machine may offer the closest thing ever invented to perpetual motion, because the more you use the card, the more data it produces. The machine takes your bytes, combines them with transactions by millions of other cardholdersand before long, it can pinpoint what youre likely to buy next, whether youll respond to a pitch for long-distance telephone service, and how likely you are to sign up for Internet banking.
Fairbank, MBA 81, built that data machineand revolutionized the credit industry.
Before Fairbank, all credit cards cost the same: 19.8% annual percentage rate, $20 fee.
Before Fairbank, no one had ever heard of teaser rates, superprime cards charging just
9.9% interest, or credit cards printed with your kids pictures. Since Fairbankto be precise, since October 1991 when he rolled out the first cards to break the plastic price

people didnt really have a new offer, Fairbank says. Thousands of accounts were upgraded or closed at randomand the company gathered data on who left, who stayed, and how they behaved. Now, when a card-hopper calls, computers can calculate the odds that this particular customer actually does have a better offerand the lifetime profits that would be lost if she leaves. Within hundredths of a second, the operator gets a script spelling out the precise terms he can offeror orders to bid the card-hopper a cheery farewell.
In Capital Ones lexicon, that experiment was a scientific test. While it involved thousands of accounts, it was just one of 14,000 tests that Capital Ones busy analysts and marketers conducted in 1997. In 2000, the company carried out 45,000 tests. Anyone in the company can propose a test, and if the results are promising, Capital One rushes the new product or approach into use immediately. We dont hesitate, because our testing has already told us what will work, Fairbank says.
Fairbank and Morris