BUSINESSWEEK ONLINE : APRIL 3, 2000 ISSUE
BUSINESS WEEK E.BIZ -- COVER STORY Skimming off the Cream The Internet lets companies identify, as never before, high- and low-value customers, so firms can decide which product deals, prices, and services it will offer. For the most valued customers, this can mean better information, and discounts. Low-value customers may pay the most for the least, and sometimes get left behind. Here's a sampling: Visa International Technology The credit-card company uses software that chronicles a customer's behavior so it can spot fraud and help single out people who may run into credit problems or go bankrupt. Upside Visa can avoid costly write-offs and save millions of dollars annually. Downside People may be judged by their predicted, not actual, behavior. First Union Bank Technology Service reps use software and the Web to help them sort customers into red, green, and yellow categories, depending on their banking history and value to the bottom line. Upside First Union uses green pop-ups to help service reps target customers who may be given more flexibility on credit card rates. Bank execs say this helps boost service reps' productivity by up to 18%. Downside ''Red'' customers who are thought to bring less value--or lose money for the bank--are given less flexibility when it comes to requests for, say, a waiver of a bounced-check fee or a better credit-card rate. Weyerhaueser Corp. Technology A new database, software, and the Web help door-factory execs know which customers are most profitable and which distributors give the best deals to Weyerhaueser. Systems helps company rank suppliers and distributors on price, delivery times, and innovation. Upside Order volumes doubled, to more than 800,000 doors last year, boosting the plant's return on net assets from 2% five years ago to 24% last year. Downside Wisconsin door plant has shed some 5,000 customers, cutting into their bottom lines. Catalina Supermarkets Technology Bar codes, software, and Web site help grocery executives keep tabs on who buys what foods, how often, and at what price. Upside High-profit customer rate has gone up because most special offers and services, such as free home delivery, are given almost exclusively to the store's best customers. Net targeting eliminates the need to buy costly newspaper coupons, which offer specials to everyone, regardless of their value to the store's bottom line. Downside Low-profit customers end up paying more for some items because most deals go to the store's higher-valued customers. Product and pricing needs of low-profit customers gets less consideration. Twentieth Century Fox Technology Software called Project Eight Ball taps the Internet to help studio execs scour data and sift through millions of box-office receipts to see which films, actors, and movie plots are most popular in specific theaters, neighborhoods, and cities. Upside Profit per movie goes up. And, by avoiding a flop in specific theaters, it expects to save up to $100 million worldwide each year. Downside Potential to limit offerings based on race, income, education, and behavioral data. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Weblining TABLE: Skimming off the Cream INTERACT E-Mail to Business Week Online

Copyright 2000-2009, by The McGraw-Hill Companies Inc. All rights reserved. Terms of Use   Privacy Notice