Taxpayers will cover the losses

I would like to offer my thanks to Jason Goodwin of the SAS Institute for enlightening me as to the ultimate aim of CRM (MW February 7). Goodwin says: “CRM can help to build a profile of customers and enable a company to offload non-profitable customers”. It seems Goodwin is making a strong case for CRM to be used as a tool to promote widespread exclusion from products and services on the grounds of unprofitability.

Any consultant espousing – or any company applying – CRM in this way shows CRM in a bad light indeed, particularly if the product or service concerned is a fundamental part of our lives, such as the current account. A survey conducted last year by the International Institute of Banking and Financial Services concluded that 94 per cent of financial services executives feel that their industry provides an essential service to society.

So, if a company identifies a customer as being unprofitable – or insufficiently profitable – and offloads them, what incentive is there for another company to offer that customer a replacement product or service? There are two main reasons. One is that the offloading company may simply be too inefficient to turn a profit from the customer. The other is that the offloading company is unintelligent and doesn’t realise the customer is actually profitable.

Meanwhile, the Government is trying to reduce financial exclusion, in part through the creation of the Universal Bank, with the support of major financial companies. This bank is designed to cope primarily with those consumers that are unable to obtain a bank account, usually because of their high-risk profile. Is Goodwin suggesting that the target market for this bank be broadened to include the unprofitable? And who is to pay for this and other “Unprofitable Customer Organisations”? The taxpayer springs to mind.

Perhaps CRM should be referred to as Exclusion Relationship Management. Most of us remember the last ERM ending in tears. ERM Two will inevitably end up the same way.

Gary Boyes

Senior research fellow

University of Leeds

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