ManagementSpeak: Our company philosophy is to continually “Exceed Customers’ Expectations.”

Translation: Our company philosophy is to promise more than we can deliver and make up the difference with press releases.

This week’s anonymous contributor certainly exceeded reader expectations, in contrast to the company in question, which lived down to those of its employees.

I’m not in the mood to write a new column this week. So you get to enjoy a re-run, this time one inspired by my father, who first coined the term “Customer Elimination Management” among many other great turns of phrase.

Dad, this one’s for you.

– Bob

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Ready for some Customer Elimination Management (CEM) — the term coined by soon-to-be Direct Marketing Hall of Fame inductee (and father of yours truly … congratulations, Dad!) Herschell Gordon Lewis to describe Customer Relationship Management’s evil twin? Have I got a story for you. It’s about a growing, privately-held retailer dealing with, as the retailer’s controller put it to me, “one of the nation’s largest bank systems, soon to be shrinking if this continues.” Call it First CEM Bank (FCB).

The retailer was expanding into a new market where its primary bank couldn’t provide deposit services. FCB could, and another FCB branch had previously contacted the retailer expressing strong interest in providing a different service, so the controller called them to make the arrangements. FCB responded by asking for a great deal of financial information. None was relevant to a depository relationship (the retailer wasn’t, after all, requesting a line of credit) and all was inappropriate for a privately held company to disclose unnecessarily. When the controller declined to provide the information, FCB declined his business.

The retailer’s business could have been significant, as its primary bank’s reach is incomplete. The controller, wanting to be fair, and also incredulous, pursued the discussion to make sure there was no misunderstanding. Here’s the response — paraphrased to disguise identities at the request of the retailer’s controller:

“I am pleased to respond to your query, as you’re asking legitimate questions. When we spoke you informed me your company was unwilling to provide financial statements. We like to establish deep comprehensive relationships. Providing us financial information about your company is a prerequisite to opening a dialog. I suggest you work with another bank, which should be able to handle your request.”

The controller told me that yes, another other bank was very happy to talk to him, and they are now discussing the possibility of expanding their relationship beyond the original services and market.

Ready for the best part? FCB has received a lot of ink over the past several years for its advanced and innovative implementation of Customer Relationship Management.

You knew that was coming, didn’t you?

How can this kind of corporate stupidity coincide with a strategic focus on CRM? It’s easy. All that’s needed is leadership that holds employees accountable to a system of well-defined metrics, and a clearly stated set of corporate policies designed to drive the metrics forward.

All that’s needed, in other words, is to follow what most management consultants consider best practice for well-run companies.

Here’s how I’m guessing it worked at FCB. CRM focuses on a measure called “Customer Lifetime Value” (CLV) (sometimes called “Lifetime Value” or LTV). It’s an estimate of the discounted value of all future cash flows expected from an average customer or class of customers. I’d bet FCB’s focus is on increasing CLV, its strategies for increasing CLV are based on one-to-one marketing that requires extensive customer knowledge, and its corporate policies require that knowledge early in a business relationship, figuring no knowledge leads to no marketing leads to no increase in CLV.

Which is to say, FCB started with the right idea and promptly forgot that good customer relationships aren’t built on marketing and customer coercion. They’re built on earned mutual trust, with an emphasis on “earned.” Marketing becomes communication, which includes listening alongside the personalized sales messages. The numbers? They follow as a natural consequence. As is so often the case, trying too hard to move the measure results in damage to the business.

As head of IT, you’re going to be in the middle of your company’s CRM implementation. And you’ll be tempted to encourage an emphasis on those aspects of customer relationship management that center on information technology. That’s fine, to a point. It’s easy, however, to tell when you’ve gone past that point.

It’s when the numbers and information technology take precedence over your company’s customers.