Customer Ownership: Relationship? Conversation? Simply Put. SCRM is not VRM. Simple Being the Operative Principle

This is meant to be a simple post.  Flat out, I want to say that there is a difference between “ the customer’s control of the conversation” and “customer’s owning the relationship.”  Because there is a discussion that I see looming on the “ownership of the relationship” I’d like to clarify my thinking at the get go, if you’ll be willing to listen.  Before I do that, so that there is no misunderstanding on where I stand -

The customer is in control of the conversation. SCRM is the company’s response to the customer’s control of the conversation. There is no joint ownership of the conversation. But there is no control by one or the other of the relationship between them. Though the “power balance” can lean toward one or the other. Right now it leans to the customer.

The Relationship

First, the relationship.  The customer doesn’t own the relationship.  He can’t own it – its a relationship.  I think Denis Pombriant, a man who has been one of the great pioneers in enterprise thinking for many years, has a superb discussion of what he calls “the relationship entity” on his blog that you should read. His fundamental point is that it takes two to tango when it comes to a relationship, which of course, has to be the case – or it can’t be a relationship. What he sees as important, and I agree with 100%,  is “relationship health” based on transparency and fair mutual value.  His quote here - “Relationship health stems from honesty and transparency and a sense that each party feels it is getting fair value from its contributions.”  A perfect description.  That is what all relationships and in this case, the customer/ company relationship is all about.  I hope I made my perspective clear in the 4th edition of CRM at the Speed of Light – the company owns the company, the customer owns their own personal value chain so to speak. That’s why there is a difference between SCRM and VRM.  Vendor Relationship Management is what the customer does to command their side of the relationship.  SCRM is what the company does in response to the customer’s control of the conversation – and all the other things associated with that.  But the company still owns itself – meaning its operational practices and its objectives and its records and its legal status as a company.

Speaking for myself, and maybe someone else or some others, I’ve never said the customer owns the relationship. I think that the customer is at the hub of business ecosystem – to the point that you can call it a customer ecosystem. Meaning the customer drives demand and the company is now forced to respond to that.   But a relationship between company and customer is exactly what Denis says it is and that relationship’s success is the essence of SCRM.

The Conversation

What about the conversation, which seems to be a nebulous term? “The Conversation.”   To be clear by what I at least I mean by the conversation – it is an ongoing series of 1 to 1 to many to many dialogues that can go on outside the purview of a business.  It relates to a particular business when it is a dialogue that concerns their brand in some way ranging from a nondescript comment to a complaint to waxing rhapsodic about something that the business produced (for example).   The conversation in the past was often driven by the messaging of the brand pushed to the customer. We all know the history of the 1960s and Madison Avenue and how they drove demand for businesses around products. But now, the these discussions occur, often quite transparently, without the business’ knowledge or involvement.

This isn’t new. We always gossiped about things we liked and didn’t like.  But its the nature of the relationships which, via the web and mobile devices, have extended beyond a simple 1 to 1 and gone to the 1 to 1 to many to many – meaning the impact is far more profound – either good or bad or more extensive – but far more profound than it has been in the past. It is also more complex because there are people who are engaged in the discussions that are influential to specific groups and what they say carries more weight than what others say – thus adding an additional layer of complexity to the interrelationships that this matrix of conversations has.

Thing is, the businesses have ZERO to say about how the conversations are conducted, about the sentiment expressed in those conversations, about the direction of those conversations and about the results of those conversations as they are going on.

There are reasons why they’ve lost control:

1. Customers realize that they can buy whatever it is the company has to offer 10, 20, 30 other places for roughly the same price and don’t have to depend on a single company to get what they need. They can risk not dealing with that company with little or no consequence to their personal agendas.  They have an unprecedented amount of choices. I don’t need to fly United to get where I have to go.  I can fly other airlines.  So telling United to take a flying leap is not as big a deal as it would be if I depended on them to get me to a regular location each week.  Keep in mind, that the reality is that the customer could always buy the product when and where they wanted. But the extensive choice makes them less pliant than they were in the past.  They can demand more based on the company’s knowledge that the customer has a choice – and a network.
2. Customers have networks of peers that they can access via the web who have both loose and, also, in a different way, strong ties and are willing to spread the content of the conversations further which reinforces their participation with that network. They don’t need to go to the company to register a complaint loudly or even to get a problem solved necessarily. If they do need to go to the company, then they have their network to fall back on if the company doesn’t respond to them the way that they want them  or at least expect them to. If they don’t get a satisfactory solution, at least they get the comfort of validation for their complaints. BTW, don’t underestimate the power of validation. 
3. 1 million messages a year dilutes attention to the point that customers don’t WANT to pay attention to messages that they don’t create or have any control of as a customer – so they don’t.  They tune them out (just think of the direct mail that you get every day – and then how much of you read – or even open). That weakens the power of the brand over the customer. They simply aren’t as responsive as they used to be. When involved in conversations with their social networks – customers have a significant amount of people to communicate with that they trust and can ask their opinion of something that they’re interested in talking about – not something that is assaulting their senses via the web, direct mail, TV or whatever.  They can get the response they want to get, not just hear stuff that someone wants them to hear.  That’s control.
4. Customers trust “someone like them” i.e. peers with typically (but not always) weak ties to the customer. Strong ties can be people who are like them, but not too – for other reasons. Simply stated, that means that they will pay attention to that someone like them because they see something of themselves in that other person via their interests.  It would be like microtargeting in politics. “Hmmm, I have an Acura TL, make $500,000 per year, go on vacations to Europe, own a home and love the NY Yankees, as does that “someone like me.” Since I’m likely to vote for a very liberal Democrat, I have to assume that “someone like me” is too, so I’ll say something very liberal and he’s likely to retweet and repeat it somewhere.”  That means that if I say something about a product or service from a particular company or ask something, I’m likely to be trusted in my comment or get an answer I trust.
5. The company had nothing to say about any of 1-4.   It was out of their control.

What the control of the conversation means is not terribly complicated though it seems to be somewhat confusing to many.  It simply means that the customer can impact a company in good and bad ways without the company having anything to say about it. It doesn’t say the company can’t try and have conversations with customers. Companies are increasingly being pushed to respond to customers and that is where SCRM begins to show itself.

So let me put it this way.  The final line of my definition of CRM says, “Its the company’s response to the customer’s control of the conversation.”  At this time, the ongoing way that the company responds to the customers control of the conversation IS the relationship. 

Hope that clarifies it. If not, let me know what else I can say.  Talk amongst yourselves. Give yourself  your own topic. (Mike Myers, SNL, forgive me).

Comments

[julioconnors]

a new dimension of client/ provider relationship. thank you

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[ERP Software]

That's a very interesting analysis of the client/provider relationship. Thanks for sharing!

[Sarathym]

Great post -- I am so looking forward to May 24th!

The customer has control of the conversation, therefore it is in the best interest of the company to manage the relationship. Hence the M in CRM, right Paul?

It is true that businesses will not always get a voice in the conversation, but let's not forget the infinite and valuable learnings that are within the conversation. What an amazing gift! Listen, Internalize, and Respond. Not necessarily direct response, although some times warranted. I'm saying take the learnings and see what can be done from an operational perspective to move forward in a positive direction.

[courtnay]

Hey pete, remember all this issue began with The Clue Train manifest (putting customer in ownership of CONVERSATION)? http://www.cluetrain.com/book/95-theses.html

Now, there's another point towards the "relationship". Since companies push for profits, sometimes against all (predatory capitalism, aka), the market and the totality of consumers (not a single one, or a group, but the full herd of all of them) made a huge "confluence" of factors that made every business offer a... comodity. This is controlling the value relationship, I guess.
A new book from Prof. Yougme, from Harvard, touch some delicate points on it.
http://www.youngmemoon.com/ym/Youngme_Moon_|_Welcome.html

Worth checking.

[Amir @ClickFox]

So what you're effectively saying is that CRM is Customer Response Management, since the company can't really control or manage the relationship. I like that approach. The company can only respond to the conversation. In fact, based on your points above, the company is usually not even part of the conversation. Great stuff.

[Ray Brown]

Hi Paul My first comment on your excellent blog. Thank you for articulating some sometimes confusing ideas. I love your comment that "the customer is at the hub of business ecosystem"

[Steve LeMay]

Great post, Paul. It makes some critical distinctions, and makes them clearly. You're the man.