By Sharla Sikes

Within the complex world of customer relationship management, categories have emerged to further define the concept.

The first, simplest form is traditional CRM. This is a customer relationship management system that focuses on a “unidirectional” approach, according to InsideCRM. The basis of this method is the 360-degree view of the customer, a complete record of that consumer’s information. Data and processes factor large in traditional CRM setups

“Traditional CRM is driven by data and loves process. Sales process to sell to customers is king, not the customer,” says Paul Greenberg on InsideCRM.

Consistency of message throughout e-mail, direct mail, phone calls, TV and magazine advertisements is key in traditional CRM. Its limitations include a “wall” between customer and company; the customer may buy for value, but doesn’t establish an emotional attachment or loyalty to the corporation.

Under a traditional CRM system, if a customer is unhappy with service he receives from a company and—for example—decides not to complete a purchase online, that data would be recorded in the customer’s file. If other customers abandoned a purchase for similar reasons, that data would be correlated and flag an automated response asking the customer why the sale was dropped. The problem is it’s a reactive response rather than a proactive one.

Vendor relationship management is a whole different beast, at least when it comes to point of view. VRM “is the actions taken by the customer to control the business environment that they are apparently in control of,” according to Greenberg. It’s CRM’s mirror image, placing the power in the hands of the consume—which indeed it is.

“VRM … is the reciprocal of CRM or Customer Relationship Management. It provides customers with tools for engaging with vendors in ways that work for both parties … VRM immodestly intends to improve markets and their mechanisms by equipping customers to be independent leaders and not just captive followers in their relationships with vendors and other parties on the supply side of the marketplace,” according to Project VRM, which is run by Doc Searls and Harvard University.

Under the VRM model, an unhappy customer will tell friends, family and the World Wide Web via conversations, blogging, message board posts, e-mails and other conversations.

Enter CRM 2.0.

“CRM 2.0 is a philosophy and a business strategy — supported by a technology platform, business rules, processes and social characteristics — designed to engage the customer in a collaborative conversation in order to provide mutually beneficial value in a trusted and transparent business environment. It is the company’s response to the customer’s ownership of the conversation,” says Greenberg.

CRM 2.0 is the proactive approach to customer relations, recognizing that customers are ultimately in control of buying decisions and therefore the company’s future, and presenting to them an environment at least partially shaped by customer decisions and preferences.

In the event of an unhappy customer, when CRM 2.0 is in place a more immediate response would be generated by an abandoned sale. The company would enlist the customer’s feedback and work to eliminate the problem causing the dropped sale, while offering the customer some “leeway” to compensate him for his participation.

“If successful, CRM 2.0 helps the company and customers work together to use resources to benefit each other. When CRM 2.0 is done successfully, advocates are the result,” says Greenberg.

While such a collaborative effort seems like an ideal solution for both business and customer, the reality is a little more difficult and costly to achieve. With today’s increasingly interconnected world however, where a negative customer experience might be communicated to thousands, I see it as an imperative.

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