DESCRIPTION
This case gives us a insight of how, in a business climate in which building relationships with customers has dominated both managerial thought and marketing budgets, could Filene's Basement have fired a loyal customer, one who was formally and informally recognized as a best customer? This case allows to customer's relationship with discount retailer Filene's Basement, from her perspective, to uncover the critical incidents and behaviours of each party that shaped their relationship. The company's customer relationship management (CRM) programs are analysed to show how they influenced and encouraged unprofitable customer behaviour.
OBJECTIVE
This case helps us to understand the complexity and dynamics of consumer-brand relationships and how they are formed, nurtured, and changed over time via a firm's CRM programs. We can use customer lifetime value analysis (CLV) to assess the profitability of a customer relationship, to assign customers to tiers in the customer profitablity pyramid, and to debate strategies for improving their profitability over time. The case provides an opportunity for us to debate the wisdom of firing the customers and to explore the processes by which customer relationships become unprofitable. Importantly, the case argues that behind most "bad customers" are poorly managed customer relationships, highlighting that firms bear responsibility for building unprofitable relationships through their customer acquisition and retention strategies.
PROBLEM
The main problem facing Filene’s Basement was the shifting management. This shifting management coupled with evolving strategy and pressure to perform resulted in the transition of a once Platinum customer to a Lead customer. With the changes in management the value of the customer was traded in for increased focus on simply making a profit.
