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07-09-2004, 02:24 AM
<font size=4>Customer's always right? Not anymore</font>
By Associated Press
Jul 06, 2004 - 08:04:15 am PDT
MINNEAPOLIS -- So much for the customer always being right.
Some retailers are deciding that the customer can be very, very wrong -- as in unprofitable. And some, including Best Buy Co. Inc., are discriminating between profitable customers and shoppers they lose money on.
Like a customer who ties up a salesworker but never buys anything, or who buys only during big sales. Or one who files for a rebate, then returns the item.
"That would be directly equivalent to somebody going to an ATM and getting money out without putting any in," Brad Anderson, Best Buy's chief executive, said in a recent interview. "Those customers, they're smart, and they're costing us money."
Anderson said Best Buy was tightening its rebate policies in the case of customers who abuse the privilege, but declined to say what else his company was doing to discourage its most costly customers.
"What we're trying to do is not eliminate those customers, but just diminish the number of offers we make to them," Anderson said.
Larry Selden calls them "demon customers."
Selden, a consultant who works for Best Buy, co-wrote "Angel Customers & Demon Customers." In his book, he said that while retailers "probably can't hire a bouncer to stand at the door and identify the value destroyer," they're not powerless.
Selden, a business professor emeritus at Columbia University, said an investment firm found that one customer with a portfolio of $500,000 was tying up three financial advisers almost full-time with requests for help and information. "Eventually, reluctantly, and very politely, in this one case the company asked him to go elsewhere," Selden said.
More on this Story (http://www.tdn.com/articles/2004/07/06/biz/news01.txt)
By Associated Press
Jul 06, 2004 - 08:04:15 am PDT
MINNEAPOLIS -- So much for the customer always being right.
Some retailers are deciding that the customer can be very, very wrong -- as in unprofitable. And some, including Best Buy Co. Inc., are discriminating between profitable customers and shoppers they lose money on.
Like a customer who ties up a salesworker but never buys anything, or who buys only during big sales. Or one who files for a rebate, then returns the item.
"That would be directly equivalent to somebody going to an ATM and getting money out without putting any in," Brad Anderson, Best Buy's chief executive, said in a recent interview. "Those customers, they're smart, and they're costing us money."
Anderson said Best Buy was tightening its rebate policies in the case of customers who abuse the privilege, but declined to say what else his company was doing to discourage its most costly customers.
"What we're trying to do is not eliminate those customers, but just diminish the number of offers we make to them," Anderson said.
Larry Selden calls them "demon customers."
Selden, a consultant who works for Best Buy, co-wrote "Angel Customers & Demon Customers." In his book, he said that while retailers "probably can't hire a bouncer to stand at the door and identify the value destroyer," they're not powerless.
Selden, a business professor emeritus at Columbia University, said an investment firm found that one customer with a portfolio of $500,000 was tying up three financial advisers almost full-time with requests for help and information. "Eventually, reluctantly, and very politely, in this one case the company asked him to go elsewhere," Selden said.
More on this Story (http://www.tdn.com/articles/2004/07/06/biz/news01.txt)