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Why CRM is an utter failure and how to fix it

Menno van Doorn
March 25, 2020

For our latest report “Utopia for Executives” we’ve interviewed nine thought leaders and asked them about their future vision. One of them was Doc Searls, an old friend of ours. He is foreseeing data power to the people, for more than one good reason. One of the reasons is that CRM has never worked in the first place. Here’s the (long read) interview that has been published in the report. More of this to come, but if you’re interested in what to prepare for you can download Utopia for Executives here.

Hand over your data

It was back in 2012 when we started our conversation with Doc Searls. We invited him to join us in London where we gathered a group of CIOs to discuss the future of customer engagement. We handed out red and green cards and asked the group how many of them were willing to let their customers have their own data. Almost everybody held up a red card. We then asked Doc Searls to turn their opinion around, and we gave him five minutes to achieve this. We started our interview for this project by asking Doc whether he still remembered this.

“I do remember and still know what my first sentences were: Imagine this is 1982 and the PC just came along. If I had asked you ‘Are you going to let PCs into your company?’ everybody would say no. And then within three or four years, everybody had PCs. And the same thing with the internet. Same thing with smartphones. Are you going to let them in the company? And the answer would be no. We will give you a Blackberry. Right? That’s what they did back then. And within a short time, everybody had to have an Android or an iPhone. I think we’re at the same moment right now. Will you deal with self- sovereign customers? Because that’s really what the question is. And the answer will be: ‘That’s scary’. We don’t want them to be in full charge of their identity. We will give them an identity and will know them by our database. But in the meantime, what’s also happened since 2012 is that because those companies did not hand over their data to people, we now have the EU’s GDPR.”

Who’s Doc?

David “Doc” Searls is a lifelong journalist who Thomas Friedman of The New York Times calls “one of the most respected technology writers in America.” Best known as editor-in-chief of Linux Journal, where he was on the masthead for twenty-four years, he is also a pioneering blogger (starting in 1999) whose byline has appeared in The Wall Street Journal, Wired, PC Magazine, The Globe and Mail, The Sun, Upside, Harvard Business Review, and many more. He is a fellow of the Center for Information Technology and Society at the University of California Santa Barbara, and an alumnus fellow of the Berkman Klein Center for Internet and Society at Harvard University.

Doc Searls has been ‘the voice of customer empowerment’ for more than twenty years, ever since the iconic, The Cluetrain Manifesto was published, which he co-authored: a manifesto containing theses that still look highly relevant today. After The Cluetrain Manifesto, he moved on to work on a concept called Vendor Relationship Management (VRM) in 2006. The idea was for VRM to serve as the customer-side counterpart of CRM: the hand that VRM shakes. After that, Doc published his book The Intention Economy: When Customers Take Charge in 2012. Now that several years have gone by since its publication, we asked Doc if and when customers will actually take charge. He does not doubt the “if”; rather he seems more convinced than ever before. But we need to prepare for a bit of chaos, he said. This is very much in line with the chaos we expected to come from the PC, the internet itself and the smartphone.

How is Utopia working out for Ya?

Doc Searls continues: “On the 10th anniversary of The Cluetrain Manifesto, David Weinberger and I, two of the authors, had a session at Harvard in one of the law school classrooms. The title of that talk was ‘So How is Utopia Working out for Ya? 3’ All because the Cluetrain was considered a Utopian document. It’s been twice that time since then and Utopia is still pretty far off. At the same time, I think we’re closer to it than ever. I have no doubt that the intention economy (the theme of my 2012 book) will happen. I thought we were late with publishing it, but in fact, we were ridiculously early. And we may still be early. But, at that time, we didn’t have new options, like blockchain. If anything, there are far more violations of privacy and it has made the web a much worse place. GDPR is helping in certain ways. The basic idea behind the Cluetrain was to take the customer’s side. It showed the potholes in the marketing machinery of companies, which were completely lacking empathy and out of touch with what customers really want, and lacking any real conversation.” Utopia is about relationships. The VRM concept addresses the lack of real relationships with CRM, “loyalty” programs, CX and other company-side systems for dealing with customers. It also shows what needs to be done: self-sovereignty, customer ownership of data.

GDPR is the carrot in the front of the horse

But let’s start with the crucial turnaround that Doc foresees. What problem does VRM solve?

“The original idea behind CRM was that there would be software and services that would help companies truly relate with their customers. Let’s not forget that the middle name of CRM is a relationship. The idea was that it would be about relationships. What happened was that it turned into customer records management. And it turned into a vast business for keeping track of customers, but not especially relating to them. The sort of paradigmatic VRM case here is that anyone of us should be able to change our address, change our last name, change contact information, with every company we deal with, and do it in one move. That would be VRM. And ideally, VRM would meet CRM. VRM would be a way that people could actually relate to multiple companies in standardized ways. CRM has not changed very much, just new things have been added to it. CX (customer experience) for instance and social CRM was big a few years ago. The idea was that you follow people on social media, and you connect with them there to try and relate to them. This was mostly driven by marketing. Yet mostly marketing was detached from actually relating to people. Marketing really never touched the customer. This is no different today, it’s just a lot more rationalized, and a lot more complicated. It has become infinitely more digital and it’s full of data. And it’s still bullshit like a few years ago. Even worse. There’s not another human being involved; the customer is just someone to gather data from. And the data is almost all based on spying on people. But GDPR has now put the regulatory carrot in front of the technology horse.”

Surveillance capitalism

Searls continues: “Quite frankly, had companies not spied on people, we would not have the GDPR, we would not have the CCPA in California, we would not have most of the new digital privacy laws that are coming along. All of which, by the way, is largely directed against the big companies and forget that this spying on people is endemic. It’s massive. You can’t go to a website, even non-commercial ones, without knowing they’re tracking you. It really is an offense against all that is sensible in the physical world. They put up the cookie notices saying we’re trying to improve your experience, please click, accept us improve your experience. And that experience continues to be one of spying on you and giving you advertising or spying on you just so they can do more marketing with the data. The data that they gather is toxic, and it’s poorly anonymized. And all the rest of it is beside the point, which is that it’s still spying, and spying on people is as wrong in the online world as it is in the offline one. This is all very eloquently explained in Shoshana Zuboff’s book Surveillance Capitalism. The essential question for
companies is: ‘Are free customers more valuable than captive ones?’ Because if the answer is yes, they have to welcome what only free customers can bring to a relationship—which is far more than captive customers ever can. And we have plenty of evidence that this can be done, starting with the internet itself, which has a peer-to-peer architecture and has already made customers far freer than they were without it. Remember: most big companies fought the internet early on. And that they wouldn’t live without it today. We can fix these things. The thing is, we have to fix them from our side, we can’t fix it from their side.”

Self-sovereign identity

This leads us to the question of what needs to be done to achieve this power shift. While there’s clearly lots to do, the one thing Doc keeps on stressing is the notion of getting an economic system installed that’s based on self-sovereign identity (SSI). “SSI (or just self-sovereignty) is the biggest thing. VRM has always been about self-sovereignty. The term sovereign has mostly been applied to countries. It’s also used as a synonym for, say, coins. You know, a sovereign token is a coin you can use. But sovereignty, a domain that an entity controls, is a critical concept. In the physical world, we have embodied animals, we live in our bodies, walk-in spaces that require respect for who we are and what we are. When I wave my hand, or if I’m writing something that’s a self-sovereign act, my ‘self’ is in full control of this, I have independence. I have autonomy. I have control. Theoretically speaking, GDPR was developed in the absence of us having full control of ourselves in the digital space.”

We are all digital beginners

A crucial point in our discussion is about understanding, or better, the non-understanding, of the whole change that the internet is bringing to our new lifestyles. Doc Searls, being a veteran ‘internet watcher’, makes it clear: in this new era we’re all just beginners.  “What the internet did was complete the process by which we become digital beings. We are not just embodied animals anymore, we are digital animals. We live in a place that isn’t a place. And this is a really critical point.”  Searls continues on this theme: “I’m currently in New York City and you’re in Europe, but we’re talking over the internet, so the two of us could be anywhere. There is no functional distance between us. We are also, on the net itself, disembodied and weightless, because there is no ‘there’ there. To make sense of this, it helps to imagine we’ve lost distance and gravity in the physical world. It would take time to adjust, but we would do that, just like astronauts adjust to weightlessness in space. But the key fact is that we are in fact still embodied when we are “on” the internet. We occupy two states at once: the physical one on Earth and the virtual one on the internet. One state we’ve had forever and the other is still new. We don’t yet know how to make privacy work. Or manners. Or respect for each other. If we had good ways to control our personal privacy and to signal to others what’s okay and what’s not okay, we never would have needed the GDPR, because companies would see and adjust to the simple need for personal privacy online. But we got the GDPR because people still lack the simple equivalents online of the privacy tools we call clothing and shelter in the offline world. VRM tools will provide those privacy tools, and much more. What’s inevitable is that we will eventually adjust to the absence of distance and gravity in virtual space, and we will civilize that space. How long that will take is anybody’s guess.

“I think the biggest work that needs to be done [..] is just beginning to try to understand what it means to be digital as well as physical  and where those two connect.”

Prepare for another dance

“As I wrote in The Intention Economy, there will be a different dance between companies and customers. The dance we have now is one where the companies stand on stage with a megaphone shouting to what they think is the audience. But that audience isn’t going to be an audience anymore, it’s going to be autonomous. People are going to be independent, they’re going to have a choice, and they are going to standardize the way that they deal with many companies at once. And that will change everything. A key thing for companies is to be ready for customers showing up not just with a complaint, but with constructive help. I mean, it’s so crazy that companies are trying to get data on people when people actually have the best intelligence about the company and its products. If you’re a good company, making good products, or with good services, you should be able to welcome people’s help. They’re out there, millions of them in some cases. What can you learn from them directly, rather than by spying on them?”

About the author

Director and Trend Analyst VINT | Netherlands
Menno is Director of the Sogeti Research Institute for the Analysis of New Technology (VINT). He mixes personal life experiences with the findings of the 19 years of research done at the VINT Research Institute. Menno has co-authored many books on the impact of new technology on business and society.


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