The business problems only customers can solve

Customer Commons was created because there are many business and market problems that can only be solved from the customers’ side, under the customer’s control, and at scale.

In the absence of solutions that customers control, both customers and businesses are forced to use business-side-only solutions that limit customer power to what can be done within each business’s silo, or to await regulatory help, usually crafted by captive regulators who can’t even imagine full customer agency.

Here are some examples of vast dysfunctions that customers face today (and which hurt business and markets as well), in the absence of personal agency and scale:

  • Needing to “consent” to terms that can run more than 10,000 words long, and are different for every website and service provider
  • Dealing with privacy policies that can also run more than 10,000 words long, which are different for every website and service provider, and that the site or service can change whenever they want, and in practice don’t even need to obey
  • Dealing with personal identity systems that are different for every website or service provider
  • Dealing with subscription systems that are different for every website and service provider requiring them
  • Dealing with customer service and tech support systems that are different for every website or service provider
  • Dealing with login and password requirements that are as different, and numerous, as there are websites and service providers
  • Dealing with crippled services and/or higher prices for customers who aren’t “members” of a “loyalty” program, which involves high cognitive and operational overhead for customer and seller alike—and (again) work differently for every website and service provider
  • Dealing with an “Internet of Things” that’s really just an Amazon of things, an Apple of Things, and a Google of things.

And here are some examples of solutions customers can bring to business and markets:

  • Standardized terms that customers can proffer as first parties, and all the world’s sites and services can agree to, in ways where both parties have records of agreements
  • Privacy policies of customers’ own, which are easy for every website and service provider to see and respect 
  • Self-sovereign methods for customers to present only the identity credentials required to do business, relieving many websites and service providers of the need to maintain their own separate databases of personal identity data
  • Standard ways to initiate, change and terminate customers’ subscriptions—and to keep records of those subscriptions—greatly simplifying the way subscriptions are done, across all websites and service providers
  • Standard ways for customers to call for and engage customer service and tech support systems that work the same way across all of them
  • Standard ways for customers to relate, without logins and passwords, and to do that with every website and service provider
  • Standard ways to express loyalty that will work across every website, retailer and service provider
  • Standard ways for customers to “intentcast” an interest in buying, securely and safely, at scale, across whole categories of products and services
  • Standard ways for customers’ belongings to operate, safely and securely, in a true Internet of Things
  • Standardized dashboards on which customers can see their own commercially valuable data, control how it is used, and see who has shared it, how, and under what permissions, across all the entities the customer deals with

There are already many solutions in the works for most of the above. Our work at Customer Commons is to help all of those—and many more—come into the world.

 

Discounts are free if your time has no value

“Love it or hate it, Black Friday is all about the deals,” AdAge says, in Target, Amazon, Poised to Win Black Friday. That love/hate conflict speaks to the mixed blessings (and curses) of tying a store’s — or a whole market’s — success to “deals” alone. The bargains, for both retailers and customers, can be Faustian.

Exhibit A: Kmart.

Back around the turn of the millennium, I attended a retail conference where two of the speakers were myself and Lee Scott, then the CEO of Walmart. We represented the bookends of demand and supply: as a co-author of The Cluetrain Manifesto, I represented the customer. As CEO of the world’s largest retailer, Lee represented his whole industry.

The location was Lucerne, and the lunch was boxed. It was a nice day, so my wife and I took our boxes outside and sat at a small table near the lake. Lee came over and asked if he could join us. I said sure, and then used this rare opportunity to pump the dude with questions. My first was “What happened to Kmart?” — which was then closing stores and heading toward bankruptcy.

His answer: “Coupons.” Some large percentage of Kmart’s overhead, he said, was devoted to publishing what amounted to its own currency, and then dealing with numerous effects, which only began with the time wasted by handling that currency at check-out. In addition to inconveniencing everybody involved, couponing also had the effect of “downscaling” the demographics of the customer base to a caste then known to the trade as “coupon-clippers.” (This population has now become so large — and expert — that the reality TV show Extreme Couponing persists into its third season.)

Walmart, Lee explained, minimized its dealings with coupons — and even advertising, which was limited (by decree of the late Sam Walton) to some small percentage of the company’s overhead. Instead they let the company’s tagline, “Everyday low prices,” do most of the work. (That tagline was also Sam’s.)

When I asked Lee if there were any large retailers he thought did an especially good job, he singled out Costco, which also succeeded through simplification. (Yes, they do publish and take coupons, but it’s a side thing, rather than the main thing. As a Costco customer you don’t need coupons to obtain the sense that you’re paying a low price for the goods they sell.)

Retailing has long had its time-sucking frictions. When I was growing up, in the 1950s and ’60s, the big one was stamps. The main driver of the trend was S&H Green Stamps, which had many competing imitators. The original idea was for retailers to differentiate from other retailers by offering sheets of stamps with every purchase, which customers could paste into a booklet, which they would later trade in for an outdoor grill, a door mat, or some other item from a catalog. It’s been said that S&H at its peak issued more stamps than the U.S. Post Office, and that the largest press run in human history was the 1966 Green Stamps catalog. Eventually, however, nearly every store offered the stamps, differentiation ended, and whole fad collapsed.

Today we have a similar fad with loyalty cards. Never mind that most retailers (or so it seems) now have them, but that they have costs to both retailers and customers. Here are just a few:

  • Maintaining two or more prices for items throughout the store
  • Forcing both personnel and customers to attend constantly to the differences in prices on “discounted” items
  • Partially or completely obscuring what the “real” price might be. Is the non-discounted price a surcharge for non-card-carrying customers? Probably, if the “regular” price for a dozen eggs is $3.99, and the “discount” price is $1.99 — when, say, Trader Joe’s (which has a single non-discount price for everything) wants $1.99 for the same eggs.
  • Maintaining “big data” systems for tracking customers and “personalizing” offers for them.
  • Obscuring the real value of goods gets even more than it already might be.
  • Coercing loyalty rather than earning it, causing emotional dissonance that can damage a company’s brand value.

All those practices, and many more, are both normative and highly rationalized within retailing today. Yet the notable exceptions, such as Trader Joe’s, reveal how much time, money and effort by both sellers and buyers in systems that are essentially coercive.

What would happen if we began to respect time as our most essential value? Would we have discounting at all? Not sure, which is why we need to talk about it. There are real costs to discounting. If our time has any value at all, then discounting is not free. And the hidden costs may be far higher than the obvious ones.

Personal vs. Personalized

In Worth The Deal? Groceries Get A Personalized Price, Ashley Gross on NPR says,

Heather Kulper is one of those people who really wants to get a good deal. She’s a mom in a suburb north of Seattle who writes a blog about coupon clipping and saving money.

On a recent shopping trip to Safeway, Kulper pulls up a special Safeway app on her phone called Just For U. It shows her deeper discounts on products that she’s likely to buy based on her shopping history. The deals are lower than the club card discount listed in the aisle. When she checks out, she gets that personalized sale price.

“This is the artisan caramelized onion bread, which is normally $4.29. Priced with the Safeway club card, it’s $2.99,” Kulper says. “But with the Just For U personalized deal, it’s 99 cents.”

Kulper says it feels a little bit like she’s getting a secret deal.

It’s kind of like the old days, when you walked into a relative’s small grocery store, and they gave you the family discount. Except now, this is a big corporation using computers to calculate exactly your propensity to buy and at what price.

She concludes,

On this most recent trip, Kulper saved 41 percent with the Just for U app and coupons — $21 altogether — on her purchases. She says she’s happy with her discount, and she doesn’t mind that Safeway knows every tiny little detail of what groceries she buys. To Kulper, it’s worth it, as long as she can save money.

I can’t find Heather Kulper’s blog (the story doesn’t provide a link, and searches go mostly to the story), but it’s clear that she’s one kind of shopper: the aggressive bargain hunter. Is Safeway trying to turn all customers into full-time bargain hunters? Hard to say at this point, because it’s not clear whether a card-carrying Safeway customer is hunting for bargains, or simply forced to use the card to avoid paying the inflated “normal” price. It’s also not clear whether a personalized discount is any different than a coupon. The image above is one I shot of a Stop & Shop scanner, telling me about one in a series of discounts it offered me, based (presumably) on past purchases at the store.

Let’s think about about turning this around, to a system you control as a customer. You share your shopping list with the stores where you like to shop, and they come back with information about what they’ve got. Maybe they tell you they’ll give you a discounted price, or maybe they’ll tell you something is out of stock, or maybe they try to switch you to buying something else. In any of those cases you should also be able to tell them what you like or don’t like about what they’re telling you, and why. What matters in this alternative system is that the system is yours, not theirs. You take the lead, you control the information you share, and you aren’t trapped into many separate relationships, each with its own system for relating with you. In other words, it’s personal — by you —rather than personalized for you.

This is VRM, for Vendor Relationship Management. It’s how you run your relationships with many different companies, rather than how they run their relationships with many different customers. (Those are called CRM, for Customer Relationship Management, a many-$billion business.)

It’s still early, so there’s lots of room for customers to take the lead in helping develop VRM tools and services. You’ll find a list here, in the ProjectVRM wiki.

Which companies love customers?

Not love to have them, but love interacting with them, knowing them, talking with them, learning from them, involving them in the business, and letting them take the lead sometimes. (And not just by using a “loyalty card” or some other gimmick.)

In The Intention Economy, I give two examples, one offline and one on.

The first is Trader Joe’s, whose retired President, Doug Rauch, told me that his main job at the store was talking with customers. That is, literally, shopping along with them. Seeing what they liked, didn’t like, and why. Asking questions. Getting input. Trader Joe’s, he said, doesn’t just look for transactions, but for relationships. When I asked him if there was anything in the store that customers did not influence, he said no. When I told him we lived in Santa Barbara, he asked if we shopped at the store on Milpas Street or the newer one near Upper State. I was impressed. The dude was based in Massachusetts and still knew every store, and had shopped along with customers at every one he went to as well.

The online example is Zappo’s, which encourages its service people to maximize interaction with customers on phones. The company also welcomes exceptions. For example, I have wide feet: 9 1/2 EE. Shopping just for what fits me is easy. A few minutes ago I bought replacements for my several-year-old ASICS Gel-Cumulus 13 athletic shoes. The old ones look more worn than they really are, so I got some fresh ones. There was no reason to work with a human in this case, but I sensed a human sensibility to the ease with which I could find and get what I wanted. (The Kid and I like to sing, “Shop like a man, fast as you can,” to the tune of the Four Seasons‘ old “Walk Like a Man.”)

So who else is there? You tell us, in the comments below. No restrictions. The only qualifications are the ones I laid out in the first sentence. And tell us why, too.