InformationWeek
Defining The Business Value Of Technology
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December 11, 2000 |
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Playing For Keeps
Innovation 100 companies use IT to deepen customer ties
By Eric Chabrow
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arrah's Entertainment Inc. tracks the profitability of individual casino customers so it knows exactly what promotions to offer them. Borders Group Inc. bookstores use the Internet to broadcast in-store concerts to more people than a store can seat and to sell a broader selection of books than its shelves can hold. United Airlines lets on-the-go passengers book flights through Internet-ready wireless phones. Emerson Electric Co. not only sells refrigeration compressors to supermarkets, but will monitor the temperature remotely over the Net. Technology's connection to the customer is changing. No longer does IT merely support businesses; its creative use presents opportunities for trailblazing companies to tailor new products and services to meet the specific needs of their customers anytime, anywhere.In our first Innovation 100: The Customer, InformationWeek and Cap Gemini Ernst & Young co-developed a ranking to recognize these innovative practitioners of IT that combine technology with business savvy to learn more about and better serve their customers (see methodology).
The No. 1 company on the Innovation 100 list is Harrah's, a hotel and gaming company that runs a customer-loyalty program known as Total Rewards to encourage guests to gamble at more than one of its 21 casinos. The program lets Harrah's know--and market to--its clientele as individuals. "We have a P&L on each customer," says senior VP of brand operations and IT John Boushy, referring to a profit-and-loss statement. "That has been fundamental for us in learning which marketing program has the greatest impact and value to the customers as measured by their behavior."
The ranking reveals that innovative, technology-enabled service isn't limited by industry, ranging from a paper mill to a hospital to a computer distributor. No. 2 on the list is Vanguard Group Inc. The mutual-fund company's expanding Web services include a live agent who can assist a Web surfer in real time during complicated financial transactions. CIO Bob DiStefano says his customers' expectations are set by their experiences everywhere on the Web, so financial-services firms need to watch the best companies regardless of industry to know what standards they need to meet. "I don't think we'll get to vote on whether to offer these features," he says.
What characterizes Innovation 100 companies? They invest heavily in IT architecture to better understand client needs and meet round-the-clock service expectations. Three-quarters of these customer-centric companies provide consumers with around-the-clock access to online product and service information, ordering, and fulfillment updates, according to a survey InformationWeek Research and Cap Gemini Ernst & Young conducted this fall among Innovation 100 businesses.
Giving customers what they want is a key characteristic of these innovative companies. Forty-five of the 100 employ IT to let customers configure products based on detailed specifications, and another third let clients customize products and services from their Web sites by choosing from a menu of preset options.
Innovation 100 companies are good listeners as well, with many creating formal feedback loops that capture client information and link it to business processes and systems to improve customer-facing services. Three in five report that all customer data feeds directly into the company data warehouse. Sixty-seven link their call centers to their Web sites.
Virtually all Innovation 100 companies say customers play a key role in determining what products are offered. "You're a fool if you don't ask them what they want and whether they're happy," says Lisa Richard, VP of strategic business planning at Toshiba America Business Solutions Inc. in Irvine, Calif. "It's all about them. That's the reason for your success."
What customers say is that they want to research, communicate, and buy through multiple channels. One business manager who's listening is Paul Mozak, director of convergence and business development at Borders Group. His title not only describes his job but summarizes a strategic business goal at the $3 billion book, video, and music retail chain: Converge the physical and virtual worlds to create a single experience.
Shelf space in Borders stores is at a premium, with a typical outlet stocking 200,000 items. Borders last month completed a nationwide installation of Web-enabled kiosks in its 300-plus stores. Like its Web site, Borders .com, kiosks let store customers browse and purchase from 700,000 titles stowed in company warehouses as well as millions of other books, recordings, and videos available through publishers. "We don't want to deprive a customer of a product," says Rich Fahle, content manager for Borders.com.
Borders, in Ann Arbor, Mich., also sees the Web as a way to bring the store experience into customers' homes. Each year, Borders stores host 100,000 events, including book signings, readings, and concerts, that each attract as many as 200 people. Through streaming video and other technologies, Borders is beginning to offer these events online to customers who have broadband Internet connections. On its Bordersvision Web page, customers recently screened a slickly edited video of the English pop trio BBMak, which interspersed a concert performance, interviews of the singers at a Borders store, and shots of screaming teen-age fans lining the bookstore's aisles. As the high-quality video streamed in one browser window, factoids about the group popped up in another window. Then a third window materialized hawking the CDs of BBMak and other pop artists. "Customers can watch and read and transact on the same screen at the same time," Fahle says.
Such events strive to create an emotional attachment between the buyer and seller, something many Innovation 100 companies set as a priority for improving client loyalty. Eleven innovators made establishing an emotional attachment the top component of their customer-relations efforts, while 81 classify it as a significant factor.
Toshiba America Business Solutions, for one, is trying to maintain an emotional link with its main customers: its 325 independent dealers. "Emotion has to do with the relationship we have with our dealers, not the box," Richard says, referring to the printers, copiers, and fax machines her company markets. "Do they trust us? Do we help them grow? Do we support efforts to help them sell to the end users? It's about loyalty, and the relationship we developed is absolutely emotional."
To strengthen that relationship, Toshiba last fall deployed an extranet it calls the Service Information System that runs on Compaq Alpha servers and uses an Oracle8i database. Distributors can't sell a Toshiba machine until their service technicians are trained on that model. Dealers use the Service Information System to learn when and where Toshiba holds four-day training sessions, enroll technicians in the classes, and make travel arrangements. When a technician successfully completes training, Toshiba is immediately notified through the system, a process that used to take weeks. "It's a big deal to the distributors because they can immediately begin selling our products," Richard says.
The Service Information System also serves as a repository for technical information, manuals, and bulletins, replacing stacks of paper that piled up on dealers' desks, as well as a catalog of 50,000 replacement parts that Toshiba maintains. The extranet also hosts a bulletin board where 5,000 service technicians can seek resolution to problems posted. "A huge chunk of the dealers' profitability is in service," Richard says. "If a technician has instantaneous access to technical information in an easy format, it makes it easier for them to make money."
Instant and continuous access to information is becoming the gold standard for innovative companies. United Airlines last month introduced a wireless service to let passengers book flights wherever they are and whenever they want. Using Wireless Application Protocol-enabled cell phones, travelers accessing the airline's ua2go.com Web site can also view itineraries and check departure and arrival times and seat assignments. Since January, United has offered a paging service that automatically notifies registered passengers--and their families, if they choose--of flight delays, cancellations, and gate changes.
Photo of Austin by Edward Carreon
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