Power Shifts to the Consumer.

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 feels fair to the most frequent customers, and it aims out that they have the power now. Today, the airlines have to match their yield-management systems against online ticket auction sites offering the same or better information all geared to the customers' favor.

So after investing heavily purely for the purpose of solidifying their hold on customers, many companies find themselves fighting four powerful trends that weaken that hold:

* In a receding economy, demand languishes, creating a buyer's market.

* Those buyers have more and better information that they can use to segment companies better than companies segment them.

* With access to "perfect" information, those buyers are ignoring much of the traditional self-serving information companies purvey: advertising, mailings, posted prices, etc.

* Many businesses have been under so much pressure to meet quarterly goals that they have unwittingly neglected investments in innovation for the next round of value, pushing them into the mode of commodity provider.

To restore a balance of power with the customer--to avoid being victimized by its shift to the customer--it makes sense to sit back and learn from customers what customers seem to have learned faster. What can companies learn?

* How to make their information more actionable and useful in segmenting and serving them--not lust meeting our objectives.

* How to rely less on marketing messages that carry little meaning for them and more on the information that actually influences them.

* New ways to innovate that embed more value in our solutions-not just product innovations but new ways of selling and delivering.

Robert Hall is president, revenue enhancement group, Carreker Corp., based in Dallas, with offices in Atlanta, London, Sydney and Toronto.