Re: Open Loyalty -- Re: VRM Utopia Re: [projectvrm] good Groupon Math

[Henri Asseily < >]

On May 10, 2011, at 3:30 PM, Katherine Warman Kern wrote:

> What about a cooperative as the business model?  But instead of forming a 
> purchasing co-op to leverage clout for better pricing, this is a 
> cooperative leveraging the clout of the demand of many to get better stuff. 
>  
> 
> We use revenues to pay for operating costs and share profits with members - 
> like dividends- to motivate people to take the time to share thoughtful 
> info and be honest and share rheir info exclusively with us.  The better 
> info we generate and the better we handle it, the more value will be 
> created at three links in the marketing chain:
> 1)Better than insights than business gets from proprietary consumer 
> research (even if it is shared with competitors).
> 2)We get more relevant offers in response to our info and business gets 
> more receptivity to their offers.
> 3)retail transactions are managed in our trusted ecosystem which gives 
> customers the control over what info they contribute back to the co-op to 
> encourage continuous improvement from business.
> 
> The implication is that there's are three differrent sources of revenue:
> 1) from businesses interested in the info we generate as a group (In my 
> opinion the output will have more value if it is not one rfp (which will be 
> hard to reach consensus on anyway) but more like a cluster map - but this 
> is getting ahead of where we are now). 
> 2) from businesses interested in presenting responses to those our info 
> predicts will be most receptive and influence others
> 3) from customers who want us to handle the transaction (because they trust 
> our personal data ecosystem and want the option of contributing their data 
> exclusively back into our data analysis to signal needs for continuous 
> improvement)
> 
> I don't know if the legal definition is a non-profit or for profit.  Would 
> be great to hear the pros and cons from those in the know.  The principle 
> is that the customers who generate the info are rewarded for the value they 
> contribute after the cost of making sense of that info is paid for.   
> 
> Thoughts?

At a glance, this gets very close to a large chunk of the business model of 
my previous company, Shopzilla.com. When we started, we wanted to reduce 
friction between customers and vendors by doing a few things:
- help customers find the best vendors for them
- help the vendors better understand their customer needs
- help vendors acquire customers through their stellar service ratings

And then later on we added the following:
- help customers find the best products for them
- help vendors directly acquire leads through a hybrid PPC auction system in 
the product listing

The first part was the basis of the BizRate point-of-sale ratings, which is 
interesting because we did the ratings before the marketplace, while eBay 
(for example) had to build ratings to help its existing marketplace.

So we used to (I don't know if it's still done, I left some years ago) do a 
lot of market research for the vendors, and we would daily process tens of 
thousands of in-depth surveys, aggregating, correlating and building 
matrices. The surveys were significantly more interesting than the current 
cookie-based behavioral stuff, in that they asked pointy questions that were 
relevant to each vendor and touched upon demographics and psychographics. For 
example, babystyle.com had a question about the # of children in the 
household. The end result would be that vendors had a very good idea who 
their customers were, what they needed to do to improve, and where they had 
an opportunity to impact their bottom line.

If I were to do it all again today, I would certainly look for a way to allow 
customers who filled in surveys to automatically find similar, like-minded 
and like-behaviored people for potential group buying opportunities. Now that 
I think about it, it should have been pretty damn obvious, but once we 
started down the path of a PPC marketplace, that took precedence.

The weird thing is that people did give us a HUGE amount of personal data, 
simply because they saw obvious, instant value to it: helping a merchant 
improve, giving one's opinion of a purchase, while using a (trusted) 3rd 
party that would aggregate, normalize and anonymize the data.
We struggled for years to find a better revenue stream than pure market 
research for merchants which doesn't pay much, but I think that algorithmic 
clusters for group buying power would have been a killer app for all this 
data.

H.