Getting more into VRM

Vendor Relationship Management is hard to get your head round. It’s openness and data sharing taken to the extreme. It’s the fulfilment of user control. It’s what is left when the social revolution is won.

To aid digestion I’m quoting here in full a text from Adriana Lukas, that she delivered back in June at the VRM Hub meeting in London. Let me know what you think of the theory.

I am here for the VRM Hub, the London community around the Project VRM, that aims to redress the balance of power between individuals and institutions, customers and vendors, citizens and the government etc. I am also here as an individual user. A user fed up with being treated as profile page in someone’s online platform, entry in someone’s database, item in someone’s silo, a consumer to someone’s business model.

The web and the internet have been the most empowering space for me and it may be a timely reminder here that none of the (social) web happened with the help of businesses. The most innovative tools and technologies have been driven by the demand side supplying itself. The impact has caused disruption in the media, publishing, marketing, advertising etc.

Apart from cash, as an individual I have two other ‘things’ valuable to companies – attention and data:

My attention has been abused for decades by advertising. The web has shifted the balance of power slightly – there is much more stuff making claim on my attention so it has become more valuable and at the same time, I have tasted the power of being able to withdraw my attention or be more in control where it is directed and willingly given. Constant demands on my attention make intrusive interruptions intolerable and frazzle advertisers who believed they are entitled to our attention or that their adverts merit it.

My data has been growing in value, the more time I spend online, more things I do there and the more I am able to not only consumer but produce. The model for monetising data is still not clear, not only because of privacy issues but mainly because people create and collect data for their convenience and use, not for the advertisers’ or marketers’ needs. It is also mostly unstructured data and doesn’t fit regimented, lifeless and decaying commercial databases.

There are two things I need to point out about user/individual’s data.

1. User data generated online is a positive externality to the vendors and platforms that capture our data. Positive externality is something that is not part of the value traded in market exchanges. It is something one of the parties in the trade benefits from, without having to pay for it. For example, pollution is considered a negative externality as it is a) by-product of manufacturing processes and b) is not included in the cost or price of the products.

So, when I buy something from Amazon or Virgin Atlantic sites, the value exchange is the goods they provide and the money I pay for them. My data is external to the transaction – they are not paying for it and I am not being paid for it. Nevertheless, the vendors benefit by using the data in ways that help their business – from mining to selling it on. I have a scant legal protection against that and even with Data Protection Act and other restrictions on those who capture my data, the big part of the data collected from me is for marketing purposes and way above the threshold of legally required data to complete transactions. The advent of the ‘free’ web has confused this distinction – of data as inherent in the value exchange and data as positive externality – simply because most platforms with web services have turned what is essentially an external benefit from other value exchanges to foundations of their business models. The ‘free services’ I receive are ‘paid for’ by my attention and/or my data – both eagerly gathered by the platforms.

2. There are two types of ‘personal’ user data

One kind of personal data is mostly static, date of birth,
phone number,
 passport number, 
social security number, mother’s maiden name etc. Your address or phone number can change from time to time, and although it is possible to change your name, the date of birth or your mother’s maiden name is unchangeable. This is the last kind of information I would share online, usually only if it is required for a transaction, and even then I think twice.

The other kind, proliferating with the advent of the social web, is the ‘data pertaining to a person’. Following today’s fashion, let’s call it social data – it icreated, collected and shared by a person’s activity streams

This data is dynamic, at any time only a snapshot of the person and the more data can be created and captured, the more granular and valuable it can become. On the web such flows of data often act as a proxy for a relationship because the data’s value comes from the speed it changes & updates and the best way to maintain access to such data is a relationship, when it is voluntarily shared.

People subscribing to my blog, Friendfeed, Twitter, Facebook updates etc. perceive such data as personal, as in related to my person and yet, its existence revolves around sharing it with others. As a result, we have few means of harnessing the dynamic data i.e. making it work for us further, though we have many ways of generating and communicating it.

Users have and will continue to use and drive tools and technology that helps them take charge of their data, privacy and identity. Right now, my data is all over the place, not owned by me in any meaningful sense. However, given half the chance, I can make my data richer and more valuable than anybody else. People like me want to make that possible.

So others – companies or individuals – can either stalk me and steal my data or I can share it with them voluntarity because there is a relationship. It may actually be cheaper and more effective to treat people with respect and establish relationships with them, so the data they share is of quality that makes a difference to businesses. This is because if you stalk or abuse my data, you are devaluing it – the web is an environment where data decays fast and I may have the kind of data nobody else can provide.

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Not in the least bit copyrighted by Tim Aldiss 2012