Stores try to 'fire' bad customers

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.

Selden worked as a consultant for Royal Bank of Canada, which at one time traced checks faster for its most profitable customers, while other customers waited up to five days, he wrote. While that's a bit out of date, the bank now has other ways of prioritizing customers.

Laura Gainey, vice president of client segment strategies, said the bank's phone system sends certain customers to the front of the line, where they get the most experienced customer service representatives, depending on criteria that include their account size.

"I don't really believe that any customer at Royal Bank is a demon customer," she said, "but there's no doubt that there are different ways of approaching different customers, which will allow us to better serve their needs, and allow us to serve the bank and our shareholder's needs."