How market leaders reach out to customers

There's little doubt that market leadership and the savvy use of IT have been synonymous for the past decade. The firms that are dominating their industries today growing two to three times faster than their peers were among the first to exploit IT to re-engineer their business processes and eradicate waste from operations in the early 1990s. In doing so, they laid the foundation for their current success. My latest research also ranks them among the most astute deployers of the Internet. Moreover, these firms are in the forefront of using IT to cope with today's biggest business challenge: a scarcity of customers.

In today's crowded markets, the problem isn't building capacity or generating new products and information. The real bottleneck is finding customers for our prodigious output. Of course, that condition becomes exacerbated in a slow economy, with lots of suppliers clamoring to woo customers. Rising above the din, the new market leaders recognize that customers get flooded with choices and information, yet have less time and patience to sort through the abundance of offerings. These leaders come to the rescue by craftily using IT to get and hold customers' attention, sometimes offering an added value that keeps customers coming back.

Consider how market leader EMC Corp. helps customers stay on top of a little-mentioned corollary of Moore's Law: information storage requirements double every 18 months. Not only do EMC's innovative storage products scale well, the company's true appeal is that it allows customers to sleep better at night. Each of EMC's 45,000 data storage systems in operation worldwide is connected to one of three "Call Home" centers in Massachusetts, Ireland or Japan. Whenever an EMC unit anywhere in the world senses something wrong, it automatically reports the problem to the nearest center, and potential disaster is averted. Service to prevent, not repair, is indeed service par excellence. EMC's remote monitoring and diagnostics capability has created a virtual, umbilical link with precious customers.

Or consider UPS. In the past decade, the company has used IT to transform itself into a high-tech, customer-obsessed powerhouse that's not just distributing goods, but also enabling global commerce. Particularly striking is the company's ambitious and foresighted move to use wireless technology to boost the value of its services. The delivery information acquisition device (DIAD), is a handheld computer that has helped turn UPS into the world's largest user of mobile communications technology. It allows UPS drivers and handlers to follow each package and feed large amounts of tracking data into the company's massive data centers in New Jersey and Atlanta. Now in its third generation, DIAD has cut the firm's cost of tracking to less than 10 cents per package. But most importantly, UPS customers now use this tracking information to cut their inventories, manage their systems and keep their receivables and late payments under control. UPS is deftly using IT to boost its services' appeal and value.

These and many other new market leaders demonstrate that the imaginative and bold use of technology is the foremost way to transform customer scarcity into customer abundance.

(Fred Wiersema is author of the new book The New Market Leaders: Who's Winning and How in the Battle for Customers (The Free Press) and a fellow at business strategy and technology firm DiamondCluster International Inc. in Chicago. Contact him at Fred.Wiersema@diamondcluster.com.)

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