The ‘R’ in VRM

I’ve never really liked the laser-like focus on “intent to buy” as the primary VRM signal.  It seeks to intervene just prior to the exchange of value and makes too many limiting assumptions about what value actually is.  My usual example is that I’d like to communicate intent through policy settings such as “don’t show me DRM-enabled content when I search” or “show me DRM-enabled content only if nothing else is available.”  If people set these policies in sufficient numbers, it could send a clear signal to vendors.  When it comes to “smart” appliances and Internet of Things, vendors have been putting out crap and assume the lack of signal means we aren’t interested.  The MASSIVE success of crowdfunding IoT devices demonstrates that absence of interest signal is not signal of interest absence.

The territory between purchase intent and preference signaling might perhaps be called “intent to form intent.”  I seem to be in Major Purchase Hell at the moment as all of my big-ticket items are dying off.  After several iterations, I’ve come to realize that selling intent to purchase, as it is usually discussed in the VRM community, is inadequate to my needs.  When my lawn tractor was diagnosed with a $500 repair I needed to make a quick repair/buy decision.  Unfortunately, there is no such thing.  You must first research the market to see what you’d buy if you bought new, then research the quality reviews from Consumer Reports and similar, then figure out your best price on the potential replacement.  Perhaps you go through a similar process for used items.  Once you have that you can make an informed repair purchase decision.  Whether this ever becomes intent to spend money depends on whether you are the repair shop or the dealer.  Until I’ve made the decision, neither the shop nor the dealer have a strong incentive to participate.

If I eventually decide to buy, a retailer may find my intent signal interesting.  But nearly all of my investment in time and effort occurs well before I ever get to that point.  Once I do buy a new lawn tractor, the retail vendor is once again out of the picture.  Where VRM stands to help me most is the relationship with the repair shop because that’s who I see at least once a year for service, and with the manufacturer as a source of authoritative information and to express design preferences.

This is why, at least to me, focusing on purchase intent misses most of the potential for VRM.  The vendor may like that model because they repeat that transaction frequently.  For me, that’s often a once-a-decade or less transaction.  Why optimize it?  Or, more to the point, why spend time optimizing that instead of the activities where most of my time and effort is spent?  Sure there is some benefit in saving $50 or $100 on a lawn tractor in that one transaction I do every 10 or 20 years.  But that’s VM, not VRM.  Personally, I’d gladly forgo the $50 or $100 at purchase if I could reduce the investment of time prior to the sale (the “intent to form intent” phase) or over the lifetime of the tractor.

Anyway, these are some random thoughts that occurred to me during the course of recently repairing/replacing…

  • Lawn tractor
  • Garage door springs
  • Dishwasher
  • Icemaker
  • Built-In microwave
  • Built-in oven
  • Broken HVAC duct actuator in a zoned system

…which involved lots of time, many potential purchase decisions, and thousands of dollars expended, but none of which resulted in the sale of a replacement item.  That’s a helluvalotta VRM opportunity for my service providers and device manufacturers, but not even one signal-my-intent-thru-my-browser event ever resulted from it.  VRM has to live where I live, where I expend most of my time and attention.  If all it wants to do is live in my browser when I click [BUY] then it’s just VM.

Comments

  1. Hi T.Rob

    A very insightful post.

    I agree with you that only focussing on the ‘intent to buy’ is missing the much larger picture. It it isn’t only missing the ‘intent to form intent’ that you mention, but also all the myriad of touchpoints over the lifecycle of the product when it is used to do something that creates value for the customer.

    As Vargo & Lusch (2004) point out, much of business today is built around the point-of-sale where the Co’s products are exchanged for the customer’s money. At the point-of-sale the Co gets what it values; the customer’s money. But the customer only gets what he values after the point-of-sale; when he uses the product to do jobs that create desired outcomes. Assuming that just owning the product but never using it is not why he bought it in the first place.

    The realisation that Cos can make good money not only from selling products, but also from selling outcomes (the things customers use products to do) as a subscription has led to the wide adoption of servitisation by Cos selling to other Cos. Many large capital items are sold through outcome-based contracts where the Co is only paid when the product creates outcomes. For example, Rolls Royce Aviation sells the outcome of ‘power by the hour’ to commercial airlines rather than selling or leasing aero engines to them. An ecosystem of partners ensure the airline gets the outcome it wants without having to take on all the maintenance and repair operations itself.

    Looking at the larger VRM picture, it should be clear that there is more value for the customer in being helped to better use products, services and experiences to do what they were bought to do, than in helping the customer procure them in the first place. Whilst I agree with Doc that it is probably easier to focus initially on the point-of-sale rather than on the bigger usage picture, the rapidly increasing volume of contextually-rich, small-data about customers and what they are trying to do may well change this.

    It is ironic that VRM is currently focussing on the bit of the lifecycle that customers find least valuable (and that contributes the least to the development of a working relationship with a vendor).

    Graham Hill
    @grahamhill

  2. Good post. A couple of quick thoughts to share.

    First, there are at least two good reasons to focus laser-like on “intent to buy” scenarios. One is to confine the scope of the challenge. The other is to keep marketing out of the room.

    The population of buyers who already know what they want — their shopping is nearly done — and have money ready to put on the table for a given product or service, is not small. It is also valuable. The population of people in earlier stages of the “customer journey” is larger, but also already super-served by all of sales and marketing, plus all of big data driven analytics. To place VRM in the midst of that is to risk turning it into a suburb of what’s already being done on the sell side by marketing.

    I’m not saying VRM should stay away from escorting customers all the way through their shopping and buying journey. That’s good to do, for all the reasons you give. I’m just saying that there are also good reasons for confining at least some early VRM work (and it’s still early) to intentionality that is unambiguous and ready to send a clear economic signal.

    Second, neither life nor VRM are about shopping alone. We live mostly with stuff we already own. In CRM circles they speak of this part of the customer journey as the “own cycle.” I believe this is a huge greenfield, especially since it is (relatively speaking) all but ignored by CRM and other vendor-side marketing and sales functions. Links where some of this is unpacked:

    http://hvrd.me/18dAJG1

    http://bit.ly/JERl2u

    http://bit.ly/JES0AV

    http://bit.ly/JESrLu

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