EXPLOITING THE VIRTUAL VALUE CHAIN New customer relationships Ultimately, however, companies must do more than create value in the space hey must also extract value from it. They can often do so by establishing space-based relationships with customers Once companies become adept at managing their value-adding activities across the parallel value chains, they are ready to develop these new relationships. In the world of high technology, examples of building customer relationships on the VvC abound. Today, thousands of companies have established sites on the World Wide Web to advertise products or elicit comments from customers. Some companies have gone further and have actually automated the interface with the customer, thus identifying and fulfilling customers' desires at lower cost Digital Equipment Corporation, making a comeback from its slump in the late 1980s, has developed a new channel for serving customers on the Internet. DEC's World Wide Web site allows prospective customers to use a personal computer to contact sales representatives, search for products and services, review the specifications of DEC equipment, and actually take a DEC machine for a"test drive. "Similarly, Oracle Corporation, a database software maker, now distributes a new product over the Internet as well a through physical channels. These companies are joining the burgeoning ranks of major high-tech firms in the business-to-business sector that have become Internet marketers; the group includes GE Plastics, Sun Microsystems, and Silicon Graphics, all of which use the Web to establish and maintain relationships with selected accounts Managing information allows companies to create new value Other companies view their challenge as for customers by serving a that of managing each individual customer broader set of their needs relationship in both the marketspace and the marketplace. Those that succeed have an opportunity to reinvent the core value proposition of a business, even an entire industry. One extraordinary example is United Services Automobile Association, which has truly maximized its opportunities to deliver value to customers in both he space and the place and has thereby become a world-class competitor. USAA began as an insurance company. Over time, it has used its infor mation systems-installed to automate its core business, insurance sales and underwriting -to capture significant amounts of information about customers, both individually and in aggregate. USAA has integrated this information and distributed it throughout the company so that employees are ready to provide products, services, and advice whenever a customer contacts the company. Having make this investment in visibility, it found that, among other things, it could prepare customer risk profiles and THE McKINSEY QUARTERLY 1996 NUMBERNew customer relationships Ultimately, however, companies must do more than create value in the space: they must also extract value from it. They can oƒten do so by establishing space-based relationships with customers. Once companies become adept at managing their value-adding activities across the parallel value chains, they are ready to develop these new relationships. In the world of high technology, examples of building customer relationships on the VVC abound. Today, thousands of companies have established sites on the World Wide Web to advertise products or elicit comments from customers. Some companies have gone further and have actually automated the interface with the customer, thus identifying and fulfilling customers’ desires at lower cost. Digital Equipment Corporation, making a comeback from its slump in the late 1980s, has developed a new channel for serving customers on the Internet. DEC’s World Wide Web site allows prospective customers to use a personal computer to contact sales representatives, search for products and services, review the specifications of DEC equipment, and actually take a DEC machine for a “test drive.” Similarly, Oracle Corporation, a database soƒtware maker, now distributes a new product over the Internet as well as through physical channels. These companies are joining the burgeoning ranks of major high-tech firms in the business-to-business sector that have become Internet marketers; the group includes GE Plastics, Sun Microsystems, and Silicon Graphics, all of which use the Web to establish and maintain relationships with selected accounts. Other companies view their challenge as that of managing each individual customer relationship in both the marketspace and the marketplace. Those that succeed have an opportunity to reinvent the core value proposition of a business, even an entire industry. One extraordinary example is United Services Automobile Association, which has truly maximized its opportunities to deliver value to customers in both the space and the place and has thereby become a world-class competitor. USAA began as an insurance company. Over time, it has used its infor￾mation systems – installed to automate its core business, insurance sales and underwriting – to capture significant amounts of information about customers, both individually and in aggregate. USAA has integrated this information and distributed it throughout the company so that employees are ready to provide products, services, and advice whenever a customer contacts the company. Having make this investment in visibility, it found that, among other things, it could prepare customer risk profiles and EXPLOITING THE VIRTUAL VALUE CHAIN THE McKINSEY QUARTERLY 1996 NUMBER 1 29 Managing information allows companies to create new value for customers by serving a broader set of their needs