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.

Technorati Tags:

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.

Technorati Tags: , ,

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.


Technorati tags: , ,

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


Technorati tags: , ,

Written by Colin Henderson

March 7, 2007 at 00:27

Introducing Operator; a Microformat Detection Extension for Firefox 2

 I found this new beta (hat tip to Chris) fascinating, and a clearer example of how microformats work to the layman. 

Its the first effort that starts to play out the vision that I see for microformats and Banking.  Operator is a firefox extension that “watches” for information that it understands. 

The simple example provided here is for areas where standards exist, such as dates, addresses, and photographs.

Operator requires information on the Web to be encoded using microformats, and since this method for semantically encoding information is relatively new, not all sites are using microformats yet.  ….

As more sites begin to semantically encode data with microformats, Operator will automatically work with them as well.

Source: Mozilla Labs Blog » Blog Archive » Introducing Operator

However the part that interests be is the “as more sites” statement.  The earlier reference was to microformats as information brokers.  In the above example microformats are information brokers for interesting address, dates, and photo’s.

What about banking services that I require, better interest rates, bill updates etc.  Its becoming clear that microformats will be focussed on the above items in the near term, but I predict someone will establish a way to use for items beyond the narrow scope of dates and addresses.


Technorati tags: ,

Written by Colin Henderson

January 7, 2007 at 10:46

Posted in VRM

Microformats as information brokers – revisited

I was chatting with a colleague about the reference to microformats to support VRM, and it struck me I am not being clear enough, and haven’t thought this through sufficiently to make the case.  Thanks JPG 🙂

So I thought I would give it another shot.  First the VRM concept, outlined on the Project VRM site.

In this picture of the model, ‘Me’ represents you, the consumer.  VRM is an idealistic view that places the consumer in charge of merchants of any type, trying to sell things to you.  In this vision, presumably, tools exist to protect you from unwanted advances from vendors, as well as, tools to intercept vendors and properly represent their services and products to you, as they would fit your requirements.  And all this is done automatically. 

This suggests to me that it can only be accomplished with tools of some type that will provide that function to you, the consumer (how I have come to hate that word – thanks Tara!).

Using the diagram above as a rough reference, in order to provide that service, the functions required are presumably:

  1. Data Source …n : requirements that you the consumer define.  These will vary from basic attributes such as name, address, contact info, job, contact requirements, personality descriptors, elements that describe you in a way that would be meaningful to companies that sell things. Note all of this is securely controlled by you, and you would define how those personal attributes would be displayed to anyone.  At this point its merely a collection of personal data in a totally secure format and a location under your personal control.
  2. Comparison based on match quality:  this is an algorithm(s) that is capable of taking inputs from your preferences and data, and matching with inputs from vendors, sellers of things.  This is hard, but essential.  As a consumer I want to trust the result of this interaction, so the outputs had better be what I expect, or I am gone!
  3. Decision and vendor selection: the final piece of the puzzle is my own decision.  Based on the tools selection, I will make the final decision on the new cell phone, bank account, pair of shoes, new laptop, etc.

Running through this model points out the degree of variability is enormous, and so constructing one tool to handle all this is impossible, or at a minimum a long way off.  The preferences that apply to me selecting a laptop are not the same as for me purchasing a bank account, or a pair of shoes.

So to manage the scope of this, I will zero in on Banking, because that’s my domain.  Banking has a series of things that are standard requests, such as, name, address, contact information, contact preferences, credit history, job history, residence history, investment goals, transaction usage, financial goals, & financial aspirations.  


Take those standard requests and build into a tool that will hold all that information. Retain that tool with those request in a background state as you browse online. 

The next part I am less clear on – either:

  1. The tool would capture appropriate inputs from sites as you browse
  2. the tool would go out and spider sites and capture appropriate inputs ( I like this one better)

The need is real -my lack of clarity is only because I am not sure how the technology would accomplish these requirements.


I am assuming in all this, that the corollary to the tools I am thinking of that vendors would have to adapt to this new world and provide API’s that sit out on the internet awaiting inputs from my “tool”.  When the vendor receives a request from my tool, it would send back an appropriate response based on my request.  It would only answer based on what I ask and make no attempt to circumvent the process to gain advantage over other vendors.  I, the consumer am in charge in this model, and the vendor is subservient.  If the vendor tries to press beyond what I have requested they are dismissed.

I would be in charge, and I would determine the method of response to the vendor based on the collection of responses that my tool has gathered.

Final point – Microformats

I had considered microformats might be a method of managing these interactions.  Could the consumer requirement I have outlined be brokered by a Microformat?  That’s the open question I have.


Written by Colin Henderson

January 5, 2007 at 18:17

Posted in Customer Advocacy, VRM

Microformats as information brokers – the intelligent agents to support VRM

I have been thinking a lot about Vendor Relationship Management (VRM) over the holidays. Doc latched on the the concept as the the corollary to Customer Relationship Management (CRM). He spoke of VRM finally delivering the Cluetrain promise, and that got my attention. CRM places all the power in the hands of the vendor (Bank, telecom, retail store ) and that’s why you get annoying phone calls at dinner time, junk mail, or those annoying “can I put you on hold” comments while the poor call centre rep reads up on your history. CRM does nothing for you as a customer.

VRM is your software, you the customer. The concept (its just a concept right now) would allow you the customer to control your interactions, and effectively manage the vendors based on what you require. CRM allows vendors to manage you based on what they think you need, which is of course ludicrous.

However one of the constraints I see in the current thoughts on VRM is that it does not recognise how customers think. I would like to see this picture evolve to reflect the stages of customer purchasing. Consider your own behaviours. If you need a chocolate bar you go to the store with no thought and buy it. If you need a car, you go through stages in the purchasing process. So depending on what you need, and generally if you are buying it online, this will apply, its more than a chocolate bar purchase, and you want to control the entire process, not just the act of purchase.

Similarly for a new bank account, which is my focus here, but I hope this can be applied to VRM more generally. Brad and Cathy at Forrester have done much research on this topic, and come to realise that the web highlights the way that people think. In the old world it appears that customers walk into a Bank to buy a bank account. This doesn’t take into account the thought process and events that preceded, the discussion with family members, and friends, the picking up of brochures from several banks. In the new world, these events are exemplified on the web, including reading (brochures), discussion and email, (family and friends), web browsing (thinking).

Forrester concluded in the case of mortgage purchase there were several general steps:

We can abstract these steps into five general steps:

  1. research: sources, research product types
  2. education: the process and ways to get a loan
  3. quotes: obtain quotes, perform calculations based on the quotes. consider how it fits with customers expectations, decide what I will specifically apply for, how much, interest rate, terms required etc.
  4. apply: apply to one or more locations, and receive offers
  5. acceptance: accept one offer, and make final decision

Returning to the VRM information flow, the “request for proposal” is an amalgam of 3 & 4. In the consumers mind, these are two discreet steps. In some cases the decision will between 3 & 4 will be made almost instantaneously, but they are two separate processes. #3 is a ‘what if’ analysis, a simulation to consider life after the new service is in place (e.g., I have this great new car, but can I afford the payments, will it fit my garage, will my wife like it, etc). Whereas #4 is after the decision is made, and the consumer is ready to deal.

So thinking about how to manifest those steps online is what I have been thinking about. I recall back in the mid 90’s conjecturing during an IT strategy session, for the concept of intelligent agents, bots that would somehow (we had no idea how), scour the internet for the right service based on the customers preferences. I see VRM manifesting that concept.

Then I read some more on microformats today – (Hat tip to Read/Write, and Alex Faaborg of Mozilla) and this picture.

Link to informationBroker.jpg_large.jpg (JPEG Image, 1481×699 pixels)

The diagram is restricted to contacts, and calendar entries, but the part that caught my attention is the ‘information broker’ bit at the bottom. That information broker could represent the buying process I outlined above.

Consider the consumer who is at stage 1 of my buying process above, and he wants to buy a car. He has in mind a used model, something in the 2002 – 2004 range, and about $25,000, of which he estimates he will borrow $12,000. He instructs his financial services microformat with these facts, and as he browses, it gathers data based on his requirements. In fact, it could gather from sources without him actually visiting those sites, if he chose to instruct it accordingly.

Once he has enough information, the consumer can choose to instruct his microformat to move to stage 2, etc etc.

Part of stages 1 and 2, would include seeking advice and information from trusted social networks. Splogs need no apply, and would be blacklisted. In this view the notion of a splog black list service, similar to phishing black lists would be powerful. Trusted sources that eliminate spam/ splog information. Power would be truly transferred to the customers.

If I was a smart bank I would offer such a microformat for my customers, and it would pull in the best of breed, not necessarily my own products. Who has the nerve to try that? As a Bank I would be building trust with the consumer. If I do a good job there may be a business model there … a referral fee even?

Relevance to Bankwatch:

In this view the consumer is not restricted to Banks. Banks would have to re-architect their CRM systems to lookout for VRM requests, and recognise the stage the customer is at. But Prosper, Zopa and others will be doing the same thing, and can probably react faster than the Banks. Also, if the customer is researching (stage 1, do not press them to close the deal (stage5), or they risk losing the right to bid in future. This customer could blacklist them from their VRM tool.

Technorati tags: , , ,

Written by Colin Henderson

January 2, 2007 at 11:20

%d bloggers like this: