The Bankwatch

Tracking the consumer evolution of financial services

Archive for the ‘VRM’ Category

A market test alternative for credit cards

This is a variation on the theme I cover periodically called Vendor Relationship Management (VRM).

The variation here is that the Vendor must place the consumers product up for bif from competition when they are considering changing the terms, such as interest rates.  The consumer would then have the choice of accepting the change, or accepting one of bidders. (HT Payments News)

A Market Test for Credit Cards

We have an alternative solution, employing a market test of a proposed change. At the time when the lender proposes a unilateral change, it would be required to put the existing account balance up for auction on a LendingTree-like service that would allow other credit card issuers to bid for a chance to issue a new card and take over the existing balance.

Borrowers wouldn’t be forced to switch to the auction winner. They’d just be given the option. When an existing credit card issuer proposes a rate increase, it would be required to pass on the terms of the winning bid and a comparison with its own terms, and the borrower would decide whether he wanted to make the switch.

Written by Colin Henderson

July 11, 2009 at 14:46

On VRM, Facebook, and being misunderstood for long periods of time

I simply love this post at RWW.  The post is about how FaceBook could turn on the power of their userbase to the benefit of consumer power.  I have long been a fan of VRM and at the same time at something of a loss to see how it could be initiated.  Then I read this post, and new lights went on.

The post is about FaceBook, but it is less about them, than it is about business models for companies with large userbases who insist on following tradigital advertising models. The whole ‘We have lots of eyeballs so lets monetise’ thing.

[disclaimer]  I have long believed that adwords, adsense, and any such interruptive advertising model has only a limited online lifespan, and represent a termproary interlude that keeps SEO types busy in these formative internet times, until we get to the next level whereby the consumer is truly in charge.  Only then will I accept a Web X.0 increment.

I look at myself and my online behaviours, and maybe I am in the minority, but maybe thats because the tools I use are not well understood.  My online experience sees almost no ads except when I choose to do so, and I do so choose.  I see them in emails I deliberately subscribe to, I see them when I seek them out, but my standard web experience is protected by pop up blockers and AdBlock Plus.  If in doubt how many have PVR’s at home, and skip tv ads?

Its not that I don’t want to lknow about products and services.  I just don’t want to know when I am reading, listening and watching things on the web.  This is the power and the promise of the internet medium;  it has the power to be better.  I listen to Sirius Radio for similar reasons; I want to hear music not ads.

Enter Vendor Relationship Marketing (VRM).  Terrible title, but in essence VRM says you will decide when a merchant (vendor) may contact you, ie advertise to you.  Until then stay away. Here is one of the more provocative catchphrases from “The ClueTrain Manifesto” which forsaw this problem and solution 10 years ago.


The challenge is how to move from an interruptive model in radio, television, phone, mail, and now internet to VRM which would require a seismic and complete shift.

“be prepared to be misunderstood for long periods of time.” – Jeff Besos

Back to the RWW post.  Bernard does a nice job of pointing out that FaceBook is taking too long to develop a business model, and is taking longer than Google did.  He notes that it will take a radical shift in order to do that, and that shift will be misunderstood, but give it time.

I agree with Bernard.  The reason FaceBook and traditional advertising doesn’t work is because no-one wants to hear an ad in the middle of a conversation.  However FaceBook has the other benefit (some say weakness) of being a walled garden and Google cannot see inside.  He notes this is the perfect oportunity to turn that walled garden into a powerful tool on behalf of the consumer.  When they feel the need for a product, service or information on them, FB users could, through an RFP (Request for Purchase) process make it known to vendors, even to the point of naming their price or price range.  Vendors could respond.

This turns the ad model on its head.  The playing field is levelled between the merchant and the consumer.  If the merchant comes on stronger than the consumer wishes, or tries to return to old ways, the consumer can ignore them.

Relevance to Bankwatch:

Consider banking – every day thousands of RFI’s emanating from VRM services, and the banks can compete on them, all electronically.  Clearly this requires formats, standards, and defined processes but it makes an interesting future world view, and one that FaceBook could kick off.

Written by Colin Henderson

June 26, 2009 at 12:47

Retailers have improved the online shopping experience as far as they can

Once in a while Doc Searls comes up with a classic statement, and this is one of those [emphasis mine]. 

The buyer’s envelope, please

In the meantime, consider this thesis: Amazon and other excellent online retailers have improved the online shopping experience as far as a retailer can. Yes, there is always room for improvement, but there is only so much improvement you can carry out only on the sell side, even if you’re equipping buyers to do a better and better job. At a certain point the improvements need to happen on the buy side. You need better buyers, not just better sellers. You need to improve the tools available to buyers — tools that help buyers with all sellers, and not just within each seller’s walled garden or silo.

Therefore… At a certain point the problem is no longer scale but scope.

This is the argument for Vendor Relationship Management

Written by Colin Henderson

September 11, 2008 at 00:02

Are ad networks really the endgame?

We have had all the ballyhoo about FB’s new ad network, and now MySpace is predictably moving ahead too.  I say predictably because clearly the economics of internet is destined to lever off advertising.  Online advertising spend is predicted to double by 2011.  However I continue to question whether Ad networks will be the right deployment for online advertising.

I see very few ads.  Google Apps (gmail) turns of Ads, and gmail spam filter eliminates most spam (+95%)  The Ad blocker extension in Firefox eliminates the rest of the ads from web pages.  I might be a little unusual there, but I like it.  Those who don’t seek out that approach, must contain many who are just not aware those tools exist.

News Corp (NWS): Launching An Ad Network, Too – Silicon Alley Insider

Easy enough to pooh-pooh the move as me-too. As Saul Hansell points out, ad networks now strike everyone as a sure-fire winner, even though only a few are likely to co-exist with Google in a few years. But FIM’s MySpace property alone gives the network-to-be a shot.

And if/when it can be combined with Rupert Murdoch’s other Web properties — most intriguingly, of course, the Wall Street Journal and Dow Jones — it could be a home run.

Clues from Cluetrain

The Cluetrain Manifesto, written in 1999, holds clues to the real future, and we can see it being acted out now. 

Markets are conversations.  Cluetrain said this in the theses:

  1. There are no secrets. The networked market knows more than companies do about their own products. And whether the news is good or bad, they tell everyone.

  2. What’s happening to markets is also happening among employees. A metaphysical construct called “The Company” is the only thing standing between the two.

Eight years later, 1. is now well underway.  The notion of customers speaking about products online and sharing that information exists, and as social networks evolve no doubt that trend will continue.  Tara wrote today about Get Satisfaction, a new service in beta, that exemplifies the conversations about products. 

Meantime the employee conversation in 2. is no-where yet.  Enterprise 2.0 holds some of that promise, but the big service providers, Banks, Telco’s, retailers, are still pretty much embedded in telephone call centre land, based on principles established in the 80’s and 90’s. 

“Most corporations, on the other hand, only know how to talk in the soothing, humorless monotone of the mission statement, marketing brochure, and your-call-is-important-to-us busy signal. Same old tone, same old lies. No wonder networked markets have no respect for companies unable or unwilling to speak as they do.”
Extract:  Cluetrain Manifesto

But the actual trends towards 1. is promising for the full evolution of Cluetrain.  Sure, Corporations are turning off access to FaceBook and webmail, but that strikes me as a sign that the dam is bursting.  Who will be be the first large Bank to engage with an Enterprise information sharing capability?  [And no, the CEO blog, monitored by Cororate Communicataions does not count.]   One that permits employees to speak watch and speak about current customer trends and needs.  The final evolution would be those informed and empowered employees speaking with educated and empowered customers.  

Companies that don’t realize their markets are now networked person-to-person, getting smarter as a result and deeply joined in conversation are missing their best opportunity.

What intrigues me, is the role of advertising in this people networked future.  With everyone, both employees, and customers, approaching ideal information on quality and scope of products and services, the role of advertising to push product is less relevant, and in fact just plain annoying.  

  1. We are immune to advertising. Just forget it.

  2. If you want us to talk to you, tell us something. Make it something interesting for a change.

It presents a somewhat idealistic view of the future, but it makes sense. Empowered customers, and employees, combined with tools that support them.  While the old way relies on advertising to generate awareness of products and services, we will have tools that follow the Vendor Relationship Management (VRM) approach.  VRM is the converse of CRM.  CRM places management of customer contact in the hands of the Corporation.  VRM reverses that, and places the management of the Corporation(s) in the hands of the customer.  

In a VRM world, sales calls would occur when the customer initiates it, overtly or otherwise, but entirely based on the customers preferences;  and those calls would be much more productive because of relevance, and informed conversations.  

Sales calls outside of VRM would be screened out by people who adopt the VRM concept.  

Oh well, we can but dream.  Meantime, which Banks are willing to bet that they don’t need to get engaged in use of the tools associated with Web 2.0.  Thats the bet that 95% of Banks are making right now.

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Written by Colin Henderson

November 10, 2007 at 01:31

Applications, platforms, and VRM

Nice analysis, and context setting here from Joe.  I continue to watch the concept of VRM, and agree that the directions being set by platforms such as F8 and related tools will be useful in helping someone to narrow down tools that allow people to own and lever their preferences to get better service, and more simply locate what they want to buy. » Blog Archive » Marc Andreessen hits three nails on the head…

… the most powerful platform of all: platforms that are completed
distributed and designed to run on other peoples platforms. This “Level
4″ Platform is something Marc is intimately familiar with. …

Vendor Relationship Managment (VRM)
is working to create a Level 4 platform that turns CRM upside down,
providing tools for individuals to manage their relationships with
vendors. As such, we aren’t attempting to build one particular
application, we are building a framework for which any number of
service providers could offer applications and hosting platforms. It’s
not a small challenge, but we think its the right way to do it.

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Written by Colin Henderson

September 18, 2007 at 11:26

The perversity of online advertising

 I certainly don’t pretend to be any kind of expert in this area.  Seth makes a point here which, while I know it to be true, makes me shake my head.

There are very few sites built on Amazon affiliate revenue alone, mostly because the affiliate deals don’t convert often enough to make them worth what’s paid.

Source: Seth’s Blog: Inventory and Risk

His argument is that marketers will not quickly shift from PPC (Pay per click) to PPA (Pay per Action) because the “A” in action happens too infrequently!  Hello …. this means that the “C” in click is producing non economic activity – it used to be called brand awareness, in the old days.

I have been long suspicious of the success of Google Ads, and have written about that before.  Yes the clicks are there, but is anyone buying anything.

Perhaps PPA just needs to sort out the economics of the “A”, which of course is hard, because the value of a car is different than the value of a book.

But there is something fundamentally perverse afoot here, and internet advertising as a model has some way to go in its evolution.  One has to believe that PPA is getting closer to the answer, but me … my long term bet remains with VRM, which provides customer control over the vendors/ merchants.


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Written by Colin Henderson

March 22, 2007 at 15:38

Posted in Marketing, VRM

Chips talk to you as you walk around Ginza

 This fascinating experiment is indicative of the real networked future, when buildings and companies will talk to you as you walk by.  This is makes VRM the more essential, because I don’t want to be bothered by every building as I walk by.

TOKYO – Downtown strollers looking for directions, store guides or historical tidbits will be able to get an earful without talking to anyone – thanks to 1,200 computer chips embedded around Tokyo’s Ginza shopping district.

The information can be heard through earphones that pick up signals from chips stuck in cement, lampposts and subway-station ceilings. The 1 billion yen ($8.7 million) government-backed Tokyo Ubiquitous Technology Project spans several blocks.

University of Tokyo professor Ken Sakamura says the effort gives a glimpse into the future, when such chips will become so widespread that government offices and private businesses will use them to zap information to passers-by.

Source: Chattering chips enliven Tokyo stroll – Yahoo! News


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Written by Colin Henderson

March 7, 2007 at 00:27

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