BUSINESSWEEK ONLINE: MARCH 20, 2000 ISSUE

Readers Report

The Care and Feeding of Customers

In ''An eagle eye on customers'' (Special Report, Feb. 21), Steve Hamm and Robert Hof offer an interesting assessment of customer relationship management (CRM) as a rapidly emerging software category--one that is helping businesses compete in the New Economy by helping them understand and market to their customers.

However, CRM is about more than simply finding the best product solutions to meet a company's needs. Rather, CRM needs to be viewed as an all-encompassing business strategy--a customer-centric philosophy of doing business that affects every single consumer touchpoint.

Savvy business leaders will clearly recognize the full potential of CRM; they will incorporate a customer-centric CRM philosophy into the core of their business and use CRM strategies to create an integrated, corporatewide view of the customer. In doing so, the most successful companies will empower themselves to attract, retain, and care for the ever-demanding consumer.

Deepak Sircar
Group Vice-President
eCRM Division
Reynolds & Reynolds Co.
Carrollton, Tex.

Your article on customer management and software is timely and informative. Better understanding of your customers is one key to success in the New Economy. Many companies, however, both Net-centric and old-line, continue to ignore the customer-service representatives and the work processes in the customer interaction center. The software you detailed is wonderful and has the potential to affect a business' success.

The full impact, though, can only be realized if there is first a complete rethinking of an organization's work processes. We have seen all too many companies investing in customer-relationship management software without first optimizing the organization. Remember, 75% to 80% of the cost in a customer interaction center is people-related. Before investing in CRM software, assess what you have today.

Gerald F. Giermak
President & Chief Operating Officer
Atlas Technology Group
Chicago



Those Old Stock Prices Are British, Not Spanish

''Should you be scared of decimal stock pricing?'' (BusinessWeek Investor, Feb. 21) repeats the Wall Street lore that the one-eighth tick size is an anachronism traceable to the use of Spanish ''pieces of eight.'' There is no evidence, however, that Spanish money was ever widely used as a medium of exchange in New York financial circles.

The earliest New York Stock Exchange transactions were denominated in British currency. The pre-decimal British pound was equal to 20 shillings, the crown was five shillings (one-fourth of a pound), and the half-crown was two shillings and sixpence (one-eighth of a pound). The one-eighth tick size found in U.S. stock markets probably originated from the division of the pre-decimal British pound into fourths and eighths. British currency was converted to decimals in 1971.

Edward A. Dyl
Tucson



Tech Companies Need to Get Their Employees Wired, Too

Kudos to Ford Motor Co. and Delta Air Lines Inc. for taking the bold step to get their employees wired to the Net and the world of computing (''Workers of the world, log on,'' News: Analysis & Commentary, Feb 21). It shows that they realize the value of their most important asset: their people and where they need to be in today's world. As an added extra, this is sure to pay a huge dividend in worker knowledge, innovation, and productivity.

But wait a minute.... What is missing here? Have you seen any tech company doing the same thing? The real story here may be the lack of action by tech companies, like IBM, that should have done this first. It speaks volumes about how these companies are managed and where they are likely headed.

Bruce Broadley
New York



Saturn Has Failed Its Cars, Not the Other Way Around

''Running rings around Saturn'' (The Corporation, Feb. 21), while excellently setting out Saturn Corp.'s current problem, ignores two additional and important reasons why the new L-Series car/wagon offerings have not caught on.

1) I defy anyone to find one good advertisement in a national magazine showing photos of these cars. For a long time, even the Saturn Web site did not picture them. How can a company sell a product the public doesn't even know it has? In other words, Saturn's marketing of these new products has been highly deficient.

2) The refusal to offer the six-cylinder-engined version with a five-speed manual transmission eliminates many younger drivers who want a product that is peppy and fun. At the same time this mistake dooms the L-Series to predominantly middle-aged buyers, many of whom have stashed enough money to buy larger or more interesting cars. These cars have not failed Saturn. Saturn has failed these cars.

Peter C. Betz
New York



The Reform Party's Death Has Been Greatly Exaggerated

The Reform Party is alive and well and has survived its latest phase of growth (''As the Reform Party implodes, who wins?'' News: Analysis & Commentary, Feb. 28). The party is now unified behind the issues, instead of just their personalities. The party was founded to try to correct and influence government policy in the U.S., not to be a vehicle for any individual's ego. Jesse Ventura has forgotten this; apparently so have your writer and many others in the media.

Despite the internal struggles, the party at the local, state, and federal levels has never lost sight of its core issues. These include: the national debt, trade deficits, loss of sovereignty, political corruption, and foreign policy, among others. The leader of the party is unimportant, as long as they are issue-oriented.

The Reform Party will have $2.5 million to spend on its convention, and the party's Presidential candidate will start out with funds totaling $12.6 million. Armed with these resources and by focusing on the issues, our candidate will stand above the politics of personality, giving Americans a real choice on election day.

James Brown
Vice-Chairman
Reform Party of Pennsylvania
Yardley, Pa.



The Pros and Cons of Tax-Free E-Commerce

Gary Becker's argument that the ''effects on overall tax policy and the size of government must be included'' in the evaluation of e-commerce taxation is ridiculous (''The hidden impact of not taxing e-commerce,'' Economic Viewpoint, Feb 28).

Of course e-commerce business should be taxed just like brick-and-mortar retailers. To do otherwise amounts to subsidizing of the former at the expense of the latter. Mail-order commerce was never provided with a moratorium like the one that e-commerce businesses are enjoying. How is e-commerce any different?

The ''Chicken Little'' argument--that if we tax e-commerce businesses, the sky will surely fall in the form of public spending increasing from resulting increased tax revenues--is economic demagoguery. Of course, governments grow faster when they have easier access to more efficient taxes.

However, that is no reason to favor one class or type of commerce over another. The redress for disagreement with levels of government spending rests with voters and not trying to influence government's behavior through unfair tax subsidization.

The moratorium exempting e-commerce should never have been granted to begin with and should be ended immediately. If e-commerce businesses cannot succeed at this point without government subsidy, they deserve to fail just like any other business that enjoys no such safety net.


J. Michael Steinhardt
Cary, N.C.

I am sure Professor Becker would agree that a sales tax is regressive. With its e-commerce tax policy, the government has succeeded in making it even more so. The people who cannot afford Internet access are the very ones who do not need the additional burden of paying a tax that the well-to-do can easily avoid. The gap between haves and have-nots will continue to grow with this kind of public policy.

Len Bower
Victor, N.Y.

E-commerce is already taxed--it's called the delivery charge. Astute e-shoppers are aware that the basic United Parcel Service fee is about $4, and they tailor their purchases accordingly. Furthermore, retail taxes on goods and services vary from state to state.

Sophisticated shoppers use this information to their advantage, which is to say e-businesses compete not merely on price. Amazon.com Inc. bled three-quarters of a billion in red ink last year and will continue to do so because books are sold at a fixed price, in retail and on the Internet. Unless you are an avid collector of books and live a long way from a major book store, there is no advantage to buying a book or two electronically.

It remains to be seen what the long-term ramifications of e-commerce will be on retail sales and state revenues. Until this picture is clearer, Internet business should remain tax-free.

Franklin L. Johnson
New York



Sacramento Fans Deserve a Big Cheer

Ronald Grover's otherwise strong feature about the Maloof family's takeover of the Sacramento Kings implies that the Maloofs have somehow brought Sacramento's enthusiasm to the Kings (''Pro basketball's family act,'' People, Feb. 7). Such is not the case. Having lived in big cities such as New York and Detroit, I can tell you that Sacramento fans have been remarkably loyal to, and supportive of, the Kings. It is great to be able to cheer on a winning team, but the true measure of a community's fans is their commitment to a franchise in lean times.

John L. Erlich
Sacramento



Amazon's Greatest Feat: Swimming in Red Ink

Shareholders and analysts will be relieved by your rosy predictions for Amazon.com Inc. (''Suddenly, Amazon's books look better,'' Information Technology, Feb. 21).

However, in addition to accumulating millions of loyal customers, big inventories, real warehouses, and a changing business plan, its recent junk bond issue in Europe brings Amazon's long-term debt to $2.14 billion. Management knows how to roll up its sleeves during the holiday rush, but investors should care about its Olympic ability to swim in red ink.

Tom Ehrhardt
Albert Lea, Minn.



Don't Count Caterpillar Out

''This cat isn't so nimble'' (Industrial Management, Feb. 21) gives readers a disappointingly unbalanced view of one of America's leading companies. Most egregious was this characterization of changes to the corporate governance policy: ''Caterpillar's outside directors put [Chief Executive Glen A.] Barton in the hot seat by ousting the insiders--the board members who had worked at Cat or retired from the company.''

This past year, our board adopted revised governance guidelines. As one revision among many, the board decided that, as a matter of policy, Caterpillar employees retiring from the company should not sit on the board. Many companies have adopted such a policy as a corporate governance best practice.

Our board's decision was a collective one. Institutional shareholders were probably surprised to see it characterized as a ''message of the outside directors that it was time for the company to deliver for shareholders.''

The writer also characterized Caterpillar's financial results for 1999 as ''bad numbers.'' We are the first to admit that 1999 was a challenging year. However, in a year when about 40% of our market opportunity was either in or emerging from recession, we had revenues totaling $19.7 billion, with profit of $946 million. Significant cost reductions were realized during the year with strong performance from our engine and financial products divisions.


R. Rennie Atterbury III
Vice-President
Caterpillar Inc.
Peoria, Ill.



Video Games: The Marines' ''Insidious'' Recruiting Tool

It has finally happened: ''An animated Marine Corps commercial places a young man in a video-game setting, doing battle with a fire-breathing dragon'' (''Uncle Sam wants you...to have fun,'' Marketing, Feb. 21). The first generation raised from early childhood on violent video games is about to discover the ultimate video game: themselves. The military has found one more insidious way to lure kids to their death. Welcome to Pleasure Island.

Bernard B. Kamoroff
Willits, Calif.



Investors Should Rise Up against Those Fees

As founder and past president of the 100% No-Load Mutual Fund Council, I applaud ''Mutual funds should unload their loads'' (Finance, Feb. 21). If that came to pass, the millennium in the fund business would truly have arrived. I take a far dimmer view of both present and future expectations. I'm afraid that ''greed is good'' is a far more prevalent motivation for the ''church-going'' pronouncements by nonpracticing fund managements.

Until the mutual-fund investing public rises up in righteous rage, the fund managers will inevitably move to squeeze out a few extra bucks with complex fee charges and ''hidden'' 12b-1 charges. We have inveighed for years against such mutual-fund charges, and we have advised investors of their true impact on performance, compared with the presumed advantages, most of which are a myth. The power for change lies in the hands of the shareholders and investors.

Irving L. Straus
Chairman
Straus Corporate Communications
New York



Table in ''After all these quarters, a new burst of energy'' (Corporate Scoreboard, Feb. 28, 2000)

In "After all these quarters, a new burst of energy,'' (Corporate Scoreboard, Feb. 28), an item in an accompanying table was mislabeled. Under The Top 25 in Earnings, the column should have read ''1999 earnings in millions,'' not ''1999 sales.''



''Seeking your roots? Dig here'' (Letter from Utah, Feb. 28, 2000)

An Internet address in ''Seeking your roots? Dig here'' (Letter from Utah, Feb. 28 in some print editions) inadvertently included a hyphen, which led to the wrong Web site. The correct address is www.FamilySearch.org.





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LETTERS:
The Care and Feeding of Customers

Those Old Stock Prices Are British, Not Spanish

Tech Companies Need to Get Their Employees Wired, Too

Saturn Has Failed Its Cars, Not the Other Way Around

The Reform Party's Death Has Been Greatly Exaggerated

The Pros and Cons of Tax-Free E-Commerce

Sacramento Fans Deserve a Big Cheer

Amazon's Greatest Feat: Swimming in Red Ink

Don't Count Caterpillar Out

Video Games: The Marines' ''Insidious'' Recruiting Tool

Investors Should Rise Up against Those Fees

CORRECTIONS & CLARIFICATIONS:
Table in ''After all these quarters, a new burst of energy'' (Corporate Scoreboard, Feb. 28, 2000)

''Seeking your roots? Dig here'' (Letter from Utah, Feb. 28, 2000)

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