Letting the customer learn with help from the firm...

...is not the only way to make the customer smarter. The other way is to reverse the usual flow of information in the market. John Hagel, co-author of Net Gain, says, "Instead of helping your firm capture as much information about the customer as you can, you want the customer to capture as much information about themselves as they can." And you want customers to capture as much information about the firms they are dealing with as well. There are several ways on the web to bias information toward the customer. Among the most exciting innovations are new vendors that send a bot around to comparison shop for you. If thirty music retailers online offer the soundtrack to the movie Titanic for sale, web sites such as Junglee or Jango will collect the offers from each vendor, and rank them for you. But the vendors are calling the shots; they craft the offer, keep the data of requests, and drive the sale.

By reversing the direction of information flow one can create a "reverse market." In a reverse market (already set by a few web sites), the customer dictates the terms of sale. You say, "I'd like to buy a Titanic CD for $10, new." You broadcast your offer into the web, and then the vendors come to you. This works best at first for high-ticket items such as cars, insurance, and mortgages. "I'd like a $120,000 thirty-year mortgage for my house in San Jose. I can pay $1,000 per month. Do I have any takers?" You set the terms, keep the data, and drive the transaction. Technology, of course, means that much of this negotiation happens in the background via agents and so forth; you don't have to do the haggling yourself. But the R-shift moves the capture of information into the hands of customers from those of the vendors. It makes the customer smarter.



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This is a blog version of a book of mine first published in 1998. I am re-issuing it (two posts per week) unaltered on its 10th anniversary. Comments welcomed. More details here.
-- KK