Digital Matters -- Issue 45

The networked customer relationship is one of the fault lines between the old-economy mind-set and the new networked economy. After the dotcom sector imploded last April, there was palpable glee in certain sectors of corporate America. You saw it in all the sniping at and gunning for Amazon.com. Aside from envy, companies feared that they would have to deliver the Amazon.com customer experience in the future. Amazon's enormous success in connecting with customers raised the bar of customer-relationship management to a whole new level -- to the level of the networked customer relationship. That scared the bejesus out of everyone with the old-economy mind-set because it meant that they too would have to pass the Amazon test. And the Amazon test was ferociously difficult: It meant anticipating what the customer might want. To paraphrase Jeff Bezos, it meant thinking not in terms of your competition's level of performance but in terms of your own level of performance: Were you doing everything possible to deliver a consistently excellent experience to your customers?

The collapse of the dotcoms and the industry shakeout that followed offered a hope at least that the genie might go back into the bottle -- that all of those Internet customers might forget all of those newfangled ideas about customer experience. Coke could go on selling Coke at a discount one week and at full price for the next three weeks. And then Coke's management could say, "We have a Web site," and pretend that such a proclamation somehow qualified as a customer-relationship strategy.

And it wasn't just old-economy companies that hoped the genie would go back into the bottle. Most of the dotcoms were (and still are) every bit as devoted to the idea of a command relationship with customers. Priceline.com offers customers cheap airfare and hotel lodging, but it doesn't offer customers any control over which airline or which hotel room. It's a take-it-or-leave-it deal, and once you click on the "buy now" button, priceline.com makes the decision. Once you take it, you can't leave it without paying the freight.

Last year, America Online offered upgrades that bollixed up its customers' computers so that those customers would stay within the parameters of AOL's content. And then there are a number of Internet-based businesses that shamelessly sell their customer data to whoever is willing to offer the highest fee.

Old-economy companies as well as those such as priceline.com argue that they deliver a ton of value. But for the most part, they quantify that value in terms of price and ignore the rest of the networked customer relationship. Increasingly, customers quantify value as what they value: time, convenience, or price, for example. It could be something larger, or it could be pieces of each of those things. Whatever it is, customers expect companies to understand that value is something that the customer determines. Put more simply, customers expect more than a coupon from P&G and more than a three-legged, two-airline flight to Chicago from priceline.com.

There's value in ownership. The basic idea of a peer-to-peer computing world is that information pertaining to what is bought and what is sold is "captured" by each customer and by every company. Right now, such companies as Encirq Corp. and Groove Networks, to name just two, are writing code that enables millions of computers to communicate and to share data with one another in much the same way that Napster enables the musical content of one compact disc to be "owned" by 33 million Napster users.

And in that soon-to-be-truly-networked world, there's no reason why some small percentage (let's say, 1%) of everything that I buy cannot be rebated to me in the form of stock in those companies whose products I buy. And there's no reason why that same small percentage cannot be rebated in the form of stock to everyone who buys products from Coca-Cola, Dell, GM, or Pepsi. Using a product that you own (by actually using it) is not just a killer customer-loyalty application, it's politically dynamic. It networks millions of customers to the political cause of free markets and democratic capitalism. It links your behavior as a consumer to your values as an individual. And it gives everyone a stake in the outcome.

There's also value in education. A company called UPromise Inc. enables any company to engage its customers in the future of education. Depending on how much Diet Coke I buy in any given year (and how many other Coca-Cola products I buy during that same year), some small percentage of that money can be set aside in a college-education fund. The fund might be for my children or for another child I designate. UPromise has also set up a foundation that has created a scholarship pool for youngsters who can't afford private school or college tuition. Think about the math at work here: If 1,000 companies were to sign up with UPromise and 20 million people did business with those companies, in 10 years the number of better-educated kids in America could skyrocket.