It is common knowledge that Income minus Expenses equals Profit. Regardless of the complexity of a business, if profit is to increase either income must increase and/or expenses must decrease. Information Technology (IT) is works towards manipulating this formula.
Many believe IT is who you call to fix computers. Fixing the computers is only a small part. Information and IT has made the world a much different place than it was in 1961 when I was born. Today I want to review IT in the new world how to use it to gain a competitive advantage.
So if it’s not fixing computers, how do we define IT? In 1961 a computer were just a big adding machine that took up an entire office building.
Hand-held computers were called slide rules. If you wanted to find a pizza you opened a book called the Yellow Pages. The biggest advertisement and easiest to read compelled people to choose a company for pizza. In it’s day, the Yellow Pages, magazines and newspapers were the cutting edge in "information technology". What information technology does is exactly the same thing as the Yellow Pages once did. The difference now is with the speed in which we can retrieve information, the larger scope of information accessed and the reliability of that information.
In 1961, a sales person had the yellow pages to call from. The job of the sales person was to make call after call after call from an alphabetical list of businesses. Little was known about the businesses, the name, a very general yellow page category, an address and a phone number.
Contrast the "old days" with the IT of today. For $100, a sales person can order a list of businesses, in a certain SIC category, in a specific geographic location within a range of annual revenue. You can specify how long the business has been in business and whether they are a good credit risk. You can also expect to receive the business owner’s name, the company officers and all their phone numbers on this list. For a small additional fee, you can also get email addresses.
In 1961, a good sales person would grab a pencil and record each contact on a 3x5 card and store it in a file box called a tickler file. If a company said "call me next week or next quarter", the 3x5 card would be put into the 1 week or 3 months later section of the tickler box. Sales people then felt clever calling back when a business owner was ready to buy.
Now lists of contacts are digitally entered into a contact/customer relationship management database. Emails, mailings and phone calls are automated. Customers are contacted based on how closely they match a “Perfect Customer” ideal. Those who appear to be obvious non-customers are ignored and not contacted. Managers recognize how the more information there is available about a customer, the more likely the sale.
Compared to 1961, results now are phenomenal. More sales are made per sales call thanks to the information gathered before the customer is even contacted. In 1961, this type of information was available but it cost ten's of thousands of dollars and usually 6 to 24 months out of date. Today, consumer information is so clean and inexpensive it would have been difficult to imagine even 20 years ago.
Customer Centric Marketing
With the over abundance of information, a new sales strategy has been created called "customer centric marketing". There is a focus on present clients, recognizing buying patterns and presenting just what the customer needs, when they need it. Customers love it. There is more customer loyalty as the company and customer build almost a friendship relationship.
An example of a strong customer centric company is Amazon. When logging onto Amazon, the site remembers your name, past purchases and makes suggestions about other items you may be interested in. When you are ready to buy, Amazon stores credit card information so it is a "one click" payment. Customer centric companies remember their customers without the need of being re-introduced.
“Hello is this Tom at XYZ company?”
“How is that <insert product name> you bought last quarter working for you?”
Even if the two have never shared a conversation, a customer appreciates being remembered. The customer also prefers not to be required to submit customer information each time a new operator comes on the line. .
This is the power information technology brings to a business owner and staff. Understanding the business process flow and matching that flow to integrate with the business vision becomes a true competitive advantage.
In the 90’s, computers entered the business world users saw computers as fancy typewriters which made documents cleaner and more impressive. Expenses were reduced with fewer steno pools and secretaries.
Moving into the next decade, every the business that didn’t make the switch and add computers were unable to compete. Thinking forward, those with a competitive advantage in the future will understand how information can identify customers, opportunities and predict which customer will have a need and when the need will occur.
Those businesses without the Information Technology to build those loyalties in this decade will have a tough time competing with those who are adapting and evolving.
Profiting from technology means leveraging information in ways nobody was able to 40, 20 or even 10 years ago. No one can predict the future with all the answers. As new IT systems become part of mainstream, it’s important to bring in experts who have experience with the evolution of IT, to help build the systems that will be essential in tomorrows world.
If you are interested in considering what possibilities exist and options to consider, please contact me here >