Capital One 1996 Annual Report Download - page 5

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Signet Bank. In November 1994, when
we became an independent company,
we set the ambitious goal of increasing
Capital One’s earnings per share by
20% a year. We exceeded the 20% mark
in 1995 and in 1996. We are aiming to
do it again in 1997.
The Strategy Driving
Our Success
Our consistently strong growth is the
result of the proprietary information-
based strategy we created in 1988.
Using advanced information technology
and sophisticated quantitative analy-
sis, we mine the vast amounts of data
we have collected on millions of actual
and prospective customers. We use the
data and scientific methodology to test
many product ideas on a small scale,
allowing us to separate winners from
losers before we make major commit-
ments to marketing. By the time we
invest in a large-scale product launch,
we already know we can count on supe-
rior economic returns.
The information-based strategy
also gives us the ability to customize
our offerings in order to get the right
product to the right customer at the
right time and at the right price. We
now have more than 3,000 product,
pricing and feature combinations tai-
lored to the individual needs and wants
of our customers. By designing and
pricing products to fit each customer’s
financial circumstances, we have been
able to add almost seven million cus-
tomers in the last four years.
Customization also enables us to offer
our products at highly competitive
rates while simultaneously generating
favorable returns for Capital One.
Grow th Through
Constant Innovation
We believe that every business or
product idea has a limited shelf life. We
have been able to plan for the
inevitable end of a product’s life cycle
and stay ahead of the downtrend by
introducing a steady stream of product
innovations. For example, we were the
first to offer the balance transfer prod-
uct nationwide, and it was a tremen-
dous success. But, like most successful
product innovations, it drew a crowd
of competitors and, over time, became
less profitable. Anticipating this devel-
opment well in advance, we steadily
scaled up our investment in a new,
second generation of products even
while the balance transfer product was
still enjoying strong growth.
These second generation products,
which capitalize on our ability to cus-
tomize offerings for a wide range of
We have been able to
plan for the inevitable
end of a product’s
life cycle and stay
ahead of the down-
trend by introducing
a steady stream of
product innovations.
The information-based
strategy gives us the
ability to customize
our offerings in order
to get the right prod-
uct to the right cus-
tomer at the right
time and at the right
price.