I’ve always had a problem with customer relationship management (CRM) and CRM tools. This is principally for two reasons (sorry, I’m going to get a little geeky in this post):

1. They are at heart not customer focused – they are vendor focused. They tell vendors things vendors want to know and think are important, not what we wished vendors knew and what’s important to us, and
2. They don’t really work, they just create unrealistic and one-dimensional customer views. This isn’t their fault as such – it’s basically an impossible task for a vendor to get anything more than a view of customer in relation to themselves. They simply can’t get a detailed view of the many other ‘supply’ relationships that customer might also have.

As a result most CRM revolves around the needs of businesses and defines customers by things like how much money they spend and basic demographics.

Even complex systems only see a narrow customer view. This is because the relationship is being ‘managed’ at the wrong end. Surely customers should manage the retail relationship? After all we should have the upper hand here since we’re the one with the need and money!

In visionary work The Cluetrain Manifesto, one of its four authors Doc Searle alludes to an age of customer managed retail relationships, or what has since come to be known as Vendor Relationship Management (VRM). Ten years ago when the book was conceived this probably seemed an elegant (if compelling) theory. However, with Nostradamic precision it seems to be coming ever more a reality and it’s everyone’s favourite social network, Facebook, which is pioneering this. But how?

First, it’s important to get a broad understanding of what VRM is.

VRM tools allow customers to manage the relationship with their vendors. They allow them to share information that is important to them, in a way which they control. The information is not uniform or rigidly structured and it is up to vendors to interpret and understand it effectively. Critically, VRM tools are based on open standards and APIs and relate to one another. Data is shared freely between systems and customers are able to give as broad a perspective on themselves as they wish.

So we immediately see how Facebook has allowed customers to start controlling this relationship. Users get to share as much (or as little) as they choose based not only on the content they add to their profiles but also their privacy options. This information is then openly available via API tools such as Facebook Connect and Open Graph. Facebook Connect (used on 50,000 websites already and growing) gives us a first glimpse of what a standard identification protocol might look like online, combined with two-way data transfer between one of the most extensive (and honest) profiling databases ever created. Open Graph aims to further enrich that data, combining all those innocent Facebook ‘Likes’ you’ve clicked into a huge aggregated database of complex customer preferences.

So isn’t this just CRM on steroids? Well no, as critically it contains information that we have chosen to share and make public and more importantly, is dictated by us, the customer.

Retailers obsess about breaking down customers based on their spending habits and ‘talking to them’ differently, but how many are able to ask what their favourite films were or where they went on holiday last year? Maybe if they knew that they could offer us a genuinely personal experience, rather than one based simply on our bank balance or gender.

So what do these tools mean for vendors and marketers? How do businesses respond in a customer-managed age? Well for starters, it has become easier than ever to find out what your customers like. Hell, they’re telling you! And all those ‘Likes’ are being helpfully aggregated and made available. For free!

Of course you then have to use this data, but even five minutes thinking about complex levels of personalization, targeted recommendations and genuine conversations with people about their passions should get any creative mind buzzing.

The customers (and of course, Facebook) are doing the work for you now. In the impending VRM era, all you need to do is be attentive and creative and let your customers tell you exactly the kind of relationship they want.