Ending slavery didn’t end the problem of inequality. Lincoln’s emancipation proclamation, or better yet, and more eloquently put, Lincoln’s Gettysburg address (“Four score and seven years ago our fathers brought forth, upon this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.”) is to me equivalent of Project VRM and the concept of VRM, vendor relationship management. Yet, as ending slavery only led to segregation, VRM in its current state is only a half way mark – a transitional step – to a true, fully-integrated, and “harmonious” system.

When I first heard about VRM, from Doc Searls’ blog, I new there was something I liked about it. However, I didn’t get it as I think many people still don’t (and in all honesty, I still may not get it, but more so today than yesterday at least). As Doc described this concept more, I liked it more, and I understood it better.

VRM is about putting customers in control of their data, and giving them greater control over their interactions with vendors. Previously, vendors like Target, Verizon, or even your local doctor, have tried to utilize CRM, customer relationship management, systems to better “connect with” (aka sell to) customers based on the information they collected about their customers. Vendors have been in control, and at times this causes us, the consumer, a headache from all the junk mail and annoying advertising that’s – poorly – driven off this data (such a past purchases, demographic information, personal healthcare records, etc.). As companies figure out more ways to collect data, away goes our privacy and anonymity, and up goes our headaches from automated “relationship” building.

So, out comes this VRM concept. I fucking love it! And, I finally dig in and read the project’s wiki (and join the mailing list where I look forward to finding out what they’re saying, and hopefully contribute myself), so I feel like I actually understand what this is all about. Great – but I’m worried now.

Empower the customer. Take back ownership of your data and privacy. End the corporate slavery as Doc put it (“In a conversation with a honcho from a big retailer a few weeks ago, the guy talked about the Big Retailer Value System, and how important it was for retailers to “capture” and “own” their customers. “We talk about that all the time”, he said. I asked him to give me a word that meant “owning” other people. “Slavery”, he said. “Exactly”, I replied.”). However, as I read through the wiki and what VRM protocols would mean, I saw a gap – a remaining segregation.

Assuming VRM succeeds, there are still two separate worlds, two functioning systems, VRM and CRM. Both can live together, but that’s like having a water fountain for blacks and a water fountain for whites. VRM doesn’t in itself abolish with lousy CRM. Designed and constructed well, VRM shouldn’t encourage further headaches from CRM, and may alleviate some of the pains, but I don’t see the interest in, or misuse of, CRM systems going away.

The core problem with VRM is that it specifically addresses the problem from the customer side removing the vendor from the equation until the customer feels it’s appropriate (the customer is in control of his data). Because we’ve never really had this before, it’s a great step forward. Progress is undeniable, and it’s something I look forward to. However, a truly integrated system would facilitate the market place from both side, which VRM inherently doesn’t do. VRM establishes the previously non-existent customer side (it establishes a functioning, responsive – empowered – demand side for the demand and supply concept), yet the market place that occurs from these two sides meeting, the place where prices are actually decided, isn’t facilitated by either system. Market places must still be created.

[I think a lot of the confusion around VRM is that advocates talk about it in specific terms, in terms of market places and use cases. This makes sense because products and services are much easier to understand than hand wavy concepts. That can in itself cause confusion, though, when discussing the benefits of VRM using very different scenarios from healthcare to bank loans.

Additionally, the people interacting with VRM at this point also want the details. How will this actually work? At this point, you start stumbling over protocols, APML, microformats, and other architecture level things that confuse most people (including a techie like myself at times), so it’s hard connecting the dots from concept to reality at this stage.]

Selling the idea is can be tough. VRM has some interested parties, though, including the interest of some large corporations, which helps promote the idea and establish its viability. But that doesn’t in itself fix the market place problem. For that, you have to rely on those big corporations, and more likely, small entrepreneurs. It’s a nice thought that customers will start collecting their own data (is that actually part of the equation, I don’t know?), but that’s unlikely or at least a high water mark. How do you create or gather together a large enough body of customers so that companies are willing to actually spend time and money interacting? As so many Web 2.0 entrepreneurs have learned, “build a community site, get 1,000,000 users, make money” isn’t a great business model. The other alternative is for companies that currently hold your data to release it to you. Good luck with that.

Both situations pose challenges. One has to work if VRM is to work, though. And yet, that doesn’t solve everything. Even with a sizable community or communities, you’re still asking corporations to interact with this VRM system manually. That’s half the problem with the current CRM systems. It’s nearly impossible to establish real relationships with customers, especially when you have a significant number of customers who just walk in, shop, and leave, and that’s still an issue with VRM, if only in reverse. Sure, corporations can automate the process some and RSS and other technologies will allow other technologies to be built around them and bring the two worlds closer together, but that leaves me asking, “Do we really have to wait for that? Or can we skip this transitional step and move into a truly integrated system, must we have segregation before integration? And what do we really gain from semi-automated systems that simulate relationships?”

Maybe much of this is beyond the scope of VRM. Establish a means of storing and communicating and let people at it. Even though I’ve covered a number of large challenges and posed a few tough questions, I’m still a huge fan, and I think, given the chance, VRM will spread and produce new areas of economic gain. This will help rewrite how businesses and individuals interact, and that will in the long run help balance out control providing benefits to both sides.

[Update] Not even a second after I post this, I get my first email from the VRM mailing list. Apparently, I’m not the only one thinking this same thing as mailer Gigaboy20 writes nearly the same thing in a faction of the space: “The problem with Doc’s message of VRM is that it promotes one side as having more control over the process. Nothing in the universe can exist without a counter part to balance the experience…you’ll realize it’s not VRM or CRM it’s the + that forms V+CRM. Because it’s the + that is missing from the conversation that enables everything else to fall in place as a harmonious balance.” The + in this case, as I wrote, is the market place where the relationships are built, and where the actual price of business is decided.