Volume 4, Issue 2
_______________________
A Team Boston
Newsletter
Meeting Change Date to
April 4th, 2001
Customer Spending Patterns
Inside this issue:
From Vacuum Tubes to
2
Microchips to DNA
(cont.)
Chevron Confirms Texaco 2
Will Quit Shell Joint
Ventures
E-shopping with E-cash is 3
Evolving
Remodeling E-tail/Retail
3
Business Model
Chevron Confirms (cont.)
4
Connection Committe Invitation Meeting Change Date to
April 4th, 2001
4
to segment and reward shoppers by
profitability.
Charles Schwab's top-rated Signature
clients never wait more than 15 seconds
for someone to answer the phone.
"Regular" customers often wait 10 min-
utes or more.
"A" customers at First Union Bank
aren't expected to pay the $20 overdraft
fee, but "C" customers certainly are. "B"
customers sometimes are given the oppor-
tunity to negotiate with a representative
who judges how good a customer they're
likely to be in the future.
It's not just individuals who are expe-
riencing a tidal wave of poor customer
service. Small businesses doing business
with behemoths are also profiled and
offered service commensurate with past
patronage and their potential to contribute
to future profits.
Companies know who we are because
they have sophisticated data mining pro-
grams called neural networks that enable
them to create and to build customer
predict with some certainty how a cus-
tomer will behave in the future. How
customers are "tiered" as a result deter-
mines the level of service provided and
offers tendered.
Profiling Pays Off
Arguably, financial service companies
are among the most highly motivated to
profile customers because the top 20% of
bank customers generate up to six times as
much revenue as they cost. The bottom
one-fifth, on the other hand, cost the com-
panies four times as much to service as
they generate in income. So it's no wonder
that 68% of the banks with assets of more
than $4 billion now segment customers,
and virtually all the rest have plans to do so.
By almost any measure, profiling pays
off. Levi Strauss claims to have sold 33%
more jeans and increased repeat customer
traffic by 25%, since installing segmenta-
tion software to track Web activity. Inter-
continental Hotels slashed direct mail
costs by 50%, while achieving a 20%
increase in response rates by eliminating
customers from its mailing list who did
not respond to previous deal offers.
