with viewers, with the larger ecosystem by which we all inform each other. – Doc Searls, Project VRM Director