Power Shifts to the Consumer.

• Author: Hall, Robert
• Position: Brief Article - Statistical Data Included

To restore a balance of power with the customer, it makes sense to sit back and Learn from customers.

Over the past decade, as huge sums were sunk into customer information technology, the underlying assumption was power--power to attract and retain all the right customers with all the right tools. "When we get all this information about our customers, we will be unstoppable. We will practically be able to read our customers' minds, market to them one-to-one. We will know what they want before they do. With perfect information, we will have perfect power."

Partly right. Thanks to voluminous information and related technology, and thanks especially to the Internet, mass amounts of information about customers, capacity, products, and prices are indeed almost instantly accessible.

Case in point: The major airlines (prior to the September tragedies) used yield-management practices built out of major databases that were notorious for price-punishing their most frequent fliers, last-minute business travelers. According to The Wall Street Journal, "By the second quarter of 2001, the typical business fare had climbed to 4.9 times the price of the lowest discount fare, compared with 2.61 times the first quarter of 1996." Says Leo F. Mullin, chairman and chief executive of Delta Air Lines, "Anybody who has a modicum of Internet capability and wants to take what is now a modest amount of time can very rapidly find out and comparison shop. There is almost perfect information out there."

Perfect information that tells customers they are paying too much, where they can go to get more information, and how they can retaliate, turning the information hack on the providers. "At Intel Corp., employees using a new online booking program linked to its corporate travel department, have aimed into bargain hunters...The big chipmaker slashed travel spending by 25% in the second quarter from a year earlier..."

Of course, it is true that airlines have found many ways to use information about their high-paying fliers that reward them-priority call-center service, personal calls, special services, etc. And in a mutually favorable economic climate, the situation might have persisted. But in today's uncertain economy, the deal no longer...