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Monday, August 20, 2007


For years junk mailers and traditional retailers have employed data mining in their customer relationship management (CRM) to identify their best customers. Now they’ve turned this practice into a system to determine which ones they want to get rid of. The very design of CRM places the borderline group on the back burner, electing to ignore them for the most part, unless they make another purchase. But just out-and-out dumping them seems a bit over zealous. Liz Pulliam Weston in MSN Money covers the current trend of how companies are getting rid of shoppers who “complain too much, return a lot of items or otherwise hurt their profitability.” Complaints are that these people are spending too little, or complaining too much. This bunch, says corporate-profitability expert, Larry Seiden, represents 20 percent of the total. So you just ditch them, and go looking for the more profitable customer. Actually, it could make sense if these people are chronic offenders with little or nothing to base their actions on. Sprint Nextel dropped 1,000 customers for calling its customer-service lines too much. Online bank, ING Direct shuts down 3,000 to 4,000 accounts a month, because these people are “more trouble than they’re worth.” Other banks may even have you assigned as “pests” or “promising” in their system, so when you approach a teller or go online, they know how to treat you. Airlines are even taking it to another level in determining who is the best-of-the-best frequent flyers, with extra perks at the airport and other benefits. Guess us coach potatoes are relegated to little or no service at all. But some retailers are taking it too far by using a company like The Return Exchange to identify and refuse abusive shoppers. Pulliam mentions two: Staples and The Sports Authority. When you return an item there you must give the clerk your driver’s license, who swipes it through The Return Exchange Verify-1 device. It records your name, address, age, and other particulars of the transaction—no doubt your license number—and sends it to The Return Exchange database where it is kept. As usual, enough data to make it simple for the identity thieves, if somehow a breach occurs. Privacy Rights Clearinghouse has an ALERT on The Return Exchange you should read. Questions immediately arise of how much other personal data does The Return Exchange receive from member retailers? How long do they keep this information, and just who has access to it? As I’ve said many times, the development of personal information databases is a perpetual force in the marketplace, and, despite the state of the current identity crisis, it just keeps on perpetuating.

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