Now, the customer's always managed

Commentator Ian Ayres

TEXT OF COMMENTARY

KAI RYSSDAL: While there's no guarantee that every business transaction in life's going to be a pleasant one, most companies do at least try to appear interested in how their customers feel.

But if you feel like more like a lab rat than a loyal customer, get used to it, says commentator Ian Ayres.


IAN AYRES: Say you and I have been bumped from a flight and there's just one seat left on the next scheduled plane. Who gets it?

In the old days, it might have been whoever had more frequent flier points. But today, airlines are more likely to give the seat to the unhappier customer.

Welcome to the wonderful world of CRM -- customer relationship management. Here's how it works:

If I've already had two flights canceled in the past six months, the airline might predict that any further mistreatment might cause me to take my business elsewhere. In fact, having tons of frequent-flier points might even hurt your chances, because airlines don't have to worry as much about giving inferior service to loyal flyers who will tolerate just about anything to earn more miles.

Harrah's Casino is playing a similar game. It uses oodles of data to predict the "pain points" accrued by their regulars. A paint point is the amount of money an individual gambler can stomach losing and still come back for more. If you start to get close, Harrah's might send a "luck ambassador" to tap you on the shoulder and offer you a free steak dinner to get you away from the blackjack table.

A lot of CRM is good for consumers. Firms calculate what products and services will make individual consumers happier, and go out and provide it -- eHarmony does it with potential dates, Amazon with night table reading and Netflix with your DVD cue.

But when firms use CRM to figure out how close to the edge they can go with increased prices or decreased quality, then it becomes a kind of corporate Zoloft, smoothing out the high and lows of consumer happiness. In this new world, you don't have to be a squeaky wheel to get some grease. But you also are a lot less likely to come away truly elated.

RYSSDAL: Ian Ayres is a professor at the Yale Law School. He's also the author of the book Super Crunchers: Why Thinking-By-Numbers is the New Way to Be Smart.

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