Customers: can't live with 'em, can't live without 'em. You need them to survive, but they can cause headaches. Customers don't always pay their bills promptly. They cheat retail return policies. They pirate software and music. They even help themselves to soda refills. But while entrepreneurs have long accepted such petty outrages as simply the cost of doing business, a few innovators are discovering that technology can induce consumers -- without alienating them -- to play by the rules.
Consider Payment Protection Systems. The company, based in Temecula, Calif., sells a dashboard device called On Time to used-car dealers. It starts blinking in the days leading up to a payment, and if the driver fails to cut a check, it disables the car's starter. In so doing, On Time enables dealers to take a chance on customers with bad credit. "The majority of people don't want to break the rules," CEO Mike Simon says. "You change behavior through technology." Repossessions at dealerships using these devices dropped 36% last year, and late payments fell by 64%. Roughly 100,000 units -- priced at $225 each -- are in circulation. But Simon calls the market "infinite": independent dealers, On Time's current bread and butter, sold 13 million used vehicles last year.
In the same vein, Flexplay Technologies in New York invented a disc to curb software and copyright piracy. Once the DVD is opened and exposed to oxygen, it will play for 48 hours, until a chemical reaction renders it useless. The Mission Impossible-like product has since been found to have a wider application. Disney's Buena Vista division plans to sell short-life DVDs through drug stores and gas stations.
Ryan Jones of the Yankee Group in Boston says that this self-limiting technology can reduce liability and risk, and also expand a market as On Time and Flexplay have. These innovations can "plug the dike" or "look for new ways to sell the water," Jones says. Either way, consumers' bad habits are kept in check.