Interesting. Good perspective. Thanks.
Chris S.
On 2/18/2013 10:19 PM, T-Rob wrote:
"
type="cite">Hi Chris,
I believe there's two different
things
going on here. They overlap a bit but still fundamentally
different
things.
One is the notion of
externalities.
The usual definition of an externality is to shift the cost
laterally
but ultimately the cost is shifted in time. Burying toxic waste
doesn't
eliminate the cost, it shifts it to the future as medical and
cleanup costs.
Ignoring network security doesn't eliminate the cost, but
rather
shifts it to the future as the costs of a breach. This gets
back
to the idea of accountability on different time scales. There
will
always be an incentive to shift as much cost as possible to
future payers
outside of regulations that anticipate and correct for long-term
outcomes.
It's tougher to bury toxic waste now due to stricter
enforcement
and higher penalties. Unfortunately, still VERY cost effective
to
ignore security because it's a Black swan event.
The other thing at play here is
balance
of power in the relationship. The pendulum has been swinging
toward
the vendor side for quite a while now. If you are caught
stealing
a pack of gum from the corner store you risk severe personal and
professional
consequences. But if the same store overcharges you for 10
times
the value of that pack of gum, it's an accounting error. Every
contract
the typical consumer signs (clicks) is a contract of adhesion.
And
if you should decide to get justice in court, you find that it
goes to
he who has the biggest war chest and the loser risks financial
ruin.
I don't hear anyone claiming VRM
will
eliminate all externalities. However it does promise to shift
the
balance of power back toward the consumer. To the extent this
is
possible, early vendors will enjoy increased market share and
profit from
the "enthusiast" market who are in fact willing to pay extra.
But as the model reaches maturity, instead of enjoying a
top-tier
market VRM will become the norm and vendors not adopting it will
realize
a penalty. At that point it won't command a premium but will be
part
of the regular cost of doing business. The overlap is that VRM
takes
what is currently an externality - customer intent - and
accounts for it
in the market. These benefits are not mutually exclusive with
the
continued existence of other externalities relating to product
quality,
price sensitivity or running your server without security
enabled.
-- T.Rob
From:
Chris Savage
"><
>
To:
">
,
Cc:
">
,
"'Iain
Henderson'"
"><
>,
">
Date:
02/18/2013 09:35 PM
Subject:
Re: Aw: RE:
[projectvrm] Multifunctional Advertising
This discussion actually raises a link between the
potential
for customer-centric enterprises and the Gini coefficient.
Let's assume that customer-centric enterprises are more costly
item-for-item
than cutthroat capitalist exploiters of the downtrodden workers
and consumer
masses. (Or something like that... <g>)
On that theory, in order for most folks (as opposed to "the 1%"
as they were called here in the US for a while) to enjoy the
benefits of
a customer-centric vendor, they have to be both willing
and able
to pay more for the superior experience.
It follows that the more skewed the income distribution in favor
of the
1%, the harder it will be for customer-centric vendors to
survive, because
the pool of people with sufficient above-subsistence income to
spend, even
in part, on the service inherent in customer-centricity will be
smaller.
Hmm.
Chris S.
On 2/18/2013 5:55 PM,
">
wrote:
Hi Katherine
I would like to shop at
customer-centric
companies too. And sometimes I do. My local coffee shop just
over the road
from my banking client in Bishopsgate for example. But as a
recent article
in Booz & Cos Strategy+Business points out, most consumers
choose value
over values when push comes to shove.
We all love to work with superior
clients.
Superior in their customer-centricity, superior in their
offerings and
superior in their profitability. But most of the companies with
most of
the money are none of these things. Or at best only in one.
Trader Joes,
Whole Foods and Zappos are tiny squibs in comparison with the
behomeths
Safeway, Walmart and Tesco. All of these dominate their sectors
due to
core competencies other than their customer-centricity.
If VRM is ever to become a force to
be
reckoned with, it will have to offer a superior and proven
economic model
than the ones offered by companies like these, not to the
interesting B-School
case studies like Trader Joes.
Best regards from Cologne, Graham
--
Dr. Graham Hill
">
UK +44 7564 122 633
DE +49 170 487 6192
http://twitter.com/GrahamHill
http://www.linkedin.com/in/grahamhill
http://www.customerthink.com/graham_hill
Partner
Optima Partners
http://www.optimapartners.co.uk
Senior Associate
Nyras Capital
http://www.nyras.co.uk
Gesendet: Montag, 18. Februar
2013 um 21:30 Uhr
Von: "Katherine Warman Kern"
"><
>
An: "'Graham Hill'"
"><
>,
"'Iain Henderson'"
"><
>
Cc:
">
Betreff: RE: [projectvrm] Multifunctional Advertising
+1 Graham.
Iain, as a
consumer, I vote
with my wallet. I want a business who is customer-centric to
succeed
and hire more or better people to continue to improve their
service. I
have no problem with this business making a handsome profit.
But if a business
profits
at the expense of others – even if their profit is marginal -
I
will vote against them. I use a local community bank, for
example.
I know of a
company who launched
before FEDEX in the express mail business. They invested in a
lot
of great people and infrastructure all over the world, but
could not maintain
that human resource and infrastructure and compete on price
with FEDEX.
Instead of cutting costs they changed strategy by serving
customers who
could take advantage of their superior human resources and
infrastructure.
This company grew beyond the founder’s wildest expectations
and he shared
the profits with all those people he held on to instead of
cutting because
they made the strategy work.
As a marketing
consultant,
I prefer clients who make a product which is superior for
customers and
customers are willing to pay a premium for it. It doesn’t
take as
much effort to come up with great ideas. The media costs are
lower
because it doesn’t take a lot of frequency to get the message
out and
see a result in the cash register. So I make more money too.
Everybody wins.
K---
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