Understanding Customer Potential

WHEN I DEAL WITH MY BANK and phone company, I am reminded of an Indian folk story about six blind men who try to learn the truth about elephants. One touches the side of the elephant and concludes that it is like a wall. Another puts his hand on its trunk and announces that it resembles a snake. A third feels the elephant’s leg and proclaims that it is like a huge cow. Each man understands a part of the elephant, but nobody understands the whole elephant.

Until recently, I had five relationships with Bank One?a checking account, a home mortgage, a credit card, private banking and a small business account for my consulting work. While I saw Bank One as one company, it treated me as five different customers. And like the blind men, no part of the bank saw the whole elephant. The private banking unit classified me as a premium customer because I kept healthy account balances. But the small business unit slapped fees on me because I kept the balance in my small business account too low. I got separate statements at different times. And while my private banker was pleasant, she could not help me with online banking or service at the local branch. The bank presented many faces and talked to me in several voices. As a result, it had no idea how much business I did with the bank as a whole and gave me no incentive to keep all my relationships there. Last week I fired Bank One and moved my accounts to Citicorp, which promises to treat me as one customer by combining my balances, sending me one statement and giving me one point of contact.

My phone company, AT&T, promised better. A few years ago, AT&T offered me a revolutionary communications package called the AT&T Personal Network. The compelling proposition: “One rate, one bill and one number for customer care.” I signed up for six relationships with AT&T?long distance, wireless, calling card, credit card, cable TV and cable modem. Things seemed to go well until I had a billing problem with my wireless service. The “one number” that I called put me in a queue. Then I was transferred to another queue?for wireless customers. It would have been faster to call the wireless customer-care number directly. I got my billing problem resolved, resulting in a large credit balance in my wireless account that was reflected in my next bill. But a month later, a collection agency called, claiming that my long-distance account was delinquent. “But AT&T owes me money,” I protested. “We don’t know about that, sir. Your long-distance account is overdue,” I was told curtly. So much for “one number, one bill.” Now I use four different vendors?SBC Communications for local calls, MCI for long distance, AT&T for cable TV and modem, and Verizon Wireless for wireless calls. Meanwhile, A&T has quietly dropped the Personal Network service.

Pay Customers to Stay

The airline industry figured out how to retain customers a long time ago: Pay them to stay. By creating a strong incentive for customers to do their business with one airline, frequent flier programs have helped retain customers. Hotels, casinos and car rental companies have followed suit with loyalty marketing programs that have produced impressive results. For instance, Harrah’s Entertainment’s Total Rewards program is credited with increasing repeat business at its casinos, resulting in $50 million of added profit and 14 percent same-store revenue growth in 1999.

Why don’t banks and telecom companies do the same and create incentives for their most valuable customers to stay with them? First of all, most of these companies don’t even know who their most valuable customers are, because they don’t know how much business a customer does with the entire company. Airlines have it easy. They offer one product and have one relationship with each customer. But banks and telecom companies sell many products through different business units. Because these business units don’t talk to each other, the company cannot assess the true value of each customer relationship. And business units find it difficult to cross-sell products because their marketing, sales and customer-care operations aren’t integrated. Even if they do cross-promote products, as AT&T attempted, the customer experience with pricing, billing and customer service remains fractured across products, channels and business units.

Show One Face, One Voice

The problem of silos plagues most companies that sell products and services through different business units. To become customer-focused, companies need to connect their silos. To do this, companies need to create a unified repository for customer and product information and a multichannel customer interaction platform that integrates Web, call center and in-person customer service channels. The single repository allows companies to see customer relationships across product silos, and the integrated interaction platform allows them to talk to customers across channels. Companies such as 3M are building enterprisewide data warehouses that combine customer data from different business units: It now organizes its website and customer service organization into 10 centers, each of which covers products for specific groups of customers. For the first time, 3M knows how much business each customer does with the company as a whole. By tracking all transactions and interactions with customers in one place, companies can finally begin to see the whole elephant.

Once you see one view of your customers, you need to act on this information by giving them incentives to broaden and deepen the business they do with your company. To broaden customer relationships, you need to create interlocking incentives?inducements for customers to maintain multiple relationships with your company. For instance, when I use my MCI calling card to call home, I pay the same long-distance rate as if I were calling from home, but only if MCI is my long-distance carrier. This encourages me to keep my calling card and long-distance service with the same company. To deepen customer relationships, you need to reward customers for doing more business with your company. Citicorp combines my small business account balance with my individual checking account balance to determine the fees they charge me. This gives me an incentive to keep a large combined balance with the bank.

At a time when new customers are scarce and the economy is in a tailspin, it is more urgent than ever for a company to retain existing customers and do more business with them. Companies that are blind to the opportunities within their customer base will lose out to those that can see the whole elephant, and ride it to success.