An odd one for a marketer

I am kicking off September with two conference presentations. First, I discuss the role of commercial organisations in detecting and preventing terrorism, in Leeds. Two days later, in Cambridge, I present on the risks of doing business with criminals. If you think that this is an odd topic for a marketing academic, read on to see what marketing has to do with crime and terrorism.

Several commercial organisations facilitate the movement of people and money across the world. You and I may take the plane to attend a business meeting or to go on holidays. However, some people will take the plane to organise or, even, to commit a crime. Likewise, some individuals and organisations may use financial institutions to fund criminal activities or to launder the proceeds of crime. That is, those firms act as gateways. They also have a tradition of collecting customer data, for loyalty programmes and customer relationship management initiatives, for instance. These businesses’ position and their data collection ability means that governments worldwide increasingly demand that they participate in the fight against crime.

This government-imposed role in the fight against crime creates several problems for organisations, as discussed at the Global Insecurities conference in Leeds. The issues that commercial organisations encounter include:
– The type of data required for crime detection is very different from that traditional collected for commercial purposes. I discuss some of the technical challenges here.
– The role requires significant investment in human and technical resources.
– The role also creates delays and may require reporting customers to law enforcement, which clashes with the culture of service, diligence and secrecy prevalent in these industries.
– The legal requirements conflict with the commercial nature of the jobs, which creates tension for employees.
– It affects a variety of organisations in the supply chain, over and above the government and the gateway firm.
– It affects competition because costs differ for incumbent firms and new comers and because costs are not proportional to the size of the organisation.

Another important aspect for marketing is the cost of serving those (undesirable) customers. It is not simply a matter of customer profitability. Serving those customers exposes firms to a multitude of risks, as explored in my presentation at the 29th Cambridge International Symposium on Economic Crime, in Cambridge. Some of the risks encountered are:
– Waste productive resources – This is a major concern in the current economic climate.
– Impact on customer behaviour – For instance, safety is a key variable in destination choice and additional security checks may have a long-term effect on the route of travel.
– The possibility of errors and the delays impact negatively on customer satisfaction – This is a particular concern because (at least in the UK) organisations are not allowed to tell customers that the delay results from suspicions about their behaviour.
– There is the risk of fines, legal proceedings or imprisonment, if the organisation is deemed to be complacent or incompetent in their role in crime prevention and detection.
– The negative press attention may damage the organisation’s reputation.

Modern marketing research and practice embrace the principle that not all customers are equally desirable. Indeed, the basis of Customer Relationship Management is the understanding that customers differ in the value they generate for the firm and that their management should reflect these differences. However, most marketing research tends to focus on the upside of relationships, looking at questions such as how to attract more customers, how to upsell or how to retain customers. My work looks at the dark side: the identification and management of bad customers.

If you wonder whether this is relevant, consider these simple statistics:
– In the UK, front-of-store assistants are subjected to verbal abuse an average of twice a week, to threatening behaviour twice a month and to actual acts of violence once a month
– An average of 4 out of 10 people have stolen from a shop before and intellectual property theft is a widespread behaviour.
– Customer theft cost retailers over £30bn
– 10% of US insurance claims are inflated or altogether fake
– Around 7% of the total value of deposits in UK personal accounts are thought to be the proceeds of crime
– The equivalent of 3% of global Gross National Income is thought to be laundered every year, in the world.

Consider, as well, that customer demotion impacts negatively on spending behaviour and loyalty, and generates negative word of mouth. Moreover, there are numerous operational and legal restrictions on customer abandonment.

For all these reasons, identifying and managing undesirable customers is a key aspect of a marketers’ job. And that includes criminals and terrorists.

Not odd at all.

Do you focus on the good customers, only? Or do you take active steps to identify and manage undesirable customers, as well?