Customer relationship management concentrates to a great extent on the
profitable customers and how to enhance their profitability. Little
insight has been given on how to treat the "wrong" customer. This
literature research paper shows that customer profitability and overall
firm profitability can be improved when dealing with unprofitable
customers. The managerial approaches discussed focus on maintaining the
customer relationship. For this reason, this paper differs from the
general widespread strategy of termination or "firing" an invaluable
customer. First, relationship marketing and "Relationship U-turn" are
introduced in this paper. Second, customer value and methods of
measuring customer value are discussed. The body of this paper
concentrates on different approaches that try to turn unprofitable
customer relationships into profitable ones. Some of the approaches
focus on letting the customer take over more of the value chain
activities such as self-service. Other approaches look more at the
non-monetary value a customer can provide such as positive
word-of-mouth. Examples from business-to-business (B2B) and
business-to-consumer (B2C) markets are given for each approach and
discussed in detail. The paper concludes with ideas for future research
and a discussion. It emphasizes that companies need to realize that
every customer is an asset that contributes to the value of a firm.
However, customers differ in their needs and a company has to tailor its
offering to meet these needs. Only when a company takes a more
customer-centric view can it be successful, especially in mature
markets.
