A comparison of buyer-centricity, customer-centricity, and customer-managed relationships (CMR) What is different about buyer-centricity? Isn’t it just another way of being customer- centric, and of doing customer managed relationships (CMR)? Customer centricity looks at products and services in their broadest sense – from purchase to use to service to disposal, including related information and services – from the customer’s point of view to meet his product/service needs and wants better. Customer Managed Relationships looks at the conduct of the relationship (process, communications, transactions) between a particular seller and a customer from the customer’s point of view, to meet his relationship management needs and wants better. Buyer centricity looks at markets and the process of going to market from the buyer’s point of view. Superficially, all three can be lumped in the same basket. All three appear to ‘focus on the customer’ and try to identify and meet the customer’s needs and wants. But there are at least three fundamental differences between buyer-centricity and the others. 1) Means and ends. Both ‘customer centricity’ and CMR attempt to meet customers’ needs as means to sellers’ ends. They are adopted as strategies by individual sellers in order to meet their particular selling objectives: e.g. to sell more, more profitably etc. Under buyer centricity, meeting the customer’s needs is not a means to an end. It is the end. 2) Outlook. All seller-centric strategies and initiatives look at the world of customers through the seller’s eyes. Buyer-centric commerce looks at the world of sellers through the buyer’s eyes. Every seller-centric marketing concept (including customer focus, customer-centricity, CRM, CMR, permission marketing, 1-to-1 marketing, etc, etc) starts from the point of view of one particular seller, with the assumption that this seller is dealing with many different buyers. Buyer-centric commerce starts from the point of view of each particular buyer, with the assumption that this buyer is choosing from among, dealing with, etc, many different sellers. Seller-centric marketing is about helping sellers deal with buyers. Buyer-centric commerce is about helping buyers deal with sellers. 3) Source of value. The seller-centric marketer assumes that the source of value for the customer lies in the better/cheaper/etc product or service that he is bringing to market. For buyer-centric commerce, on the other hand, the source of value lies in a better/cheaper/etc go-to-market process for the buyer. Buyer-centric commerce therefore subsumes and includes seller-centric value, as just one ingredient of a much broader, richer value offering. It’s about sourcing the best/most appropriate product/service (what seller-centric marketing has to offer) plus improving the process of sourcing (and using) this product/service. In short, in buyer-centric commerce the acid test of success is not whether it helps a particular seller sell more, more profitably, but whether it helps a particular buyer to go- to-market more efficiently and effectively and to source more value, more ‘profitably’. (In reality, buyer-centric commerce goes way beyond the narrow realms of buyers’ go-to- market or ‘sourcing’ processes – it is about helping individuals maximise the value they create in their own lives and through their interactions with other people/organisations. But that is a broader, and slightly different discussion.) Buyer-centric commerce therefore represents an entirely new market – a market which requires entirely new business models and probably, organisational structures and operational infrastructures and processes. Constructing an organisation that helps an individual buyer deal with many different sellers is very different from constructing an organisation that helps a seller deal with many different buyers. Buyer-centricity is also completely counter-intuitive to the seller-centric mindset, which judges every activity and initiative by the degree to which it helps a particular seller sell, rather than helping buyers to source value on the open market. That’s why so many business people, trained and steeped in seller-centric attitudes and assumptions just don’t ‘get’ it. Ultimately, customer-centricity and CMR are still about helping sellers to sell. They still dwell within the territory of seller-centricity. So why could, or should, traditional sellers be at all interested in buyer-centric commerce? There are three main reasons. 1) Competitive threat. One obvious reason is that if buyer-centric players succeed in offering superior value to individuals, then they could represent a competitive threat to traditional businesses. Revenues, margins and profits will this superior value to flow to, and through, those organisations that are best at offering buyer-centric services. 2) Market opportunity. Another reason is that buyer-centricity represents a completely new market opportunity. There are many industries – for instance, in IT, financial services, retailing, media, transport and distribution etc – whose core business is intimately involved/related to buyers’ go-to-market processes. They have the opportunity to deploy their skills, infrastructure etc to build buyer-centric business models. There are also many specialists within industries who earn their keep, not so much by ‘making’ specific products or services, but via their specialist market expertise and/or their ability to integrate/customise ‘what’s on the market’ to suit my particular needs. They too, are well-placed to migrate to buyer-centric business models. Many specialist makes of products and services could also use their specialist category expertise to extend their brands in buyer-centric ways. Kodak may see itself as being in the business of selling cameras. But it could conceivably position itself as the natural home of expertise, advice and value for buyers seeking maximum value from the market for capturing and displaying visual images. 3) Opportunity for cost reduction. The emergence of a buyer-centric era does not mean the end of making and selling, just as the emergence of an industrial era did not mean the end of farming. To the contrary, industrialisation was built on the foundations of farming and, in turn, helped to make farming far more efficient. The same goes for buyer- centricity and making and selling. By transforming the efficiency and effectiveness of buyers’ go-to-market processes, buyer-centric companies naturally transform sellers’ go-to-market processes too. Mostly for the better. Today’s seller-centric ‘push’ marketing processes are incredibly wasteful, full of duplication, and often counter-productive. By unleashing flows of information about the nature, shape, size and scale of demand (for example), buyer-centric companies actually help sellers to reach, and do business with, buyers far more efficiently than they could ever do before. In the end, all value creation revolves around two things – ‘the mill’ (making), and ‘the market’ (matching supply to demand, connecting buyers to sellers). Seller-centric win- wins are built around realising more efficient making. Buyer-centric win-wins are built around the construction of more efficient markets. Ultimately, the mill is determined by the market, not the other way around. When markets are more efficient, everybody wins. That is what buyer-centric commerce is about. Does that mean there is no connection between customer-centricity, CMR and buyer- centricity? In fact, there is a close connection – though not the one most seller-centric marketers see. The connection is this: the processes, skills and infrastructure needed to make customer- centricity and CMR work – understanding of customers’ needs at different points of the purchasing process, developing information systems and infrastructure capable of responding to different individuals’ needs at different times and circumstances through different channels, etc – are all essential for any successful buyer-centric business model. Concepts, tools and techniques like this are like the chick within the egg. As long as they are kept confined within the narrow boundaries of seller-centricity, their true potential will never be realised.