The Value Factor[c] How Global Leaders Use Information for Growth and Competitive Advantage

Gaining better insight will produce great financial results. We ve seen throughout the extraordinary performance records by companies who committed their business to information, who are leveraging their information resources to better understand their customers, suppliers, partners and the market.

We are witnessing a migration in value from the resources that were once the basis of competitive advantage physical assets and physical resources, toward the new sources for competitive advantage, intangible assets human capital, structural capital and relationship capital.

Mohanbir Sawhney McCormick Tribune Professor of Technology Kellogg School of Management at Northwestern University

The value potential of intangible assets is unlocked by information. Employee empowerment breeds high performance and loyalty. Logistical efficiency maximizes supplier relationships. Open communication creates effective alliances and partnerships.

The companies who have made the commitment to information are financially fittest because they are best able to adapt to new market imperatives. The business world after all is no different than anything else ”the fittest survive.

As if the case studies we ve looked at already haven t been extraordinary enough, here are just a few more companies whose bottom-line value soared when they began capitalizing on their information.

In Canada, Royal Bank of Canada (RBC) has raised the art and science of customer relationships to new levels of achievement. The improvements in economic profit are proof of their leadership.

Between 1999 and 2001 RBC achieved enviable results:

• 32 percent improvement in economic profit in its key market segment (the early life stage customers)

• 61 percent improvement in its prime market segment (the wealth accumulators and preservers)

• 138 percent improvement in its growth market segment (mid-cycle customers, builders and borrowers)

At Travelocity, the online travel company s aggressive use of its information resources to improve its relationship with customers has proved valuable .

In 2000, Travelocity s:

• Conversion for recipients of targeted event-driven campaigns improved by up to 400 percent

• Conversion for newsletter subscribers improved by 84 percent

• Booker conversion rates rose to 8.9 percent

Finally, in Brazil, BCP Telecommunications, a Brazilian Bellsouth affiliated company with almost three million customers, has scored some big wins.

Using its information resources in new customer acquisition initiatives, BCP Telecommunications has returned, in these tougher times in the telecom industry, stellar results:

• Plan penetration has increased 8.5 percent

• Insurance penetration has increased 12.6 percent

• Revenues are 100 percent higher

• Churn is 64 percent lower

• The cost per account is 22.1 percent lower

• The number of months in which an acquisition campaign pays back is 10 percent lower

In fact, for every dollar spent now on marketing, the company earns revenues of $4 within 12 months.

Leveraging its information sources has paid off handsomely for BCP.

Better insight, better oversight and higher returns ”we can t afford not to invest in our information resources.