Free Customers are worth more than those in captivity

Intention EconomyGoogle & Facebook can stop collecting buckets of customer data. Consumers will provide the data themselves, when and how they want to. Well, that’s what Doc Searls describes in his book ‘The Intention Economy – When Customers Take Charge’. I heard of the book via a book talk on YouTube, which he did at Harvard Law School. I read the book and found it very interesting. To get warmed up, I suggest you look at this video from The Onion, which Doc Searls also shows in his previously mentioned book talk. In this very entertaining video reality is distorted by calling Facebook a “massive surveillance program run by the CIA”, with its very successful “operation FarmVille, which the CIA credits for pacifying over 85 million people.”


 

Why the book?

 

“A lot of what humans do is crazy. Some crazy things we can’t seem to stop. Making war and despoiling the planet are two examples. But other crazy things come and go, even if they last for generations. They’re popular for fifty or a hundred years, and then the culture wakes up and says, “Gee, that was nuts.””

 

An example of that last part is what we are experiencing at the moment according to Searls. Millions of companies around the world are all individually collecting massive amounts of customer data and their online behavior, often with the use of cookies and CRM-systems. The majority of online services require unique accounts, which leads to an almost impossible amount of user names and passwords to remember. For all the different institutions a person deals with a change of address needs to be processed separately and for the use of almost all websites and (mobile) applications the privacy settings, if possible at all, can only be configured separately. Apart from the existing possibilities, for the average consumers it’s often so complicated that they have no clue how to prevent spilling data about themselves while using online services.

 

“They are merely pro forma ceremonies in which the submissive party clicks on a box and hopes for the best.”

 

Apart from these examples, Doc Searls mentions many more of them in his book. However, for him one of the most important issues is that most contracts for online services are what he calls ‘adhesive contracts’. Here he refers to the long texts with very small letters behind the button ‘accept’, on which we just click or check a box in front of it, while practically having no other choice. Consumers almost never have the possibility to state under what circumstances they do or do not agree with the terms and that is exactly what Searls thinks we should be able to do. This is the case from the view point of the customer but it is also equally beneficiary to the vendor. Not wanting to accept terms & agreements under all conditions is mostly not possible other than by not using the product or service at hand. In our present society that is often not really a realistic option anymore according to Searls.

 

“Rather than guessing what might get the attention of consumers, vendors will respond to actual intentions of customers. Once customers’ expressions of intent become abundant and clear, the range of economic interplay between supply and demand will widen, and its sum will increase. The result we will call the Intention Economy.”

 

Vendors also benefit

It may seem as if the changes required to solve many of these problems, mainly benefit consumers at the expense of the vendors. But for many reasons Searls is convinced that also companies and organizations will eventually benefit from an ‘Intention Economy’. For example it is important to note that despite all the available tools and data, even in the most positive scenario’s they are still at best guessing while trying to be relevant for consumers. There must be a better way.

 

“A free customer is more valuable than a captive one”

 

In the book, Searls stresses his point by describing the famous ‘Man in the Chair’ advertisement, which was first used in 1958 by the McGraw-Hill Magazines. The ad was a statement that business begins before the sales person contacts you, an insight that certainly not everyone in the business of ‘corporate advertising’ had at the time. In the ad you saw an old man in a chair with on the side some statements in text. During the annual Business Marketing Association’s conference in 2009 the ad was staged live, which makes it possible for me to show you a video of it instead of an image.

A great opportunity for vendors in the ‘Intention Economy’ is that many consumers are willing to pay more for many products and services if they can customize them more to their preferences. In our present economy most Vendor systems are unfortunately designed in such a way that they can’t act upon customer signals, other than pointing to the standard offerings. Searls calls this MLOTT (money left on the table).

 

“If you limit what customers can bring to markets, you limit what can happen in those markets.”

 

What needs to be done?

Innovations are of course the most important, but also difficult thing to move towards an Intention Economy. Doc Searls describes both existing initiatives and future possibilities to achieve that goal. One thing is for sure, for the success of the Intention Economy consumers as well as vendors need to become more transparent. “Companies will have to be turned inside out. And for consumers to take charge, which they will, at least half of the time they have to take the lead too”, according to Searls.

To be more specific, he says that the customer data and intentions on the one hand and the core competencies of businesses on the other hand, should be able to communicate directly with each other via API’s. Companies that manage to do that best will be the future winners in his opinion. On the consumer side this type of communication could be facilitated by what Searls calls ‘fourth parties’. These are service providers that can contact vendors in your name via a fully automated process. These systems on the consumer side are called VRM-systems (Vendor Relationship Management), with on the side of the vendors the well-known CRM-systems (Customer Relationship Management). According to Searls, with the introduction of VRM-systems now both parties are responsible for maintaining their relationship together. This makes it a relationship between them and not something that takes place within the vendors system. The terms and intentions on the consumer side, in Searls opinion, could look something like in the picture below. These are called ‘EmanciTerms’, which in their turn the vendors will also have. These EmanciTerms allow for an automated process to reach agreements between vendors and consumers.

Emanci Terms

 

The solution will not come from ‘above’

In the second part of his book, in my opinion, Searls seems to take a quite left wing approach when talking about the necessary changes and ‘The Law in Our Own Hands’. For example, he writes that in our society we still have ‘freedom of contract’, but that in reality there is an almost absolute monopoly amongst the creators of ‘adhesive contracts’. The internet, with all of its services and corresponding contracts is on the forefront of this, according to Searls. He sees it as an illusion that the law protects citizens against breaches of ‘freedom of contract’.

 

“We are all batteries in ‘The Matrix’. We still await liberation. What’s it going to take?”

 

I must however admit that I think of the law making process, contracts, regulations, etc. as things that come from above. And by that I mainly mean the government, the judicial power and lawyers. At the same time many of us are starting to realize that in our world of increasing complexity, it is becoming very unlikely that the necessary rules, laws and decisions needed for change, will come from those institutions. We should not wait for something to happen and start making a difference ourselves.

 

Conclusion

‘The Intention Economy’ by Doc Searls is in my opinion a must read for managers and professionals in the online services industry. Especially current topics such as cookie laws and big data make it extra important to think about the fundamental ways in which consumers and vendors interact with each other online. Many of the solutions Searls suggests raise many questions in my head, but I very much agree with the overall problem he describes in his book and I can only support him in his mission to find a solution to that problem.

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  1. Remko Dur’s avatar

    Dat de klant zelf veel meer de touwtjes in handen krijgt is iets dat naar mijn mening nog steeds zwaar wordt onderschat. Zolang we de klant zien als iemand die netjes wacht op een product of dienst die aan het eind van een bedrijfsproces wordt afgeleverd, missen we de boot. Klanten worden een belangrijke speler in het proces: van productontwikkeling tot en met de marketing ervan.

    Een mooi initiatief van eigen bodem in dit opzicht is Qiy. Dit bedrijf uit Boxtel bouwt aan een datakluis waarvan het beheer bij de klant zelf ligt. De klant kan bedrijven toegang geven tot zijn data als dat voor het verkrijgen van een dienst nodig is. De data is altijd betrouwbaar en compleet en niet verspreid over een onoverzichtelijke cluwe van losse gebruikersprofielen onder een zee van gebruikersnamen en wachtwoorden.

    We staan nog aan het begin van het ondraaien van de waardeketen. Inderdaad erg belangrijk om bij stil te staan en je op voor te bereiden. Goed dat je dit onder de aandacht brengt, Sander!

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