VRM and identity

Feb 25, 2009

In this post on VRM, I made a fairly innocuous statement:

Consider any local, independent shop - a greengrocer, for example. Let us imagine that this greengrocer has access to the VRM data of a reasonable cross-section of the local community; this needn’t be more than a few hundred people. In return for providing (suitably anonymised) data about their shopping habits, these customers receive a small discount when shopping at the store in future. The data gleaned might be enough to alert the greengrocer to market opportunities which they could not have known about in any other way

For this, I was pulled up (see the comments and this full post) by Adriana Lukas. Adriana is a major figure in the world of VRM, so when she pointed out a flaw in my statement, I have to take it seriously.

Adriana was taking issue with my use of the term ‘anonymised’, on the basis that information provided anonymously cannot be used to sustain a relationship. She correctly states that for a full relationship between vendor and customer, both must be able to identify each other. This is clearly true; anonymisation would prevent such a relationship from forming, as the vendor would see customers as anonymous bundles of information and desires.

But I can’t help but wonder, after giving it some thought, whether this is entirely a bad thing. Yes, the greatest possible value one could extract from VRM is one in which full information is shared between participants in the relationship. It’s a basic principle of market economics that markets function more efficiently when participants gain more information, and less efficiently when information is concealed. But there are other values to be considered, and there are certainly those who feel that their identity is one piece of information that has such value that they wish to conceal it even at the price of some efficiency.

In a world of perfect security and perfect trust, I would be happy to share everything. But I may have many different relationships with many different vendors, and my identity might not always be something that I’m willing to share. For many transactions, precise details of identity are not necessarily required. Services such as PayPal can allow vendors to process payments without gathering any personal data (other than a shipping address) from customers.

The second key point is that identity is difficult. It’s really, really hard to prove that I am who I say I am. There are a small number of organisations which may be in a position to verify that claim, and not all of those would be willing to give guarantees for which they might be held liable. In contrast, 'soft’ ID systems are everywhere: the standard email address/password combination that gets you into Facebook, Twitter etc. is very soft ID, but it works. The name that you give to retailers when you purchase from them can be inaccurate, provided that the payment details you give are accurate. And yet, these soft ID systems, in which nobody can really rely on that ID being accurate, have worked perfectly well for the massive expansion of commerce on the web to date.

In short, are there not plenty of situations in which a degree of anonymity is perfectly acceptable? Provided that the vendor knows that I am the same person who bought from them a week earlier, they do not need to know my name; my identity is not strictly necessary in order to use my data to provide me with a tailored shopping experience or product recommendations. This is not to say that identity is not important, but to insist on the provision of a valid identity as a prerequesite for VRM-style data exchange could rule out a lot of valuable transactions. In particular, from a technology standpoint, delaying any deployment of VRM technology until the Gordian knot of provable identity has been cut could delay adoption severely, at a time when the economics of VRM are otherwise very attractive.

Now, I’m still fairly new to the VRM debate, so perhaps I’m merely displaying great naivete in posting this. Either way, I’m going to be attending the VRM hub event tomorrow night and will hopefully have a chance to find out more from Adriana and others in person. <!–break–>