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What We Believe About The PRM Business That Others Seem To Just Not Get

(What startup people might call our "key insight")

· PRM,Product,Business Model

There is no other company working on a full-featured PRM.

There are PRM-like things out there, but they all differ from Hubscriber in two fundamental ways:

  1. The provider--not the customer--is the center of their universe.
     
  2. The scope of their product vision begins/ends with only one aspect of the customer-provider relationship.

Pictured below is one example.

provider relationship management

This company puts providers--not customers--at the center of its universe, and their product begins/ends with a single aspect of the customer-provider relationship. Why do I say this? Just follow the money.

Back in 2011, the founder of this company noticed that paperless bill adoption (so-called "e-bills") was miserably low. I have read estimates that the ceiling for most providers was 30%-35%, meaning that 70%-65% of a given provider's customers had, for whatever reason, refused to opt in to e-bills so that the provider could stop sending paper bills. Given the the average mailing cost to providers of $0.75 per recipient on average, this was a multi-million dollar problem waiting to be solved--again, for the provider.

So he approached providers with a pitch, which probably went something like this:

  • Your inability to increase e-bill adoption is costing you millions of dollars per year.
     
  • My belief is that a big reason your customers have refused to adopt e-billing from you is that it requires too much behavior change with too little payoff for them.
     
  • In light of that assumption, my hypothesis is that if we can give your customers a compelling enough reason to adopt paperless billing, they will, and that a "compelling enough reason" would be a single app to manage all of their provider bills. (Contrast this with the alternative of one app per provider, which, while attempting to make one aspect of the customer-provider relationship easier, incidentally makes the customer's job much more complex.)
     
  • That is what we have built: a single app your customer can use to pay all of their provider bills, paperlessly. It is one bill-pay app for all of a customer's providers.
     
  • The cost to you? $10/year per customer. So if you have one million customers, and you get 500,000 of them to use our app to adopt paperless billing from you, we would charge you $5 million. This would excuse you from the upfront cost of $4.5 million to send paperless bills to those customers and the backend cost to receive and process those respondent paper checks. Altogether, therefore, the cost of using our app to drive paperless billing among your customers would be close to break even.
     
  • Then what is the upside? You get paid quicker, with less required collection activity (which carries additional cost), and it is a somewhat better customer experience for your customers.

That entire business model is centered on the provider deriving a primary benefit so that the provider could justify paying this founder the fee. There is no doubt that this app has improved that one aspect of the customer-provider relationship--the hassle of collecting and paying bills. But since the revenue model stopped there, so did the product vision. As a result, this PRM-like thing never went on to tackle a much larger problem/market opportunity.

By the way, it is worth mentioning that Bezos Expeditions (the venture organization of Jeff Bezos) invested over $5 million in this company several years ago. So some really smart people have signaled that, at least implicitly, "PRM-like things" are worth betting on.

The PRM dream--albeit incomplete--has been around for awhile.

For years, the Berkman Klein Center Harvard has hosted a research effort call called ProjectVRM ("vendor relationship management") intended to provide academic support to entrepreneurs who are interested in creating tools to help build a customer-side ecosystem mirroring the CRM ecosystem. There are hundreds of tools, just like the example given above, that tackle one aspect of the customer-provider relationship without attempting to address any of the other basic aspects.

Editor's note: a previous version of this article incorrectly stated that Harvard "funds" ProjectVRM. Berkman fellow Doc Searls provided the following clarification:

"Harvard doesn't fund ProjectVRM. It is a project at the Berkman Klein Center there; but "at" means we run three things on their servers: 1) the wiki, 2) a website/blog and 3) a mailing list (which I recommend you join). Everything we do, as individuals and as a community, is voluntary."

We are proposing now to expand that vision, to give customers a complete tool, one closer in completeness to the CRM tools providers have long enjoyed and benefited from. We think that what works for one side of that relationship should also be available to the other side, and that both sides fo the relationship would benefit as a result.

PRM should be full-featured, instead of just one-off features to address only one or two aspects of the multi-layered relationship between customers and providers.

So why has no one done this before?

The challenge historically has always been finding a business model that would justify that full-featured product vision. This challenge has often raised objections like...

"CRM is the biggest software market in the world. But the reasons CRM can be full-featured is that there is a business model to support it: one in which the user of the CRM pays a fee to use it. PRM is different. I do not believe that customers (aka "consumers" or "people") would pay a fee to use a PRM."

The above objection focuses on the difficulty of finding a winning business model for a full-featured PRM.

"The provider side of the customer-provider relationship is profoundly different than the customer side, because providers are generally always thinking about customers--how to engage or up-sell--whereas customers only want to think about providers when the customer wants to complain or buy--otherwise, the customer does not want to interact with the provider. So a PRM that merely emulates a CRM, that makes it easy for customers to always engage with providers is probably not something customers even want."

We agree with this objection, which speaks to the limits of using CRM functionality as a carbon-copied blueprint for designing PRM. Customers are not like companies; and just like two people in a romantic relationship, although they share in common the relationship itself, the differences in what each party wants from the relationship can be vast; customers and companies are no different. This is why we believe that key to a winning product vision for a full-featured PRM requires putting customers at the center of the universe, and we might simply be the first entrepreneurs crazy enough to attempt that, despite the increased level of difficulty on the business model front.

We have been experimenting with this PRM vision for years, and we beleive that we have finally devised both a business model and product vision that will not only support a full-featured PRM at all, but an entirely new category of software that could very soon usurp CRM as the biggest software market in the world.

Summary: what we believe that others seem to not get?

There is a massive market opportunity with PRM, one that could define an entire era (no hyperbole intended; we believe it can be that big). And, importantly, we believe we have figured out how to capture that market opportunity, in terms of both business model and product.

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