The relationship entity

Posted: April 14, 2010 in CRM, Economics, Technology

Ok, some people thought my last post was somehow bearish on social CRM but I don’t agree.  I am trying to be accurate about what we ought to reasonably expect, nothing more.

A bandwagon effect in early markets often has predictable results.  Often people become adopters of new technologies not because they’ve done the necessary homework to know a product type is appropriate for them, but because “everyone is doing it.”  The results are often uneven.  When CRM was a new idea companies — large, respectable companies — ran out and bought Siebel for no other reason than it was what other large, respectable companies were doing.  I know because I asked them.

The result was uneven success resulting in an unfair rap on CRM in general for not living up to its potential.  It was operator error if ever there was such a thing and it would be nice if we didn’t have to repeat that history with social CRM.  So I’m just reading the labels, looking for nutrition.

On a related topic, who owns the customer relationship?  Is it the customer?  The vendor?  Both?  I think this is a trick question because a relationship is a duality that exists independent of both parties but requires both to exist at all.  In fact, the relationship becomes an entity of itself, a mass-less, weightless entity but a reality nonetheless.  Substitute the word marriage for relationship and you see my point.

It’s not much different from the limited liability corporation.  Modern corporations are treated as legal entities existing between the joint stock holders.  This entity — some would call it a fiction — makes modern life possible.  The corporation owns itself, the shareholders own claims on future earnings.  That’s why when a corporation goes belly up shareholders lose only their investments, the corporation’s creditors don’t have the ability to chase the shareholders for their money.  This approach makes risk taking by shareholders manageable for without it who would build the infrastructure of civilization.

Ok, I digress.

So the relationship is an entity existing between the vendor and customer and a relationship can be good or it can be dysfunctional but it exists.  And it takes two parties no matter what.  So in my mind the subject of relationship health is what we mean when we talk about who owns a relationship and whether or not it is a good one.  Relationship health stems from honesty and transparency and a sense that each party feels it is getting fair value from its contributions.  When we are honest and transparent we have few reasons for mistrust and dissatisfaction.  How do we get that?

Here’s the interesting part, relationship health starts with good communication — bi-directional communication.  I’ve been a critic of overusing social media to spam the market and a proponent of things that support inbound communication from the marketplace.  At this stage of the social revolution we’re all about outbound messaging and not enough attention is given to the inbound.  The ratio of outbound to inbound need not be 50/50, in fact, most of us don’t want to provide input to our vendors most of the time, and vendors don’t want all of that input.  But occasionally we do and this input feeds into the idea of a healthy relationship.

Maybe the ratio of outbound messaging to inbound is 80/20.  I like 80/20 or perhaps 70/30 not because they resemble Pareto ratios but because 20% to 30% participation in social networks seems to be a typical range.  Not, I am not talking about membership, which should be in the 100% range.

So back to transparency and communication.  It strikes me from listening to a lot of stories about success with social technologies that the most successful relationships are those that use some form of formalized customer feedback to go with the outbound messaging.

Feedback is purposely not well defined here and there may be a lot to be desired from what amounts to a mixed bag of input types.  For instance, some inbound modes take no account of who is providing the input or whether the participant has voted early and often, to borrow a phrase.  But the act of opening up to customer input makes people feel valued and validated and it also makes the listener mindful of a higher authority and that can lead to relationship health.

So when I hear questions about who owns the relationship — or more specifically, the answers — my antennae go up.  I wonder, if only one party owns the relationship, does this mean that it’s that party’s exclusive responsibility to keep it functioning?  It shouldn’t mean that and in fact people who advocate that the customer owns the relationship also advocate for intense listening to the customer and that’s a good thing.

Nonetheless, for the sake of everyone who does not automatically think of listening as a vendor responsibility I advocate thinking about the relationship as an independent entity, one that has to be nurtured from both sides.  And that drives my thinking on social CRM.

Comments
  1. Hi Denis,

    Your article helped crystalize some of my thoughts around customer centricity. Relationships *are* two sided so there needs to be balance or a power differential will occur.

    I’m a big believer in customer centricity. That said, though, equity needs to be present in order to have a balanced relationship. And balance is key to sustainability.

    I had much more to say on this, using your article as a springboard. You can catch up with my additional thoughts here.

    http://ow.ly/1yqVH

  2. […] further reading Denis’s post; The Relationship Entity he also makes a great reference to the old CRM 1.0 world, and offers some sage advice: “When CRM […]

  3. […] answers and questions emerge in a thread that starts with Denis Pombriant’s The Relationship Entity, at the heart of which is this: Who owns the customer relationship?  Is it the customer?  The […]

So, what did you think?

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s