Random musings on customers and vendors

Many times during this week, I had conversations on the dynamics between customers and vendors with my buddies.  These are all not connected thoughts, but let me type it here for some day in future, when some of it may make sense – at least to me 🙂

In B2B – Customers and Vendors are always strategizing to take advantage of each other. CRM and SRM are practically aimed at the same thing – find as much about your business partner so that you can gain an upper hand in the short term and long term transactions.  B2C is similar – except, the SRM is mostly social in nature. I, as a consumer, cannot keep track of Vendors who will sell to me  – so I trust social channels to give me a fair chance.

A common concern from customers is that vendor companies do not share information internally, so the customer has to redundantly provide data in transactions.  This led to the big mantra of 360 degree view of customer – every company out there wanted this, and very few did get there.  Customers would really like their vendors to do all they can to prevent redundant data entry etc, but they will cry bloody murder and sue the vendors if they think Vendor is storing “personal” information about them. The point is – it is not easy to do this, and technology is not always the limiting factor. Example : No sales person on a commission will enter “all” his account management information on a system where some one else can use it. Even if he did – in some countries, he cannot enter certain information that can identify you as a person.  In some other countries, certain data needs to be stored in a server that resides locally in that country and so on. So, even if the vendor has the best CRM system in the world, there is no way of getting around it without serious overhaul of culture, human behavior, incentive schemes and the legal framework. In short, it ain’t happening any time soon in a meaningful way.

Customer will not always upgrade to the latest and greatest version of a product, unless they are forced into it somehow. However, they do expect 100% support of what they once bought and also want the vendor to continuously innovate. A lot of consumer software can do innovations much easier than enterprise software strictly because they are not tied to backward compatibility.  If enterprise software can get to that paradigm, we have a prayer of expecting real innovation from vendors.

Bottom line – customer wants to pay the least possible money and expect the vendor to be there for them for ever and ever. Vendors on the other hand would like to be constantly paid for what they do, usually via a maintenance fee .

Neither customer nor vendor will let go of their profit motive.  But here is the thing – vendor can quantify the profit better than customer. Vendor knows cost and revenue. Customer knows the cost in most vases – but in most cases , customers have to guess or approximate the value.  Due to this – Customers can fairly guess what margins a vendor has, where as the Vendor cannot guess well in most cases on what is the exact value a customer gets, since the customers themselves cannot figure this out easily.  In those cases where customers and vendors know each other to a good extent, the chance of making a deal is much higher. In my opinion, this is also why some customers and vendors stick by each other although they both term each other as difficult. Known devils are generally better than the unknown ones 🙂

And finally – business is always done between people. They represent companies – but they still are people who need to feel comfortable dealing with each other. A lot of attributes of these people get attributed to the companies they represent.  So when you hear things like “that Vendor is hard to work with” or “that customer is cheap” or “that company only does on-premises, never on-demand” – most often, it just refers to one person, or a very small group within that company.  But at an abstract level – especially when used as part of aggregate data – these nuances get lost, and we reach very wrong conclusions.

That is it – end of my rant. It is time to start the weekend.