This is a Marketing Revolution

The ultimate solution -- suggested by the technology folks -- had less to do with an animated character than with artificial intelligence: Why not predict the reason for each call and then send that call to the agent who is best able to handle it? In fact, a company like Capital One, with 3,000 people answering calls, knows plenty about why customers reach for the phone: Ninety percent of all calls fall into 1 of 10 categories. Raise your customers' interest rate, and they call. Put an automatic fraud stop on their card, and they call. Send out a new card that needs to be activated, and they call. Some people call once a month to find out their balance; some people call three times a month.

It took months to analyze these calling patterns, to figure out which events in a customer's credit-card life would predict a call. Decision-tree software had to be written, equipment had to be bought, phone switches and computers had to be taught to talk to each other. Along the way, people working on the project arrived at some powerful insights. For example, customers who call each month to check their balance or to see whether their payment has arrived could be identified and routed to an automated system that answers the phone this way: "The amount now due on your account is $364.27. If you have a billing question, press 1. . . . " Or: "Your last payment was received on February 9. If you need to speak with a customer-service representative, press 1. . . . " The genius of this system, says Donehey, is that "we can answer your question before you ask it." A phone call that might have taken 20 or 30 seconds, or even a minute, now lasts just 10 seconds. Everyone wins.

A routine problem in search of a quick solution led to a new way of doing business. Today customers get where they are going immediately, and they get the information that they need quickly. Customer-service reps handle those calls that need to be handled by people, and they don't waste any time passing calls to colleagues. For example, customers who have received prototype products are automatically routed to staffers who know about those products.

This calling system has become a competitive advantage for Capital One, making possible both lower costs and better service, and the company is understandably reluctant to share specific performance data about it. But a few round figures are available: The system went into effect last June, and, says Donehey, "Within a few months, it was right 40% of the time." Gannon says the prediction-success rate is now at 60% to 70%.

And the system just keeps getting smarter. Do you routinely call from your boyfriend's phone -- the number for which is not on file at Capital One? Eventually the computer will figure out that his number should be associated with your account. If you call to close your account, you'll encounter a subtle measure of what Cap One thinks of your business -- because the system will do a real-time analysis of your value as a customer. People worth keeping are routed to a live agent like Tim Gorman. People whom Capital One is not unhappy to be rid of are routed to a voice-response unit and allowed to close their account using their Touch-Tone phone. Meanwhile, more capabilities are in development. For example: The system will learn what language each customer prefers to do business in and then route calls accordingly.

"This started as such a simple problem," says Donehey, "but IT enabled us to go back to the business side with a solution that went beyond solving that problem. The flow of information between IT and the business side and the customer is constant. A lot of the stuff that really makes our technology work has nothing to do with technology -- it has to do with attitude."

"Every interaction is a selling opportunity."

Larry from Pennsylvania is on the line, baffled by his new Capital One "Silver" Visa, with its $1,000 limit and its $59 annual fee. The card comes with coupons offering discounts on hotels and rental cars, but Larry can't figure out how they work.

Barbara Brannon, 57, a veteran customer-service rep and one of Cap One's telephone stars, talks to Larry as if she has nothing else to do. She concedes that the Silver Visa carries a fee that's $20 higher than that of Larry's former card, a regular Visa. But, she says, "you can get that back with a single discount at a single hotel."

Once Brannon has helped Larry understand his new card, she says, "Sir, do you do any catalog shopping?"

"No."

"Are you interested in any kind of interior-design shopping?"

"Catalogs?" Larry asks.

"It's like the Silver Visa," says Brannon. "It's a service that we offer -- Capital One Interiors. It's a catalog with a lot of coupons. If you order it, you'll pay for it by the second or third time you use it."

"Thanks just the same," says a suddenly lucid Larry. "I get enough junk mail already."