Against The Grain

Insight (And Courage) To Turn Away Business

Being able to evaluate each customer on its contribution to your company's bottom line is the holy grail of customer relationship management.

While that capability's largely out of reach today, Eaton Corp.'s $2 billion Cutler-Hammer division, a maker of electrical distribution and control products, thinks it's taken a step in that direction. Eaton Cutler-Hammer has a familiar problem: Salespeople strike deals with customers, and those deals get the necessary internal approvals without enough information to determine if they're profitable enough to make business sense.

The problem's neither a reflection of an undisciplined business culture nor of poor IT systems. Rather, it underscores the complex web of information that must be analyzed to make timely, smart business decisions. And unfortunately, there are few tools out there to bring this information together and perform the real-time analysis that's needed.

In addition to factoring price into decisions, for example, Eaton Cutler-Hammer wants to know a given customer's product return rates and its profit margin on past deals. In addition, "wouldn't it be wonderful to make decisions about a customer knowing they pay their bills horribly," muses Bill Hightower, the division's director of marketing strategy and support.

Seeking to analyze all these variables before giving deals the green light, Eaton Cutler-Hammer looked at customer relationship management apps from Oracle, Siebel and Trilogy but found each vendor inhospitable to its homegrown order management system--which works quite well, thank you very much. (Arrogance equals lost business.)

It eventually settled on start-up Metreo Inc.'s Supplier Response software. The product evaluates customer-specific variables by pulling transactional and historical data from the company's order management system and Oracle data warehouse. It then recommends how to respond to proposed deals. Supplier Response is playing nicely with Eaton Cutler-Hammer's order system and data warehouse.

Near-term plans for the software are sensibly modest given the complexity of systems integration, product lines and customer data that must be integrated to roll it out beyond the current subset of customers. Still, Hightower says, "If we don't walk away from some deals, I'll be really disappointed."

As Metreo's first reference account, Eaton Cutler-Hammer will serve as a litmus test for the product and, more important, for the concept of gauging ROI customer by customer, deal by deal.

I'll check back with the company later this year and give an update on how things are going. Meantime, Eaton Cutler-Hammer validates the notion that not all customers are worthwhile.

Tom Smith is editor of InternetWeek. He can be reached at mailto:tasmith@cmp.com

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