Playing the customer card: Tom Peters On excellence

THANKS mostly to the enormous power of the computer, companies are waking up to their primary asset - customer relationships.

With the explosion of new products, US household names like Procter & Gamble, Philip Morris, Apple and others have lost their edge. (A poll reported in Computerworld magazine said 53 per cent of Macintosh users thought that Apple's 'trademark ease-of-use distinction' had been eclipsed, even by lower priced brands.)

On the other hand, businesses are swarming to take advantage of who they know. For example, Blockbuster Entertainment, even before its planned merger with Viacom, boasted a string of expensive acquisitions - record retailers, movie studios, children's play centers - aimed at exploiting the power of 48 million Blockbuster Video cards (that's 11 million more cards than American Express).

The names in the database, of course, range from the very occasional user (me) to the video-hire addict. No matter, all 48 million, as Blockbuster sees it, are the basis for building individual relationships that can somehow be milked. The trick is the somehow.

The race is on to get a hook into your psyche and mine. We see that in Bell Atlantic's pending takeover of TCI, the cable monster. Telephone and cable companies already know an enormous amount about us - and the new name of the new game is enhancing these physical and emotional relationships to sell us a stupendous array of services.

Many of the big multimedia deals could flop. The idea of bankruptcy, even for a Blockbuster or a Bell Atlantic, is not far-fetched. After all, a substantial share of America's railroads, after a similar speculative spurt in the 1860s to 1880s, ingloriously went bust in the 1890s.

But who wins or who loses is beside the point. The point is that all sorts of folks have jumped on the idea of investing in relationships.

Take Procter & Gamble again. While it has unconscionably allowed brand distinction to atrophy, it has worked at the same time to establish strategic partnerships with retailers. The once arrogant soap giant today will jump through almost any hoop for the Wal-Mart chain, for instance, and has even set up a big office at Wal-Mart's headquarters to nurture day-to-day relations.

Reed Personnel Services, a British agency supplying temporary workers, lives by the slogan: 'Partnership Sourcing for People.' It has employees based at its key customer organisations, who try to anticipate their needs - such as providing clerical personnel when a client changes its word-processing software.

To see how far the relationship game might go, consider the battered airline industry. Beset with losses, especially in the short-haul business, airlines may eventually sell everything except their names, route structures and reservation systems, according to the Wall Street Journal. That is, everything except the logo you recognise and the information that they have about you - in other words, the basis of their relationship with us.

Bankers, whose core brands are also under assault from all corners, are acting strangely as well. Chemical Bank, third largest in the US, has formed an insurance company which it is touting as a core business.

Business? Chemical doesn't underwrite the insurance: it farms that out to real insurance companies. Nor does it process claims. Its independent affiliate, CBC Insurance Agency Services, performs that chore.

In effect, as in the airline fantasy, Chemical specialises in marketing and relationship development, using its strong name to peddle policies by telephone and post.

Much of this smacks of smoke and mirrors. Disney's Michael Eisner says he won't get into the Bell Atlantic-TCI sort of chase, because ultimately all the multimedia distribution schemes will rise or fall on substance. Top-notch Disney programming, as Eisner sees it, will be more welcome than ever as network capacity expands exponentially. Likewise, the big airlines, for all their marketing might, have been clobbered by a better basic product - a re-creation by Southwest of the old style of flying folks in a low-cost friendly fashion.

Nevertheless, the value of relationships has never been greater. Regardless of whether Chemical Bank, Bell Atlantic or Blockbuster succeed, winners will be those who creatively extend their tentacles into millions of homes.

The fundamental point is this: the intensity, reach and breadth of your business relationships are arguably your most valuable assets. While few would deny that, most do not formally put relationship development at the top of their strategic agenda.

That is a mistake - especially if an energetic competitor gets the electronic drop on you. Even in this fickle nanosecond-denominated age, a lost relationship is typically lost for a long time.

TPG Communications