<B>Customers in color</B>

Enrique Dans. Director. IS/IT Area. Instituto de Empresa

18 June 2004

Customer information is a keen weapon in the competition wars. A customer about whom we have information is a customer ‘in color’; one we can recognize close-up. Companies are now using profiling systems to augment client information.

Using this comprehensive data, when a customer calls to enquire after or order any service or information, he or she is recognized. A screen provides the customer service operator with facts and figures on the client’s accounting status, current value, expected value and other variables, usually displayed in graphs using colors, dials or indicators of all sorts. In some cases, customers can be redirected to different sections of the company, to their own or subcontracted operators, or to managers specializing in VIP customer service.

In this world, which is looking more and more like the film Minority Report (see this space last January), each customer becomes a valuable suitcase-full of information which can be shared, to varying degrees, by companies of their choice. So one of my main assets, as a customer who spends vast amounts of money on communications, would lie not only in being considered a good customer and enjoying the VIP treatment my company gives me, but also in being seen to receive said treatment. If, besides being a good client, I am seen to be one, I’ll be able to choose among a variety of products and services offered by the various competitors on the market, who will fight to win customers like me. For businesses, this means they will have to battle for more sophisticated clients with better knowledge of the facts, and that information about them becomes a truly vital asset.

Flip side

However, there is also a downside. Knowing customers will not be sufficient; businesses will have to be intelligent enough to situate them in a particular moment in their life cycle. They must realize that today’s uninteresting customer could be tomorrow’s VIP, or one that could be developed if the appropriate means are used. Of course, we’d all like our customers to be Rothschild. Yet sadly, practice tells us that, in early days at least, many customers are young people who save as much money as they can and are constantly churning. Only later do they begin to consume more profitable services, become gold-class, and on top of it all, loyal. The ability to detect this tendency and apply it appropriately means, for example, not having to recapture customers you once rejected and who left with a negative view of your firm. This requires great customer-focused intelligence, lots of data and algorithms, but also business knowhow and common sense – which is often the least common of the senses.

The sector needs to move in two directions, one which is clearly indicated today. On one hand, toward an offer of products and services that is increasingly inclusive and more enveloping. This approach makes customers feel surrounded by the company and see it as an ally capable of explaining which new technologies are of value, how to use them, adapt them, integrate them into the present and make them create value, and not only in relation to economic worth. Customers perplexed by a large array of technological options, who find it hard to know which is best to connect their homes to the Internet or install a wireless network, represent golden opportunities. Look after them, solve the problem that’s bothering them and that has them wondering where to turn, and you will have their loyalty for a long time. But recommend a solution that doesn’t work, con them into buying what you've got and they’ll hate you as soon as they find you out. What is clear is that the all-enveloping offer, the I’m-your-reference-point-for-everything-to-do-with-communications idea affords opportunities for consolidating the relationship, adding information to our repository, and for learning to situate customers in our cycle and value them as we should.

The second tendency lies in so-called discriminating prices. It is as old as the hills. Efficient price discrimination represents maximum exploitation of the balance between supply and demand, and lets us optimize the return per customer. But it is complex because both we and our customers still retain democratic notions that makes us see it as unfair; prices, we feel, should be the same for all. Customers for whom at a higher price we can generate better value through appropriate combination of products and services can reach a greater degree of satisfaction than equivalent customers paying a “democratic” price. So, where’s the trick? In the previous paragraph. Only by getting to know customers by means of the all-enveloping offer can we apply discriminating prices that offer value and do not make them feel like they’re being conned. Like so many other things, it’s a vicious circle. Where you start is up to you.


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