Firing Your Customer: An Amex Example

February 24, 2009 at 8:31 am | Posted in Economics | 3 Comments

OK – today’s post has nothing to do with technology but I find it fascinating.  I’m no customer relationship management expert, although I can complain up a storm as well as anybody.  My exposure came during a few years at Meta Group when I was enlisted to help create their second CRM workshop.  This was a technology workshop that detailed the architectural model and services for CRM; the first workshop was concepts.  I remember the idea of “firing your customer”, something that businesses and independent consultants are usually too slow to do.  But this is a very stark example of firing your customer from Amex (from the 2/24/09 WSJ, p D2):

It used to be that credit-card companies lured customers with cash rewards. Now American Express Co. is paying to get rid of them. The card issuer is offering selected customers a $300 AmEx prepaid gift card if they pay off their balances and close their accounts.

Selected members — the company wouldn’t disclose how many — began receiving letters with the voluntary offer earlier this month, according to Molly Faust, an American Express spokeswoman. “It’s a relatively small number of cardmembers who have sizeable balances and little spending and payment activity,” she says.

Each letter came with an RSVP code that, when submitted online, immediately cancels that member’s card.

It’s a sad situation, but I give Amex credit for recognizing some of its relationships don’t make sense and making the rational economic decision that it’s better to record a $300 loss now than a much larger one later.

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