The CRM-paradox by Nguyen
Anneke Zwart, Moderator
Recently, the CRM-paradox has been put forward by Nguyen, meaning the following: in CRM it is very common to treat certain customer groups differently from others, since various consumers have different needs and wants.
Clearly, there are several important benefits to such a segmented strategy. Firms are able to make their offerings more attractive to specific groups so that profits could increase, long-term relationships could be built, cross-sales could be created etc.
Nevertheless, treating certain consumers differently from others might cause dissatisfaction as well. Some research has shown that customers may perceive favoritism as being unfair and unequal, and as a result these consumers will spread negative information, they will end the relationship or they may act in a way that damages the firm.
This is called the CRM-paradox. Because of the existence of the CRM-paradox, companies need to identify the concerns in controlling and managing the way customers perceive the way they are treated. Using CRM in an inappropriate way could have negative long-term consequences.
Source: Nguyen, B. and D. S. Mutum. (1995). A Review of Customer Relationship Management: Successes, Advances, Pitfalls and Futures. Oxford Brookes Business School, Oxford Brookes University, Oxford, UK, and Warwick Business School, University of Warwick, Coventry, UK.