American with a vision of customer empowerment

Clive Mathieson on the man (John McKean) who believes the Net will really make customers king.

Not so long ago, an American John McKean decided to test his theory that the Internet was fast becoming the ultimate creator of customer empowerment.

He contacted e-bay, the online auction house, and put up a handful of US one dollar bills for sale, not quite sure if what he was doing was strictly legal. In any event, the exercise was not undertaken for personal gain. And just as well because the average winning bid for each note came in at just 55 cents.

As the e-mails rolled in from delighted buyers asking if he had any more cash to sell and helpfully suggesting he stick to his day job, Mr McKean realised he had proved his point.

In the past week Mr McKean, an international expert on customer relations management (CRM) for businesses, has related this tale to groups of senior executives in the City as a guest of software heavyweight....

The response, he says, has been almost uniform dismay as business leaders come to grips with the power of the Internet to crush companies that fail to offer customer value or differentiate products, which could become mere commodities in an online marketplace.

Mr McKean, who runs the Ohio-based Centre for Information Based Competition, is an enthusiastic advocate for the Internet and new technologies which allow companies to have direct interaction with their customers. But he warns that it is how companies use technology and treat their customers that will determine success in a world where every one of their rivals is also online.

"The Internet is profoundly affecting every non-Internet way of doing business ... but the key is that technology only gives you the opportunity for greatness," he told reporters last week.

In his recently published book, Information Masters: Secrets of the Customer Race, Mr McKean argues that companies may be overestimating the power of new technologies to help them to improve relations with their customers. Investment in technology is just one of a number of factors which will determine a company's CRM success alongside traditional values such as people, processes, culture and information.

Mr McKean says that the past 100 years, an era which has seen the familiarity of the corner store eroded by mass-marketing, has seen the death of CRM. Only now, with the intimacy and customisation that can be offered by the Internet, is CRM again on the rise.

"It will take 20 additional years to reach where we were 100 years ago with no technology," he says. "At that point, technology will be completely and utterly transparent and we will be back to the corner shop with the intimacy that we knew in the past."

In his meetings with ... clients this week, Mr McKean said creating customer value was essential to create shareholder value. He told executives that companies could use the Internet to improve their customer relationships by focusing on "the tiny, human things" like personal contact with individuals and business customers.

But he said the key to building and maintaining customer relationships was sound management of information which would allow companies to compile detailed and, importantly, accessible, profiles of customers. He said that 90 per cent of a company's success in CRM was based on "information competency".

He said insight into customers, which allows companies to recognise potential for direct and cross-selling opportunities, was far more valuable than the current trend for loyalty schemes "based on bribery and pay-off".

"If you're not on the road to insight you will be killed in an e-commerce world," he said.