Unprofitable customers are the pariahs of the business world. Marketing experts encourage companies to analyze the economics of their customer portfolios and ruthlessly weed out buyer segments that don’t generate attractive returns. Loyalty experts stress the necessity of aiming retention programs at the “good” customers—the profitable ones, that is—and encouraging the “bad” ones to buy from competitors. And customer-relationship-management software provides ever more sophisticated means for identifying poorly performing customers and culling them from the ranks.
A version of this article appeared in the March 2003 issue of Harvard Business Review.
